LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION March 22, 2025 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB1256 by Zwiener (Relating to the authority of a county commissioners court to adopt an exemption from ad valorem taxation by each taxing unit that taxes the property of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of certain water conservation systems.), As Introduced Passage of the bill would authorize the commissioners court of a county to adopt an exemption from ad valorem taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system that would apply to all taxing units that tax the property. As a result, taxable property values could be reduced and the related costs to the Foundation School Fund could be increased through the operation of the school finance formulas. Contingent on the approval by voters of a related constitutional amendment (HJR 88), the bill would authorize the commissioners court of a county, by order, to adopt an exemption from property taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system. This exemption would apply to the taxation of property by each taxing unit that taxes the property. The bill would provide a definition for graywater.According to the Comptroller's office, no web site detailing data for all the existing rainwater or greywater harvesting installations in Texas was located, however, the cost could range from around $100 for a 55 gallon plastic rain barrel to millions of dollars.According to the Texas Water Development Board (TWDB) website, a complete rainwater harvesting system for non-potable use for a typical single-family home will generally cost between $8,000 and $10,000. Examples of Texas Rain Catcher Awards projects listed on the TWDB website range from a Dripping Springs Water Supply Corp project costing $16.9 million to a rainwater harvesting facility (serving 893 households) in Hays County that is worth about $10.3 million, to a family residential rainwater harvesting system of two 2,500-gallon tanks used for potable water and a 1,500-gallon tank for garden irrigation costing about $5,000.The property value that would be tax exempt would depend on the size and use of the rainwater harvesting or graywater system. Considering the on-going drought and current discussion of the future water supply for the growing Texas population, it could be surmised that interest in such installations would increase. A comprehensive list of all rainwater harvesting and graywater systems in Texas that are currently subject to property taxation could not be located. Nevertheless, as can be inferred from the examples cited earlier, this bill could allow significant reductions in taxable values in counties opting for exemption. The number and identity of counties that might adopt the exemption is unknown.To the extent the exemption would be adopted by county commissioners courts, it would reduce taxable property value and result in a cost to the state through operation of the school funding formulas. The exemption could reduce taxable values by significant amounts; however, suitable data for estimation has not been identified, and the number and identity of counties that might adopt the exemption is unknown. Local Government ImpactContingent upon passage of a constitutional amendment, the bill would authorize the commissioners court of a county to adopt an exemption from ad valorem taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system that would apply to all taxing units that tax the property. As a result, taxable property values could be reduced. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code could be higher as a consequence of the reduction in taxable property value proposed by the bill. If cities, counties, and special districts did not adopt higher rates, local levies would be reduced. If those jurisdictions adopted higher tax rates, the initial revenue loss from the exemption would be offset by increased tax levies from owners of non-exempt property and slightly reduced tax savings from owners of exempt property. Source Agencies: b > td > 304 Comptroller of Public Accounts LBB Staff: b > td > JMc, KK, SD, BRI
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
March 22, 2025
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB1256 by Zwiener (Relating to the authority of a county commissioners court to adopt an exemption from ad valorem taxation by each taxing unit that taxes the property of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of certain water conservation systems.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB1256 by Zwiener (Relating to the authority of a county commissioners court to adopt an exemption from ad valorem taxation by each taxing unit that taxes the property of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of certain water conservation systems.), 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
HB1256 by Zwiener (Relating to the authority of a county commissioners court to adopt an exemption from ad valorem taxation by each taxing unit that taxes the property of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of certain water conservation systems.), As Introduced
HB1256 by Zwiener (Relating to the authority of a county commissioners court to adopt an exemption from ad valorem taxation by each taxing unit that taxes the property of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of certain water conservation systems.), As Introduced
Passage of the bill would authorize the commissioners court of a county to adopt an exemption from ad valorem taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system that would apply to all taxing units that tax the property. As a result, taxable property values could be reduced and the related costs to the Foundation School Fund could be increased through the operation of the school finance formulas.
Passage of the bill would authorize the commissioners court of a county to adopt an exemption from ad valorem taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system that would apply to all taxing units that tax the property. As a result, taxable property values could be reduced and the related costs to the Foundation School Fund could be increased through the operation of the school finance formulas.
Contingent on the approval by voters of a related constitutional amendment (HJR 88), the bill would authorize the commissioners court of a county, by order, to adopt an exemption from property taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system. This exemption would apply to the taxation of property by each taxing unit that taxes the property. The bill would provide a definition for graywater.According to the Comptroller's office, no web site detailing data for all the existing rainwater or greywater harvesting installations in Texas was located, however, the cost could range from around $100 for a 55 gallon plastic rain barrel to millions of dollars.According to the Texas Water Development Board (TWDB) website, a complete rainwater harvesting system for non-potable use for a typical single-family home will generally cost between $8,000 and $10,000. Examples of Texas Rain Catcher Awards projects listed on the TWDB website range from a Dripping Springs Water Supply Corp project costing $16.9 million to a rainwater harvesting facility (serving 893 households) in Hays County that is worth about $10.3 million, to a family residential rainwater harvesting system of two 2,500-gallon tanks used for potable water and a 1,500-gallon tank for garden irrigation costing about $5,000.The property value that would be tax exempt would depend on the size and use of the rainwater harvesting or graywater system. Considering the on-going drought and current discussion of the future water supply for the growing Texas population, it could be surmised that interest in such installations would increase. A comprehensive list of all rainwater harvesting and graywater systems in Texas that are currently subject to property taxation could not be located. Nevertheless, as can be inferred from the examples cited earlier, this bill could allow significant reductions in taxable values in counties opting for exemption. The number and identity of counties that might adopt the exemption is unknown.To the extent the exemption would be adopted by county commissioners courts, it would reduce taxable property value and result in a cost to the state through operation of the school funding formulas. The exemption could reduce taxable values by significant amounts; however, suitable data for estimation has not been identified, and the number and identity of counties that might adopt the exemption is unknown.
Local Government Impact
Contingent upon passage of a constitutional amendment, the bill would authorize the commissioners court of a county to adopt an exemption from ad valorem taxation of the portion of the appraised value of a person's property that is attributable to the installation in or on the property of a rainwater harvesting or graywater system that would apply to all taxing units that tax the property. As a result, taxable property values could be reduced. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code could be higher as a consequence of the reduction in taxable property value proposed by the bill. If cities, counties, and special districts did not adopt higher rates, local levies would be reduced. If those jurisdictions adopted higher tax rates, the initial revenue loss from the exemption would be offset by increased tax levies from owners of non-exempt property and slightly reduced tax savings from owners of exempt property.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI