The House Committee on Ways and Means met on April 20th to continue their discussion on certain tax exemptions. The following property tax exemptions were reviewed:

§11.13   Residence Homestead:  Specifically local school district option.


§11.146  Mineral Interest Property Valued at Less than $500


§11.16   Farm Products


§11.161  Implements of Husbandry


§11.23   Miscellaneous Exemptions:  Specifically – Nature Conservancy of Texas, County Fair Associations, Congress of Parents and Teachers, Private Enterprise Demonstration Associations, and Bison/Buffalo/and Cattalo


§§11.251, 11.437 Freeport Property & Cotton Stored in a Warehouse


§11.253(b)Tangible Personal Property in Transit


§11.27   Solar and Wind Energy Devices


§11.271  Offshore Drilling Equipment Not in Use


§11.29   Inter coastal Waterway Dredge Disposal Site


§11.32   Certain Water Conservation Initiatives


§11.33   Raw Cocoa and Green Coffee Held in Harris County


§§23.41, 23.52, 23.73, and 23.9803 Special Appraisal for Agricultural Open-space Land and Timber Land


Another exemption reviewed was the §11.31 Pollution Control Property / Proposition 2.  In 1993, the exemption was approved by the Legislature. There are 33 other states that have similar exemptions. This program determines whether a facility uses certain property, in whole or in part, for pollution control in order for the facility to apply for a property-tax exemption from its local appraisal district. 


Chairman Rene Oliveira pointed out that opponents of this exemption would argue there would be a huge loss in tax revenue illustrated by the Comptrollers statement in 2009 that Proposition 2 resulted in a tax loss for the school districts of $300 million. Certain funding lost from exemptions will make its way back to the districts from state general revenue.


Oliveira was concerned the program is not being enforced as the enabling legislation was originally written. During the 81st Session, legislation passed to establish an advisory committee to review such concerns. The committee has met four times over the last two months and has adopted a resolution addressing “at the site” requirements which is tentatively expected to be in place by December of this year. 


There are 18 specific items that are considered pollution control devices that the Texas Commission on Environmental Quality (TCEQ) determines if the applicant meets the qualifications. The TCEQ determines the percentage of pollution control for the applicant but does not determine the actual value of the tax exemption.


Tim Reedy with the TCEQ Environmental Law Division and Miner Hibbs with the TCEQ Chief Engineers Office spoke on the program.  Hibbs pointed out since 1994, TCEQ has processed over 14,000 applications; a total value of $29 billion in property. Of those applications, a very small percentage have been for properties that are both production and pollution control.


Reedy spoke on the request by Valero Energy Corp. for a 100% positive use determination for pollution control equipment to refinery equipment. The agency’s executive director recommended that the request be denied because the rules require the equipment to provide an on-site pollution control benefit. But that decision was appealed by Valero and in January two TCEQ commissioners directed the agency to reconsider. That decision is still pending as staff is waiting for Valero to file supplemental information that they are providing a partial environmental benefit at the site.


Lisa Dawn-Fisher with the Texas Education Agency (TEA) noted that, like the other exemptions discussed during the hearing, any lost operating revenue for the districts would be made up from general revenue. The potential cost to the districts would be a loss in revenue from enrichment funding and possible lost revenue to make bond payments.  The actual impact can only be determined by reviewing the percentage of the tax base that is exempted.