Bill Caption
05/25/15 update:
Proposing a constitutional amendment authorizing the governing body of a political subdivision other than a school district to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the market value of an individual's residence homestead and authorizing the legislature to prohibit the governing body of any political subdivision that adopts an exemption from ad valorem taxation of a portion, expressed as a percentage or a dollar amount, of the market value of an individual's residence homestead from reducing the amount of or repealing the exemption.
First chamber caption:
Proposing a constitutional amendment authorizing the governing body of a political subdivision other than a school district to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the market value of an individual's residence homestead.
Fiscal Notes
A fiscal note dated March 1, 2015 anticipates no fiscal implication to the State other then the cost for publication of the resolution, which is $118,681.
It adds that the optional homestead exemption proposed in the constitutional amendment would create a cost to local taxing units other than school districts to the extent that the local taxing units adopt the new exemption or allow the automatic exemption to go into effect. The number of local taxing units that would adopt the new exemption or allow it to go into effect automatically cannot be predicted. Similarly, the amount at which a local taxing unit would set the exemption is unknown. Consequently, the cost to these local taxing units cannot be estimated.
Bill Analysis
05/25/15 update:
An amendment was introduced and adopted on the Senate floor. It would prevent the governing body of a political subdivision that adopted an exemption under Subsection (e) or (n) from reducing the amount of or repealing the exemption. Additionally, it would provide that if the legislature was to allow by general law the governing body of a political subdivision to repeal an exemption under subsection (e), an individual who would have qualified for an exemption under subsection (e) had the taxing unit not be repealed, would be entitled to continue receiving an exemption under that subsection instead of the one under subsection (n) created by Senate Joint Resolution 20 if the amount exceeded the amount provided by the exemption Senate Joint Resolution 20 would create.
A committee substitute was introduced in the House committee. The CS for SJR 20 would change the option authorizing the governing body of a political subdivision to adopt an exemption of a larger amount than $5,000 to condition it to the average market value of residence homesteads in the political subdivision 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 political subdivision for that year.
The CS would remove the provision that would automatically grant this newly created exemption if the political subdivision hadn't adopted an exemption under Subsection (e). It would also remove the language from the adopted amendment saying that the Legislature would have to authorize a governing body to cease providing an exemption under subsection (e), but would keep the rest of the provision; in that case, 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.
First chamber analysis:
Senate Joint Resolution 20 would amend the Texas Constitution 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) of the Tax Code, an individual would automatically be entitled to the new exemption created by SJR 20 and SB 279, 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 have elected not to adopt the new exemption.
If a taxing unit would cease to grant an exemption under subsection 11.13 (n) of the Tax Code, and would have adopted the new exemption created by SJR 20 and SB 279, an individual who would have qualified for an exemption under subsection 11.13 (n) of the Tax Code 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 SJR 20 and SB 279 would create if the amount exceeded the amount provided by the exemption SJR 20 and SB 279 would create.
Senate Joint Resolution 20 would have to be 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 Joint Resolution 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 allows a homeowner to receive a homestead tax exemption of $5,000 off of the taxable value of their residence homestead.
Senate Joint Resolution 20, along with its enabling legislation SB 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 resolution. This bill would hence encourage taxing units to choose the method for an exemption that suits the taxing unit best.
Senate Joint Resolution 20 and its enabling legislation SB 279 would favor property rights and a limited government since they aim at giving an additional option to taxing units so that property owners may benefit from a higher property tax exemption than currently allowed under law. As a consequence, we support Senate Joint Resolution 20.
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.
