84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the eligibility of certain property located in multiple school districts for a limitation on appraised value for school district maintenance and operations ad valorem tax purposes under the Texas Economic Development Act.
A fiscal note dated April 21, 2015 anticipates a two-year net impact to General Revenue Related Funds from CSHB 2826 of $0 through the biennium ending August 31, 2017.
The fiscal note also indicates that there would be costs to the Foundation School Fund beginning in 2019 though.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
House Bill 2826 would amend Subchapter B, Chapter 313 of the Tax Code related to limitation on appraised value of certain property used to create jobs, under the Texas Economic Development Act, to create a new limitation for projects located in multiple school districts.
The bill would apply to single unified projects that find themselves located in more than one but not more than three school districts, each of which is contiguous to another school district in which the project is located and at least one of which is a school district.
The provisions on the limitation on appraised value of certain property used to create jobs applicable to a project that is located in only one school district would apply to a project located on two or three school districts. Each school district from which the applicant desires a limitation on appraised value of the applicant’s property for school district maintenance and operations ad valorem tax purposes would still have to enter into an agreement with the applicant.
The project would be considered to be located in the school district that has the highest taxable value of property for the preceding tax year in order to determine the required minimum amount of a qualified investment and the minimum amount of a limitation on appraised value.
For a project located on 2 or 3 school districts, taking into account the school district that has the highest taxable value of property for the preceding tax year, the minimum amount for a limitation on appraised value to which a school district may agree under Section 3113..027(b) of the Tax Code would be equivalent for that project, except that it would be divided among school districts according to the fraction of qualified investment made in each district.
In deciding whether the property on which the project is located meets the requirements for eligibility for a limitation on appraised value, the comptroller would have to consider whether the project as a whole would meet the requirements if the project was located in one school district.
House Bill 2826 would apply the same system to Subchapter C, Chapter 313 of the Tax Code related to limitation on appraised value of property in strategic investment area or certain rural school districts. The project would be considered to be located in the school district that has the highest taxable value of industrial property for the preceding tax year.
Vote Recommendation Notes
No amendments have been introduced on the House floor and no changes have been made to the bill
in Senate committee. We continue to remain neutral.
The second chamber sponsor is Senator Joan Huffman.
Under current law, for economic development reasons, certain projects that bring qualified investment to Texas and create a certain number of jobs can benefit from a limitation on appraised value of their property.
House Bill 2826 would try and simplify the process of claiming such a limitation on appraised value of certain property for a single project located on 2 or 3 school districts.
While the limitation on appraised value of property for economic development is highly questionable, House Bill 2826 would not alter the practice itself but only codify a procedure for these cases in which projects are located on 2 or 3 school districts. As a consequence, we will remain neutral on House Bill 2826.
Nevertheless, it is important to note that the best incentive to attract businesses to a state is not a tax code that is riddled with tax exemptions, limitations and other favors, leaving ample space for loopholes, but a system of low and broad-based taxation that doesn't favor certain among all, and hence leaves plenty of liberty to all to be entrepreneurial and create wealth.