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Relating to the applicability of the law governing the provision of state aid to certain local governments disproportionately affected by the granting of ad valorem tax relief to disabled veterans.
No significant fiscal implication to the State is anticipated.
HB 125 would expand the current local government standards for areas disproportionately affected by the ad valorem tax relief for disabled veterans by redefining local government to include a municipality adjacent to or with extraterritorial jurisdiction located within two miles of the boundary line of a United States military installation.
This legislation is under consideration because so many special tax exemptions have been passed in previous sessions that some counties, particularly those with high populations of military veterans who have been the beneficiaries of many of these exemptions, are now having major budget problems. The unintended consequence of these exemptions has been to crash county budgets and now those counties want their budgets back-filled with state subsidies - essentially requiring other counties to make up for their tax losses.
When we oppose special tax carveouts for veterans or other preferred classes, and when we talk about carveouts causing unintended consequences, this is exactly the kind of thing we are warning about. Unintended consequences are not a phantom theoretical possibility; they are real and inevitable, which is the reason we advocate for a tax system that is low rate, broad based, and fair to all taxpayers without picking winners and losers.
We oppose HB 125 because Texans from the rest of the counties in the state should not be required to shoulder the tax burden for counties that have budget problems caused by special tax exemptions created by the legislature. The way to fix this problem is not to put the tax burden for these budget shortfalls on the rest of the state, it is rather to get rid of all special exemptions and reduce taxes across the board for all taxpayers.