LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION March 5, 2023 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB623 by Harris, Cody (Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB623, As Introduced : a negative impact of ($3,373,000) through the biennium ending August 31, 2025. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2024$02025($3,373,000)2026($3,694,000)2027($4,269,000)2028($4,346,000)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) fromCounties2024$0$0$0$02025($3,373,000)($4,906,000)($2,177,000)($1,917,000)2026($3,694,000)($5,239,000)($2,225,000)($1,965,000)2027($4,269,000)($5,787,000)($2,269,000)($2,010,000)2028($4,346,000)($5,909,000)($2,314,000)($2,056,000)Fiscal Year Probable Revenue Gain/(Loss) fromOther Special Districts2024$02025($1,770,000)2026($1,833,000)2027($1,895,000)2028($1,960,000) Fiscal AnalysisThe bill would amend Chapter 11 of the Tax Code (Taxable Property and Exemptions) to exempt animal feed held for sale at retail and exempted from sales and use taxes under current law, from property tax.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
March 5, 2023
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB623 by Harris, Cody (Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB623 by Harris, Cody (Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.), 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
HB623 by Harris, Cody (Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.), As Introduced
HB623 by Harris, Cody (Relating to an exemption from ad valorem taxation of tangible personal property consisting of animal feed held by the owner of the property for sale at retail.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB623, As Introduced : a negative impact of ($3,373,000) through the biennium ending August 31, 2025.
Estimated Two-year Net Impact to General Revenue Related Funds for HB623, As Introduced : a negative impact of ($3,373,000) through the biennium ending August 31, 2025.
General Revenue-Related Funds, Five- Year Impact:
2024 $0
2025 ($3,373,000)
2026 ($3,694,000)
2027 ($4,269,000)
2028 ($4,346,000)
All Funds, Five-Year Impact:
2024 $0 $0 $0 $0
2025 ($3,373,000) ($4,906,000) ($2,177,000) ($1,917,000)
2026 ($3,694,000) ($5,239,000) ($2,225,000) ($1,965,000)
2027 ($4,269,000) ($5,787,000) ($2,269,000) ($2,010,000)
2028 ($4,346,000) ($5,909,000) ($2,314,000) ($2,056,000)
2024 $0
2025 ($1,770,000)
2026 ($1,833,000)
2027 ($1,895,000)
2028 ($1,960,000)
Fiscal Analysis
The bill would amend Chapter 11 of the Tax Code (Taxable Property and Exemptions) to exempt animal feed held for sale at retail and exempted from sales and use taxes under current law, from property tax.
Methodology
Assuming voter approval of an associated constitutional amendment, the bill would exempt animal feed held for sale at retail from property tax. The bill's proposed property tax exemption of animal feed that is exempt from the sales and use tax under Tax Code Section 151.316 (State Sales and Use Taxexemptions for agricultural items) and is held by the owner for sale at retail would create a cost to school districts, other local taxing units, and to the state through the operation of the school funding formulas.The value lost to the proposed exemption was based on information from appraisal districts, U.S. Census, and on information related to the existing sales and use tax exemption under Section 151.316 of the Tax Code from animal feed expenditures reported by United States Department of Agriculture.Projected tax rates were applied through the five-year projection period to estimate the tax revenue loss to special districts, cities and counties; and to estimate the initial school district loss each year that would subsequently be partially transferred to the state through the operation of the school funding formulas.The estimated cost to the Foundation School Program is $3.4 million in fiscal year 2025, $3.7 million in fiscal year 2026, $4.3 million in fiscal year 2027, and $4.3 million in fiscal year 2028.This bill would take effect on January 1, 2024, contingent on approval by the voters of a constitutional amendment (HJR 47).
Local Government Impact
The estimated fiscal implication to units of local government is reflected in the table above and is contingent upon passage of a constitutional amendment authorizing the exemption.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 701 Texas Education Agency
304 Comptroller of Public Accounts, 701 Texas Education Agency
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI