84(R) - 2015
Proposing a constitutional amendment authorizing the legislature to exempt from ad valorem taxation real property leased to certain schools organized and operated primarily for the purpose of engaging in educational functions.
A fiscal note dated April 20, 2015 indicates that the resolution alone would have no fiscal implication to the State other than the cost of publication (which is $118,681). Any additional fiscal implication would be attributable to the corresponding enabling legislation.
The fiscal note for the enabling legislation, SB 545, indicates that passage of the bill would grant a property tax exemption on the real property a person owns and leases to a qualified school under certain conditions. To the extent that public schools with taxing authority lease the property, there could be a gain to those school districts if the school district property tax loss was more than offset by the gain from the facilities rent reduction based on the total property tax reduction provided by the bill. To the extent that schools without taxing authority lease the property there would be a tax revenue loss to the public school districts with taxing authority and a cost to the state through the operation of the school funding formula.
Senate Joint Resolution 30 would amend the Texas Constitution to provide for an exemption from ad valorem taxation of real property leased to and used by certain schools organized and operated primarily for the purpose of engaging in educational functions.
If passed, Senate Joint Resolution 30 would have to be approved by voters.
Senate Bill 545 is the enabling legislation for Senate Joint Resolution 30.
Vote Recommendation Notes
An amendment introduced and adopted on the Senate floor would specify that new exemption from ad valorem taxation would be for "any real property that is leased to a person for use as a school that operates under a charter granted by the State Board of Education, the Commissioner of Education, or any other state officer that is qualified as provided by Section 11.21, Tax Code, or a successor statute."
We continue to support SJR 30.
First chamber recommendation:
Current law provides that a person is entitled to an exemption from taxation of buildings and tangible personal property that the person owns and uses for a school (Section 11.21 of the Tax Code).
Senate Joint Resolution 30, along with its enabling legislation SB 545, would provide the same exemption for a person who owns real property and leases it to a school organized and operated primarily for the purpose of engaging in educational functions.
Enabling legislation SB 545 would require that the reduction in the amount of taxation provided by this exemption be fully reflected in an equal reduction in the rent of the lease to the school.
The functional effect of this constitutional amendment and its enabling legislation would be to reduce facilities costs for charter schools which are public schools that do not receive funding in the same way as traditional public schools do. This goal would be achieved by reducing the property tax for the property owner and requiring that the benefit of the tax reduction be passed on to the renter, in this case a charter school.
Traditional public schools have taxing authority and do not have to pay property taxes. The practical result of this legislation would be to treat charter schools and some private schools the same as traditional public schools by removing the tax burden they bear when they rent facilities from private property owners. As a result we support this legislation on limited government grounds.