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Proposals to Review Property Tax Exemption Filed

Ender Reed
Senior Policy Advisor

Every session, legislators file bills concerning ad valorem tax exemptions, and this session is no different. The bills, while beneficial to certain groups in a county, can increase the tax burden on other groups. An article by the Temple Daily Telegram discussed the problematic tax shifts created by tax exemptions by looking at the effect of a law that allows certain disabled veterans to receive homestead exemptions based on their disability rating. In 2011, statewide, 36,309 veterans were classified as 100 percent disabled and were absolved from paying taxes on their homes. That took $3.8 billion off of property tax rolls. In 2012, in Bell County, there were 300 new tax exemptions for 100 percent disabled veterans, resulting in $1.36 million of property tax value being taken off Bell County’s tax rolls. The effect is that other taxpayers in the county may see a rise in their property taxes to pay for the exemptions, shifting the tax burden from some members of the community to others.

One bill that may benefit counties is HB 780 by Rep. Farias (D-San Antonio), which mandates that the Legislative Budget Board conduct a comprehensive study of the exemption issue. The study will include an estimate of the financial impact of adding more exemptions, as well as the impact of the current exemptions on the services that counties will be able to provide in the future. Another bill that may be useful in elucidating the impact of property tax exemptions on counties is SB 106 by Sen. West (D-Dallas), which requires the Sunset Advisory Commission to study and make recommendations on a broad array of tax preferences within the property tax system. Some of the tax preferences that the commission would be mandated to review and make recommendations about include abatements, exemptions, credits, and limitations on appraised value. The commission’s report would be due to the Legislature before the beginning of the next legislative session.