Bill: SB 1368, 84(R) - 2015

Committee

Senate Finance

Vote Recommendation

Vote Recommendation Economic Freedom Property Rights Personal Responsibility Limited Government Individual Liberty
Neutral Neutral Neutral Neutral Neutral Neutral

Author(s)

Troy Fraser

Bill Caption

Relating to the provision of state aid to certain local governments disproportionately affected by the granting of ad valorem tax relief to disabled veterans.

Fiscal Notes

A fiscal note dated April 13, 2015 on CSSB 1368 indicates that passage of the bill would provide assistance payments to counties and cities that are disproportionately affected by total residence homestead property tax exemptions for 100 percent or totally disabled veterans, thereby creating a gain to the counties and cities that receive the payments and an equal cost to the state. The cost to the state and revenue gain to affected cities and counties cannot be estimated at this time.

Bill Analysis

Senate Bill 1368 would amend Chapter 140 of the Local Government Code to provide that the State compensate (through a "disabled veteran assistance payment") municipalities and counties that are adjacent to United States military installations and are disproportionately impacted by a loss in revenues due to the ad valorem exemptions to disabled veterans.

Such a municipality or county would be entitled to a disabled veteran assistance payment each fiscal year when the municipality's or county's amount of lost ad valorem tax revenue due to exemptions under Section 11.131 of the Tax Code (related to the residence homestead of a 100 percent or totally disabled veteran) is equal to or greater than 2 percent of the municipality's or county's general fund revenue for that fiscal year.

The lost revenue would be calculated by multiplying the ad valorem tax rate adopted for the tax year in which the fiscal year begins by the total appraised value of all property located in the municipality or county that is granted a exemption under Section 11.131 of the Tax Code (related to the residence homestead of a 100 percent or totally disabled veteran).

The disabled veteran assistance payment would be calculated by substracting one percent of the municipality's or county's general fund revenue for that fiscal year to the amount of lost ad valorem tax revenue.

An application for the disabled veteran assistance payment would have to be submitted to the Comptroller by April 1 of the year following the end of the fiscal year for which the municipality or the county is entitled to receive the payment. The Comptroller would be responsible for developing the application form by December 1, 2015. If the Comptroller were to decide a municipality or county is entitled to the payment, this payment should be made no later than the 30th day after the date the application was made.

Vote Recommendation Notes

Senate Bill 1368 would try to remedy the unintended consequences of property tax exemptions for 100 percent or totally disabled veterans and their surviving spouse passed respectively by the 81st Legislature and the 82nd Legislature.

Municipalities and counties that include or are adjacent to U.S. military installations tend to find themselves with reduced ad valorem tax revenues due to these exemptions, with consequences on the basic services they must fulfill.

While we recognize that these exemptions were passed with good intentions towards disabled veterans, and we understand the hardship placed on disabled veterans and their families and fully appreciate the price they pay to defend our country, the creation of exemptions for small groups of people, as well-intentioned as they might be, have unintended (and more often than not bad) consequences. This is why we generally do not support such exemptions no matter how much it may feel good to do so. Instead we favor low taxes that apply broadly to the entire tax base and are more equitable to everyone.

If these exemptions create such distortions to some local revenues that they necessitate the creation of a state assistance payment, they might need to be reviewed. Because Senate Bill 1368 tries to remedy this problem though, we will remain neutral on this bill.

Source URL (retrieved on 03/28/2024 06:03 AM): http://reports.texasaction.com/bill/84r/sb1368?print_view=true