Bill

SB 279

84(R) - 2015
Senate Finance
Read Bill & Check Bill Status
Senate Finance
Taxes

Vote Recommendation

Yes
  • Neutral
  • Positive
  • Neutral
  • Positive
  • Neutral

Author(s)

Kirk Watson

Bill Caption

05/25/15 update:

Relating to the authority of the governing body of a taxing unit other than a school district to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual's residence homestead and to the authority of the governing body of any taxing unit that has adopted an exemption from ad valorem taxation of a portion, expressed as a percentage, of the appraised value of an individual's residence homestead to reduce the amount of or repeal the exemption.

First chamber caption:

Relating to the authority of the governing body of a taxing unit other than a school district to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual's residence homestead.

Fiscal Notes

A fiscal note dated March 1, 2015 anticipates no fiscal implication to the State.  It adds, though, that the optional homestead exemption proposed by the bill would create a cost to taxing units other than school districts to the extent that the taxing units adopt the new exemption or allow the automatic exemption to go into effect. There would be no cost to school districts.

Bill Analysis

05/25/15 update:

An amendment was introduced and adopted on the Senate floor. It would prevent the governing body of a taxing unit that adopted an exemption under Subsection (n) for the 2014 tax year may not reduce the amount of or repeal the exemption for 10 years. Nevertheless, an exemption under Subsection (n) could be repealed if an exemption granted under Subsection (s) is an amount greater than $5,000.

A committee substitute was also adopted by the House committee. The CS for SB 279 would change the option authorizing the governing body of a taxing unit to adopt an exemption of a larger amount than $5,000 to condition it to the average market value of residence homesteads in the taxing unit in the tax year in which the adoption is adopted exceeding $25,000. The larger dollar amount could not exceed 20 percent of the average market value of residence homesteads in the taxing unit for that year.

The CS would remove the provision that would automatically grant this newly created exemption if the taxing unit hasn't adopted an exemption under Subsection (n).

In cases when an exemption under Subsection (n) would cease being granted but a property owner would remain entitled to it because the dollar amount of the exemption would be greater than $5,000 and the newly created exemption would have been adopted, the CS would make the exemption expire in the event of a change in ownership of the property or, if the property is owned by a qualifying trust and the trustor of the trust or a beneficiary of the trust has the right to use and occupy the property as the trustor’s or beneficiary’s principal residential property, there is a change in the trustor or beneficiary of the trust, respectively.

Finally, the CS would make the provision allowing an exemption under Subsection (n) to be repealed if an exemption granted under Subsection (s) is an amount greater than $5,000 expire December 31, 2024.

First chamber analysis:

Senate Bill 279 would amend Section 11.13 of the Tax Code related to residence homestead exemptions to give the option to taxing units other than school districts to adopt an additional exemption from taxation of $5,000, or more if the taxing unit decides so, of the appraised value of an individual's residence homestead. The governing body of the taxing unit would have to adopt the exemption before July 1 of the year for which the exemption would be granted.

If a taxing unit would opt not to adopt an exemption under subsection 11.13 (n), an individual would automatically be entitled to the new exemption mentioned above, as if it had been approved by the governing body of the taxing unit, unless the governing body of the taxing unit, before July 1, would elect not to adopt the new exemption.

If a taxing unit would cease to grant an exemption under subsection 11.13 (n), and would have adopted the new exemption created by Senate Bill 279, an individual who would have qualified for an exemption under subsection 11.13 (n) had the taxing unit not ceased to grant it, would be entitled to continue receiving an exemption under that subsection instead of the one that Senate Bill 279 would create if the amount exceeded the amount provided by the exemption Senate Bill 279 would create.

If passed, Senate Bill 279 would take effect on January 1, 2016, only if Senate Joint Resolution 20 is approved by voters. SB 279 is the enabling legislation for SJR 20.

Vote Recommendation Notes

05/25/15 update:

The changes that were made to Senate Bill 279 since we first reported on it do not fundamentally change the bill. The bill could still provide additional tax relief to property owners. We continue to support it.

The second chamber sponsor is Representative Eddie Rodriguez.

First chamber recommendation:

Under current law, Section 11.13 (n) of the Tax Code, a taxing unit can elect to grant an exemption from taxation of a percentage of the appraised value of an individual's residence homestead. If the percentage set by the taxing unit produces an exemption in a tax year of less than $5,000 when applied to a particular residence homestead, the individual is entitled to an exemption of $5,000 of the appraised value. The percentage adopted by the taxing unit may not exceed 20 percent though.

Senate Bill 279 would authorize a taxing unit other than a school district to provide an exemption from taxation of an individual's residence homestead as a flat dollar amount of $5,000 (or more if the taxing unit decides so), as the exemption providing for a percentage reduction has discouraged some entities from providing the exemption, according to the statement of intent for the bill. This bill would hence encourage taxing units to choose the method for an exemption that suits the taxing unit best.

Senate Bill 279 would favor property rights and a limited government since the legislation aims at giving an additional option to taxing units so that property owners may benefit from a higher exemption than currently allowed under law. As a consequence, we support Senate Bill 279.

We remain concerned though that without reducing the cap on the annual growth in property taxes, districts could increase the rate of property taxes in order to compensate for adopted exemptions. So we hope further action will be taken to stop the growth in local property taxes.