84(R) - 2015
Vote No; Amend
Proposing a constitutional amendment authorizing the governing body of a political subdivision to adopt a local option exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the market value of real property of a business that employs honorably discharged veterans.
A fiscal note dated April 10, 2015 anticipates no fiscal implication to the State other than the cost of publication, which would be $118,681.
It indicates that to the extent that local taxing units adopt the proposed optional exemption for property used by businesses that hire veterans, the resolution would create a cost to local taxing units. The future actions of local taxing units in adopting the proposed new exemption cannot be predicted; consequently the cost cannot be estimated.
The fiscal note nevertheless gives the example of the estimated cost to local taxing units if 10 percent of Texas business real property parcels were to be granted the proposed exemption at $15,000:
|Fiscal Year||Gain/(Loss) to Special Districts||Gain/(Loss) to Cities||Gain/(Loss) to Counties||Gain/(Loss) to School Districts|
|2019||(2,202,000) ||(3,120,000)||(3,174,000) ||(10,390,000)|
|2020||(2,242,000)||(3,173,000) ||(3,235,000) ||(10,563,000)|
Senate Joint Resolution 60 would amend the Texas Constitution to authorize governing bodies of political subdivisions to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the market value of real property that a person owns and uses to operate a business that employs at least one honorably discharged veteran.
The constitutional amendment proposed by Senate Joint Resolution 60 would have to be approved by voters.
SB 1821 is the enabling legislation for Senate Joint Resolution 60.
Vote Recommendation Notes
Senate Joint Resolution 60, along with its enabling legislation SB 1821, is intended to encourage the hiring of veterans by allowing for local taxing units to decrease the property tax burden of businesses that hire veterans.
We understand that it can be particularly difficult for a veteran to find a job and that this bill represents an attempt to remedy the problem. Additionally, decreasing the burden that property taxes give to businesses would give them more flexibility to possibly create jobs. Even while this exemption is optional though, it has the potential of resulting in unintended consequences.
Businesses located where this exemption would be adopted would be encouraged to hire as veterans with the objective of decreasing their property tax burden. This would create distortions on the job market, favoring one category of workers above others.
A good, existing example of unintended consequences of such special exemptions lies in Senate Bill 1368
which recently passed the Senate. SB 1368 was put forward to remedy the revenue losses caused by tax 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. Under the provisions of SB 1368, taxpayers from across Texas who already pay their own property taxes will also have to pay for the lost tax revenue created by the special veterans tax breaks addressed by the bill.
Low taxes applied broadly and more equitably enable businesses and individuals to keep more of the wealth they create or the money they earn. They can then invest this money that can be used to create more jobs, increasing the number of opportunities for everyone, including veterans.
We do not support increasing the opacity of the tax code by adding additional exemptions for special groups of people or businesses. The taxpayers of this state should not be on the hook for subsidizing the hiring of any particular group of people, no matter how highly we all hold them in regard. This essentially creates a new socialized entitlement program for a preferred class of people which everyone else will inevitably have to pay for.
For these reasons we oppose this legislation on the grounds that it abridges our free markets and limited government principles.
The only redeeming provision of this legislation is that it would be optional for local governments to participate in. We suggest legislators adopt an amendment to stipulate that the Texas Legislature may not appropriate revenues to local governments for the purpose of making up for ad valorum tax revenue that was lost due to their having implemented the tax breaks authorized by this legislation.
By amending the bill this way, any revenue losses incurred by a political subdivision that offers the subsidy would have to be made up by the tax base of the political subdivision that offered the subsidy in the first place; making it an entirely local issue.