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The House Committee on Ways & Means met on April 24 to take up a number of bills. This report covers bills concerning ad valorem, franchise, and sales & use taxes, including HB 1201 (Raymond), HB 3160 (Raymond), HB 3844 (Smithee), HB 313 (Howard), HB 3384 (Shine), HB 2456 & HJR 89 (Kacal), HB 983 (Parker), HB 905 & HJR 48 (Bernal), HB 631 (Hernandez), HB 2124 (Bailes), SB 1214 (Schwertner), HB 3256 (Dean), HB 3491 (Cole), HB 297 (Murr), HB 384 and HJR 29 (Bohac), HB 385 (Bohac), and HB 4108 (Sheffield).

 

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

HB 1201 (Raymond) Relating to an exemption from ad valorem taxation of real property owned by a charitable organization for the purpose of renting the property at below-market rates to low-income or moderate income- individuals or families.

  • Raymond – Bill extends existing charitable organization tax exemption to organizations providing services to low- and moderate-income families.

 

Elizabeth Alonso Villareal, NeighborWorks Laredo

  • For the bill.
  • Noble – Are you a 501(c)(3)?

 

CS withdrawn, HB 1201 left pending.

 

HB 3160 (Raymond) Relating to an election in certain municipalities to convert all or a portion of a sales and use tax originally adopted for the purpose of sports and community venues to a sales and use tax for economic development purposes.

  • Raymond – City of Laredo has asked to bring this legislation to prevent interruption in the collection of the tax. Bill authorizes the city of Laredo to hold an election for the conversion of its venue sales tax to a Type A corporation or Type B corporation sales tax for economic development purposes.

 

Martin Martinez, Laredo City Council

  • For the bill.

 

Noel Valdez, City of Laredo

  • For the bill.
  • Bill allows the city to present to the voters the ability to convert part or all of the existing sales tax to a Type A or Type B sales tax.

 

HB 3160 left pending.

 

HB 3844 (Smithee) Relating to the period for which certain property acquired by a charitable organization to provide low-income housing may be exempted from ad valorem taxation.

  • Smithee – Bill extends the time period that a charitable organization, like habitat for humanity, can hold a piece of undeveloped property from 5 years to 10 years.

 

Amy Parham, Habitat for Humanity Texas

  • For the bill.

 

HB 313 (Howard) Relating to a sales and use tax exemption for child and adult diapers.

  • Howard – Diapers are a medical necessity, not a luxury good. HB 313 would eliminate sales tax on child and adult diapers.

 

Holly McDaniel, Austin Diaper Bank

  • For the bill.
  • Burrows – How many diapers get distributed through the diaper banks?
    • About 9 million.
  • Burrows – What is the cost to distribute the 9 million diapers in Texas?
    • We average the cost at 30 cents per babies and 70 cents per adults.
  • Burrows – Are there more diaper banks coming to Texas?
    • The need is out there, but some communities cannot afford them.

 

Donovan Dekowski, Regency Integrated Health Service, Texas Healthcare Association

  • For the bill.
  • Diapers are a medical necessity. We are not taxed on medical supplies, so it doesn’t make sense that diapers are taxed.

 

HB 313 left pending.

 

HB 3384 (Shine) Relating to the authority of the comptroller to conduct a limited-scope review of an appraisal district located in an area declared by the governor to be a disaster area.

  • Shine – Bill would allow comptroller to do their part of HB 492.

 

Marya Crigler, Texas Association of Appraisal Districts

  • For the bill.

 

HB 3384 left pending.

HJR 89 (Kacal) Proposing a constitutional amendment to authorize a local option exemption from ad valorem taxation of a portion of the appraised value of the residence homesteads of certain volunteer first responders.

HB 2456 (Kacal) Relating to a local option exemption from ad valorem taxation of a portion of the appraised value of the residence homestead of certain volunteer first responders.

  • Kacal – Allows political subdivisions to exempt from ad valorem taxation in an amount not to exceed $15,000 for volunteer first responders. Gives local governments an opportunity to encourage local volunteers for their service.

 

Vernon Davis, Emergency Services District 2 Limestone County

  • For the bill.
  • Bill would help recruit and retain volunteer firefighters in Texas.

 

HB 2456 & HJR 89 left pending.

 

HB 983 (Parker) Relating to a franchise tax credit for enterprise projects for certain capital investments.

  • Parker – HB 983 reestablishes the franchise tax enterprise zone credit for certain capital investments in order to provide greater incentive for investment and job creation in the state.

 

Iain Vasey, Corpus Christi Regional Economic Development Corporation

  • For the bill.
  • This bill would help Texas land a large industrial project against Mississippi, which could be the largest deal in America for 2019.
  • HB 983 would help Texas be competitive against states like Mississippi and Louisiana.
  • Murphy – Are you saying the credit achieved is $6,900 dollars?
    • Yes, on a million dollars over a five-year period.
  • Murphy – and you think that would make someone go here instead of another state?
    • When we are talking about projects that are billions of dollars, we could be talking about a $69,000,000-dollar credit for a ten-billion-dollar project.

 

Philip Ramirez, United Corpus Christi Chamber of Commerce

  • For the bill.
  • This tools gives Texas the ability to compete against states like MS. and LA.
  • HB 983 creates an incentive to bring manufacturing jobs to Texas.
  • Martinez-Fischer – Have you worked with the Nueces delegation of the house of representatives on this?
    • We have spoken to a couple of senators and representatives about this.

 

HB 983 left pending.

 

 

HJR 48 (Bernal) Proposing a constitutional amendment authorizing the legislature to exempt from ad valorem taxation the total assessed value of the residence homestead of an unpaid caregiver of an individual who is eligible to receive long-term services and supports under the Medicaid program while the individual is on a waiting list for the services and supports.

HB 905 & (Bernal) Relating to an exemption from ad valorem taxation of the total appraised value of the residence homestead of an unpaid caregiver of an individual.

  • Bernal – HB 905 is designed to give tax relief to caretakers of severely disabled children. Purpose of the bill is to give a temporary property tax relief while people are on the waitlist for Star health, Star kids, Star plus, etc.
  • Cole – Are we adding state tax relief, or will it be local tax relief?
    • State relief.

 

Kyle Piccola, The Arc of Texas

  • For the bill.
  • There is a long waitlist for Medicaid waivers. This bill would be some type of relief while they wait to receive aid.

 

HB 905 & HJR 48 left pending.

 

HB 631 (Hernandez) Relating to exempting textbooks purchased, used, or consumed by university and college students from the sales and use tax for limited periods.

  • Rodriguez – HB 631 authorizes a one-week sales tax holiday to exempt textbooks purchased by university and college students from sales and use tax. The bill authorizes the comptroller to designate the appropriate week for the holiday in January and August of each year. Students must provide student identification to receive tax relief.

 

HB 631 left pending.

 

HB 2124 (Bailes) Relating to the treatment for ad valorem tax purposes of property that was erroneously omitted from an appraisal roll in a previous year.

  • Bailes – HB 2124 equalizes both real and personal property omitted on the appraisal roll, allowing for back taxes assessments to only go back 2 years, instead of currently allowed 5 years.

 

Terry Holcomb, Republican Party of Texas

  • For the bill.
  • Was impacted by supplemental tax bill for a porch that was built on their house before they bought it.

 

HB 2124 left pending.

 

SB 1214 (Schwertner) Relating to the sales and use tax exemption for certain aircraft.

  • Wilson – Currently, the agricultural exemption for aircraft is limited to 30-mile trip each way. SB 1214 would change that to interstate travel. This bill extends geographical limitations of travel.

 

SB 1214 left pending.

 

HB 3256 (Dean) Relating to the eligibility of an individual to be an employee of an appraisal district or to serve on the board of directors of an appraisal district.

  • Dean – HB 3256 prohibits a person from serving on an appraisal district board and on a governing body of a taxing entity. HB 3256 further prevents conflicts of interest by prohibiting an employee or officer of a taxing entity from also being employed by an appraisal district.
  • Cole – What is the conflict between serving on an appraisal review board and as a member of the city council?
    • This is the appraisal board, not the appraisal review board.
  • Cole – What does that mean?
    • That means that the appraisal board has an appraisal review board which a citizen can go before if they are in conflict with the appraisal district.
  • Cole – In small areas, you don’t have the number of people that you need to serve. I am also concerned with premises of conflicts of interest when there isn’t any.
    • As far as small counties go, I don’t buy into the fact that they can’t find qualified people that cannot/want do the job. As for the premises, citizens have issues with going in front of the appraisal board where elected officials are part of the taxing entity.
  • Burrows – In this committee we have heard that there is a lack of trust in the appraisal process. Doing good things to make sure the public trust is there is important, which is the intent of the bill.
    • I agree, it is important that to have that trust.
  • Cole – Is this a requirement that citizens sit on the appraisal board, because I could agree with that.
    • Yes, it is.

 

Mark Ramsey, self

  • For the bill.
  • Conflicts of interest do not necessarily have to be a real conflict, but we need to have a way to close appearances/opportunities for conflict.

 

HB 3256 left pending.

 

HB 3491 (Cole) Relating to a sales and use tax exemption for taxable items used to assist persons with an intellectual or developmental disability.

  • Cole – HB 3491 would expand the list of sales and use tax exemptions for individuals with intellectual or developmental disabilities.

 

HB 3491 left pending.

 

HB 297 (Murr) Relating to the elimination of certain property taxes for school district maintenance and operations and the provision of public education funding by increasing the rates of certain state taxes.

  • Murr – HB 297 proposes to abolish M&O property taxes for schools across the state. The replacement revenue for this proposal starts with sales tax.
  • Burrows – What would the new sales tax be under this proposal?
    • It would be about 12 cents.
  • Burrows – That is before the local option?
  • Burrows – We could dedicate the local option to this.
    • You could do a lot of things. I want us to be creative on this.
  • Burrows – Essentially, if we don’t expand the base, we are doubling the amount of sales tax from the states levying.
  • Burrows – If we expand it to services, how many pennies can we buy down from that 12 cents?
    • I would defer you to expert witnesses for that.
  • Burrows – Are you worried about the local control left with the ISDs if we eliminate this?
    • They still have local control over bonds and elections.
  • Cole – If we went to a 12%, people stop buying.
    • I don’t disagree, we would have to find a sweet spot for this bill.

 

Roy Morales, SREC SD13

  • For the bill.

 

Terry Holcomb, Republican Party of Texas

  • For the bill.
  • We need tax relief, but we do not want to put the local government into this.

 

Terri Hall, self

  • For the bill.
  • Advocated for property tax relief.
  • Cole – When you have bond elections, do you support those?
    • Not always, most of the time I vote no.

 

Mark Ramsey, RPT Legislative Priorities Committee

  • For the bill.
  • Only four bills have met our standards as part of our property tax legislative priorities. This bill is one of the four, the other three do not seem like they will pass.

 

Tom Glass, self

  • For the bill.
  • Agrees with eliminating m&o and fixing robin hood system.

 

Murr closes

  • Cole – Concerned about making decisions that will impact local entities differently. Advocated for transparency and letting the voters decide what their money will go towards.

 

HB 297 left pending.

 

HJR 29 (Bohac) Proposing a constitutional amendment to exempt from ad valorem taxation the total market value of the residence homesteads of certain elderly persons and their surviving spouses.

HB 384 (Bohac) Relating to an exemption from ad valorem taxation of the total appraised value of the residence homesteads of certain elderly persons and their surviving spouses.

  • Bohac – HB 384 seeks to exempt anyone 80 years old or over from all property taxes if they have owned their home for 10 years. The exemption would automatically extend to a surviving spouse. Bill would also entitle school districts with additional state aid.

 

Terry Holcomb, Republican Party of Texas

  • For the bill.
  • Recommends lowering the age to 60.

 

Mark Ramsey, RPT Legislative Priorities Committee

  • For the bill.
  • Recommends lowering the age.

 

Roy Morales, SREC SD13

  • For the bill.
  • Bill helps elderly pay for health.

 

HB 384 and HJR 29 left pending.

 

HB 385 (Bohac) Relating to a sales tax exemption for certain items sold during a limited period.

  • Bohac – HB 385 raises $100 sales price limit backpacks, clothing, etc. to $200. Bill would also add a complete sales tax exemption for personal computers, tablets, e-readers and other technology that is essential in the classroom. Sales tax exemption for technology is $750.

 

HB 385 left pending.

 

HB 4108 (Sheffield) Relating to the required payment of taxes by an owner of a property used for nuclear electric power generation who appeals certain ad valorem tax determinations.

  • Wray – HB 4108 intends to address inequity in situations where one property constitutes the majority of tax revenue for a county, and the appeal of that property value to district court causes shortages in revenue.

 

Ray Reynolds, Glen Rose Medical Center

  • For the bill.
  • Shared experience where they faced financial pressure from an entity that was a major tax entity in the county.

 

Danny Chambers, Somervell County Judge

  • For the bill.
  • County experienced a shortage in city resources because one entity was 75% of their tax revenue.

 

James LaBas, Association of Electric Companies of Texas

  • Against the bill.
  • Cannot support legislation that selects out two companies in Texas.
  • Burrows- Would you mind discussing how the penalty and interest element works towards the disputed taxes? How the process works.
    • It is a 24% combined penalty and interest.
    • If you are wrong, then it has to come back up and it accumulates.
  • Burrows- That is a pretty big number. The two entities received millions from the powerplant.
    • It was billions.

 

Kevin Taylor, Somervell County Water District

  • For the bill.
  • Burrows – Your county had a reliance on a single property.
    • The plant represents 72% of our value.
    • This puts pressure on the CAD to arrive at a value.
    • The sooner rather than later.
  • Noble – You provide water for the area, correct?
  • Noble – Do you charge for the water?
  • Noble – Does this nuclear plant pay you for water including the tax payment?
  • Noble – Are they a significant water user as well?
    • The plant uses 1 million gallons/year.

 

Brad Watson, Vistra Energy

  • Against the bill.
  • This bill targets two structures that forces the tax payer to pay disputed and undisputed tax upfront.
  • Burrows – What kind of bump did you have from the previous years?
    • I would have to look at the valuations.
    • They did not come down from 2008.
  • Burrows – Constituents were saying the prices were going up.
    • The plant’s value has come down.
    • We use an income-based model.

 

HB 4108 left pending.