NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.



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F I S C A L I M P A C T R E P O R T





SPONSOR: Gonzales DATE TYPED: 02/27/01 HB 727
SHORT TITLE: Increase Property Tax Exemption for VETS SB
ANALYST: Taylor


REVENUE



Estimated Revenue
 Subsequent

Years Impact

 Recurring

or Non-Rec

 Fund

Affected

FY01 FY02
NFI



Duplicates/Conflicts with/Companion to/Relates to



SOURCES OF INFORMATION



Taxation and Revenue Department





SUMMARY



Synopsis of Bill



House Bill 727 would increase the veterans exemption against property taxes from $2,000 to $6,000.



Significant Issues



The Taxation and Revenue Department (TRD) writes that the veterans exemption of $2,000.0 is specified in the state constitution (Article 8, Section 5). They say that for the bill to have an effect, the constitutional provision would have to be changed.



FISCAL IMPLICATIONS



The bill would have no fiscal impact to the state or local governments according to TRD because tax rates generally increase to loss in tax base. This has the effect of shifting tax burden from individuals claiming exemptions to persons and businesses not provided the exemption.



According to TRD, 81 thousand veterans current take advantage of the exemption. Multiplying 81 thousand veteran property tax payers by the added $4,0000 exempted gives $324 million-the total amount of valuation that would be exempted. The statewide average residential property tax rate is $25.0 per $1,000 net taxable value). Multiplying the exempted base of $324 million by the average rate of 25/1000 implies that $8.1 million would be provided to veterans in additional property tax relief. This averages about $100 per veteran.



Note: These calculations assume that the number of veterans participating is static. Given the greater benefit that would be provided, more veterans may participate in the program.



ADMINISTRATIVE IMPLICATIONS



TRD reports that there would be no administrative impact.



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