84(R) - 2015
Vote Yes; Amend
Proposing a constitutional amendment providing for an exemption from ad valorem taxation for public school purposes of a portion of the market value of a residence homestead based on the median market value of all residence homesteads in the state, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, providing that an appropriation of state tax revenues to protect school districts against the resulting revenue loss is an appropriation of state tax revenues dedicated by the constitution for purposes of the restriction on the rate of growth of appropriations from undedicated state tax revenues, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from reducing the amount of or repealing the exemption, and prohibiting the imposition or collection of a tax on the conveyance of an interest in real property.
A fiscal note dated March 1, 2015 estimates that, as introduced, Senate Bill 1 and Senate Joint Resolution 1 would have a combined two-year net negative impact to General Revenue Related Funds of $2,441,384,000. The cost to the State for publication of the resolution would be $118,681.
A fiscal note dated March 20, 2015, for Senate Bill 1, Committee Report 1st House, Substituted estimates that, along with Senate Joint Resolution 1, the combined two-year net negative impact to General Revenue Related Funds would be $2,154,016,000. The cost to the State for publication of the resolution remains $118,681.
If approved by voters in an election to be held on September 12, 2015, Senate Joint Resolution 1 would amend the Texas Constitution and increase 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 March 20 fiscal note for SB1 estimates that it would represent a $31,373 exemption for the tax year 2016).
Senate Joint Resolution 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 Joint Resolution 1 would prevent a taxing unit that would have adopted an additional homestead exemption (Chapter 11 of the Tax Code, Sec 11.13 (n)) in 2014 from decreasing the amount of or repealing the exemption for 10 years.
Senate Joint Resolution 1 would also make the appropriation of state tax revenues necessary to keep school districts harmless from the possible loss of revenue resulting from the increase in the school district homestead exemption an appropriation dedicated by the Constitution, and hence not subject to the limit in the rate of growth of certain state appropriations.
Finally, Senate Joint Resolution 1 would prevent the creation and levy of a conveyance tax, including a conveyance by sale, lease, or other transfer of title to or interest in the property.
These provisions would take effect for the tax year beginning January 1, 2015.
Enabling legislation is SB 1
Vote Recommendation Notes
We remain in support of SJR 1. Changes to the House committee substitute are below in bold and parentheses. The second chamber sponsor is Rep. Dennis Bonnen.
First chamber recommendation:
Senate Joint Resolution 1 would bring tax relief to property owners by increasing the school district homestead exemption from $15,000 to 25 percent of the median market value of all homesteads in the state. (House committee substitute would only raise the figure
from $15,000 to $25,000, while SJR1 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
Senate Joint Resolution 1 would also prevent the creation and levy of a conveyance tax. This provision would limit the growth of government by preventing government from adding a tax on the transfer of real property to property taxes. (House committee substitute does not mention a conveyance tax.)
We support Senate Joint Resolution 1 because it is a step in the right direction: it favors property rights by providing tax relief to property owners. Nevertheless, we regret that the appropriation necessary to compensate school districts from a loss in revenue is dedicated, making those funds not subject to the constitutional cap on spending, hence potentially increasing the scope of government. (House committee substitute removes the language which lifts the cap on these funds.)
Additionally, in order to open the door to the complete abolition of the property tax in the future, we recommend that Senate Joint Resolution 1 Sec. 29 be amended to add the provision that a tax on the sale of real property is prohibited (except to offset the loss in revenues caused by the complete abolition of the property tax).