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Senate Bill 1 would amend Chapter 11 of the Tax code by increasing the amount of the residence homestead exemption provided by a school district from $15,000 to 25 percent of the median market value in the current tax year of all residence homesteads in the state (the fiscal note estimates that it would represent a $31,373 exemption for the tax year 2016).
The Legislative Budget Board would be required to determine the median market value in each tax year of all residence homesteads in the state based on appraisal district homestead values in the preceding tax year and to publish it in the Texas Register by February 1 (except for 2015, when the deadline would be August 31) .
Senate Bill 1 would also prevent a taxing unit that would have adopted an additional homestead exemption (Sec 11.13 (n)) in 2014 from decreasing the amount of or repealing the exemption for 10 years.
Senate Bill 1 would reduce the limitation on the total amount of ad valorem taxes that may be imposed on the homestead of individuals who are 65 years of age or older, or disabled, to reflect for the increase in the amount of the homestead exemption.
Senate Bill 1 would also make adjustments to Chapter 25 of the Tax code in order for 2015 appraisal records submitted to the appraisal review board to reflect the amount of the new exemption.
Senate Bill 1 would require school districts assessors, for the year 2015, to assess two 2015 taxable values based on 1) a homestead exemption of $15,000 and 2) the homestead exemption calculated by the Legislative Budget Board should Senate Bill 1 pass. As a result, two sets of effective and rollback tax rates would be calculated. Taxing units would be given an additional month (until October 31) in 2015 to adopt a tax rate.
The bill would require that school districts tax assessors mail the 2015 tax bill for those homesteads that qualify for the tax limitation exemption by December 1, 2015.
Senate Bill 1 would also amend Chapters 41, 42, and 46 of the Education Code in order to hold the school districts harmless as a result of the increased homestead
For the purpose of the computation of wealth per student for the school year 2015-2016, a school district’s taxable value of property would be calculated as if the increased homestead exemption had been in effect during the 2014 tax year.
School districts would be entitled to additional state aid for the 2015-2016 and 2016-2017 school years if the amount of state and local revenue under Chapter 41 and 42 is less than what the district would have received if the increased exemption had not occurred. For the 2017-2018 school year, the revenue must be less than the revenue that the district would have received should the increased exemption not have occurred, less any state aid under Sec. 42.2516.
For the purpose of calculating additional aid under Chapter 42, the increased homestead exemption should be considered to have occurred in 2014.
The provisions of Senate Bill 1 subject to the approval of SJR 1 would take effect after and if the constitutional amendment proposed by the 84th Legislature, Regular Session, 2015 in Senate Joint Resolution 1 is approved by voters in an election to be held on September 12, 2015. Other provisions would take affect immediately if SB1 receives a vote of two-thirds of all the members elected to each house, or on the 91st day after the last day of the legislative session if it doesn't. Senate Bill 1 is the enabling legislation for SJR 1.
A committee substitute was introduced in the House Committee. It would only raise the exemption from $15,000 to $25,000, while SB1 as passed on the Senate floor would have made the exemption a percentage of the median market value of all homesteads in the state, hence making the exemption evolve with the market value of properties. The percentage also represented, as of the day SB1 was passed on the Senate floor, a greater increase in the exemption.
CSSB 1 would also remove the provision that would have prevented a taxing unit that would have adopted an additional homestead exemption (Sec 11.13 (n)) in 2014 from decreasing the amount of or repealing the exemption for 10 years.
CSSB1 would still bring relief to property owners. We hence remain in support of the bill.
The second chamber sponsor is Rep. Dennis Bonnen.
First chamber recommendation:
Senate Bill 1 would bring some relief to property owners by increasing the homestead exemption for a school district from $15,000 to 25 percent of the median market value of all homesteads in the state.
Nevertheless, the increased homestead exemption that Senate Bill 1 provides would only affect school district property taxes (and not property taxes of other taxing units such as counties, municipalities, and other special districts). Additionally, without reducing the cap on the annual growth in property taxes, districts could increase the rate of property taxes in order to compensate for the increased exemption. Finally, the state will have to compensate for any loss in revenues the increased homestead exemption will cause to school districts, which means all Texans will have to pay.
We support Senate Bill 1 because it is a step in the right direction: it favors property rights by giving some relief to property owners. But we hope further action will be taken to stop the growth in local property taxes.