84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the exemption from ad valorem taxation of the total appraised value of the residence homestead of the surviving spouse of a 100 percent or totally disabled veteran.
A fiscal note dated March 16, 2015 anticipates an estimated two-year negative impact to General Revenue Related Funds of $1,293,000 through the biennium ending August 31, 2017, increasing to a negative impact of $13,191,000 through the biennium ending August 31, 2019.
Under current law, the surviving spouse of a 100 percent or totally disabled veteran who qualified for an exemption from taxation of the total appraised value of the veteran's residence homestead before the veteran's death is entitled to the same exemption under certain conditions. This exemption for surviving spouses was passed during the 82nd Legislature.
House Bill 992 would allow the surviving spouse of a 100 percent or totally disabled veteran who would have qualified for the exemption under Subsection 11.131 (b) of the Tax Code if that subsection had been in effect on the date the disabled veteran died to be entitled to the above-mentioned exemption passed during the 82nd Legislature.
House Bill 992 would take effect on January 1, 2016 only if the Senate Joint Resolution 75 is passed and its constitutional amendment approved by voters. It would apply only to ad valorem taxes imposed for a tax year beginning on
or after January 1, 2016.
House Bill 992 is the enabling legislation for HJR 75.
The second chamber sponsor for HB 992 is Senator Larry Taylor.
Vote Recommendation Notes
No amendments or modifications have been made to the bill since we reported on it. We continue to oppose it.
First chamber analysis below:
House Bill 992 stems from good intentions. We understand the hardship placed on disabled veterans and their family and fully appreciate the price they pay to defend our country.
Nevertheless, House Bill 992 would apply an exemption retroactively in order for the surviving spouse of a 100 percent or totally disabled veteran to benefit from the equivalent exemption from taxation of the total appraised value of the veteran's, and the surviving spouse's, residence homestead.
Because it would retroactively qualify only a small category on people for an exemption, House Bill 992 can potentially create unintended consequences on the long term.
A good example of such unintended consequences lies in Senate Bill 1368
which has been recently reported favorably out of committee. SB 1368 tries to remedy the revenue losses caused by these exact same exemptions to cities and counties located near or around major military installations. SB 1368 would provide that some of these cities and counties receive state aid to compensate revenue losses due to these exemptions.
In 2017, the projected loss of revenue to local school districts would be $6.6 million, $2.4 million for counties, $2.3 million for cities, and $1.7 million for special districts. Local school districts would lose approximately $1.6-1.7 million per year through 2020 (after the initial wave of applicants tapers off).
Low taxation that applies broadly to the entire population is more efficient and has less potential to create unintended consequences. We urge the Legislature to consider the problem created by these exemptions through the example of SB 1368 before broadening their scope through House Bill 992. As a consequence, we oppose House Bill 992.