LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 87TH LEGISLATIVE REGULAR SESSION April 18, 2021 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2311 by Krause (Relating to limitations on increases in the appraised value for ad valorem tax purposes of residence homesteads and single-family residences other than residence homesteads.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2311, As Introduced : a negative impact of ($79,267,483) through the biennium ending August 31, 2023. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2022$02023($79,267,483)2024($174,324,373)2025($256,946,987)2026($390,253,655)All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromFoundation School Fund193 Probable Revenue Gain/(Loss) fromSchool Districts Probable Revenue Gain/(Loss) fromCities Probable Revenue Gain/(Loss) fromCounties2022$0$0$0$02023($79,267,483)($261,233,000)($79,000,000)($72,758,000)2024($174,324,373)($555,743,000)($165,821,000)($153,177,000)2025($256,946,987)($896,094,000)($263,808,000)($244,422,000)2026($390,253,655)($1,269,780,000)($368,834,000)($342,752,000)Fiscal Year Probable Revenue Gain/(Loss) fromOther Special Districts2022$02023($63,137,000)2024($134,342,000)2025($216,656,000)2026($307,060,000) Fiscal AnalysisThe bill would amend Chapter 23 of the Tax Code, regarding property taxation appraisal methods and procedures, to reduce the limitation on the annual increase in the appraised value of a residence homestead (appraisal cap) from 10 percent to 5 percent. The bill would limit increases on appraised value of a single-family residence other than residence homestead to 10 percent.The bill would take effect on January 1, 2022, contingent on approval by the voters of a constitutional amendment (HJR 108).
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 87TH LEGISLATIVE REGULAR SESSION
April 18, 2021
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2311 by Krause (Relating to limitations on increases in the appraised value for ad valorem tax purposes of residence homesteads and single-family residences other than residence homesteads.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB2311 by Krause (Relating to limitations on increases in the appraised value for ad valorem tax purposes of residence homesteads and single-family residences other than residence homesteads.), As Introduced
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB2311 by Krause (Relating to limitations on increases in the appraised value for ad valorem tax purposes of residence homesteads and single-family residences other than residence homesteads.), As Introduced
HB2311 by Krause (Relating to limitations on increases in the appraised value for ad valorem tax purposes of residence homesteads and single-family residences other than residence homesteads.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2311, As Introduced : a negative impact of ($79,267,483) through the biennium ending August 31, 2023.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2311, As Introduced : a negative impact of ($79,267,483) through the biennium ending August 31, 2023.
General Revenue-Related Funds, Five- Year Impact:
2022 $0
2023 ($79,267,483)
2024 ($174,324,373)
2025 ($256,946,987)
2026 ($390,253,655)
All Funds, Five-Year Impact:
2022 $0 $0 $0 $0
2023 ($79,267,483) ($261,233,000) ($79,000,000) ($72,758,000)
2024 ($174,324,373) ($555,743,000) ($165,821,000) ($153,177,000)
2025 ($256,946,987) ($896,094,000) ($263,808,000) ($244,422,000)
2026 ($390,253,655) ($1,269,780,000) ($368,834,000) ($342,752,000)
2022 $0
2023 ($63,137,000)
2024 ($134,342,000)
2025 ($216,656,000)
2026 ($307,060,000)
Fiscal Analysis
The bill would amend Chapter 23 of the Tax Code, regarding property taxation appraisal methods and procedures, to reduce the limitation on the annual increase in the appraised value of a residence homestead (appraisal cap) from 10 percent to 5 percent. The bill would limit increases on appraised value of a single-family residence other than residence homestead to 10 percent.The bill would take effect on January 1, 2022, contingent on approval by the voters of a constitutional amendment (HJR 108).
The bill would take effect on January 1, 2022, contingent on approval by the voters of a constitutional amendment (HJR 108).
Methodology
Contingent on voter approval of a constitutional amendment, the bill would require appraisal districts to reduce the limit on the growth in the appraised value of a homestead from 10 percent to 5 percent per year and cap the appraised valued of a single-family residence other than residence homestead at 10 percent creating a fiscal cost to the state and units of local government. This analysis was based on appraisal roll information reported electronically by appraisal districts. The year to year percent change in value for a large sample of homesteads listed on the appraisal roll was calculated and the results were sorted by percent change. The value loss resulting from the proposed limitation was calculated for homesteads that increased in value more than 5 percent. Value lost to the existing 10 percent value limitation on homestead property was excluded. The results were extrapolated to all Texas homesteads. Historical values for non-homestead single family residential properties, including mobile homes listed on the appraisal roll were analyzed, year over year percent changes calculated, and the results were sorted by percent change. The value loss resulting from the proposed limitation was calculated for non-homestead single family properties that increased in value more than ten percent.Value losses would occur in proportion to future residential property growth rates. Historical data from the existing 10 percent cap shows that value losses increase substantially in the second year after the imposition of a value growth cap and then increase at a decreasing rate. The value loss was adjusted in the second and succeeding years of the analysis to reflect this growth pattern.Projected tax rates were applied to the taxable value losses through the five-year projection period to estimate tax revenue losses to school districts, special districts, cities and counties. For informational purposes the initial loss to school districts is shown; however, under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state.The estimated cost to the Foundation School Program is an increase in state aid of $79,267,483 in fiscal year 2023, $174,324,373 in fiscal year 2024, $256,946,987 in fiscal year 2025, and $390,253,655 in fiscal year 2026.
Local Government Impact
The fiscal impact to units of local government is shown in the table above.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI, CPA, AH
JMc, KK, SD, BRI, CPA, AH