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The House Committee on Ways and Means met on March 8, 2021 to discuss HB 115 (Rodriguez), HB 384 (Pacheco), HB 457 (Shaheen), HJR 25 (Shaheen), HB 535 (Shine), and HB 988 (Shine). The full agenda can be found here. Link to the meeting can be found here.

 

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 457 (Shaheen) – Relating to a local option exemption from ad valorem taxation by a county of a portion of the value of the residence homestead of a physician who provides health care services for which the physician agrees not to seek payment from any source, including the Medicaid program or otherwise from this state or the federal government, to county residents who are indigent or who are Medicaid recipients.

 

Rep. Shaheen

  • Healthcare reform bill with a property tax component
  • Existing healthcare programs are increasing in cost while doctor choice is declining
  • Physicians frustrated with Medicaid and reimbursement programs – 70% of doctors do not accept new Medicaid patients
  • Bill designed to increase doctor participation in Medicaid
  • Bill gives commissioner’s court an ability to implement property tax exemption up to 50% for doctors/clinics in exchange for them not receiving other reimbursement from Medicaid
  • Indigent healthcare programs could be established through this bill
  • Guerra – Is there a distinction in the bill between counties that have hospital districts and those that do not?
    • No any county can leverage the provisions
  • Button – In your experience as a former county commissioner, would this help counties?
    • Yes, would definitely help
  • Guerra – Can the exemptions apply to any physician or just doctors?
    • Can be any physician, up to the county to decide implementation
  • Cole – Are physicians precluded from all Medicaid reimbursements?
    • For patients on the county program, but not for other patients
    • Determined on a case-by-case basis
  • Noble – Would the portional exemption be just for the county homestead tax or others as well?
    • Just county portion, not affecting school or other property tax areas
  • Meyer – How would physicians report to districts and avoid HIPPA concerns?
    • Doctors would report to the county the patients they served, no information about medical needs are reported
  • Meyer – Would waivers be needed for doctors to provide those names to the county?
    • No, some counties already implement this without waivers for patients

 

Dr. Carrie DeMoore (Self) – For

  • About 178 physician volunteers in the program in home county
  • Generally rotate indigents off of the program after a short time
  • Physicians are not compensated for this program, able to refer patients to other facilities and programs
  • This bill will likely increase the desire of physicians to participate in Medicaid care without the concerns of reimbursement and financial issues
  • Cole – Do you have any estimates of what percentage of physicians would begin participating again?
    • No data on that
    • Can say that Medicaid costs more and causes physicians to lose money, this bill would reduce the financial disincentive of doctors taking Medicaid patients
  • Thierry – Wonderful can provide continuity and consistency of care
    • Yes, specialists can be referred patients by participating physicians for little to no cost
  • Martinez-Fisher – Our hospital district serves around 16-19 districts south of Bear County, this would only apply to them if they served Bear County residents. Could we be open-minded about broader regions, and making it possible for those physicians to participate as well?
    • Will look at that
  • Meyer – Do you have anything to add relating to the practicality of this program?
    • Can say that there is no HIPPA issues with reporting, works in the status quo

 

Rep. Shaheen

  • Open to adjusting the bill to include cross-county doctors and physicians
  • Murphy –You say the county may set up the process at a level they see as appropriate, are we going to see massive differences between counties as to the level of portional taxes?
    • We recognize that different counties have different budgetary needs
    • Would not see different physicians within a county with different rates, would be uniform across the county

Left pending without objection

 

HJR 25 (Shaheen) – Proposing a constitutional amendment authorizing a local option exemption from ad valorem taxation by a county of a portion of the value of the residence homestead of a physician who provides health care services for which the physician agrees not to seek payment from any source, including the Medicaid program or otherwise from this state or the federal government, to county residents who are indigent or who are Medicaid recipients.

Left pending without objection

 

HB 384 (Pacheco) – Relating to the period for which a school district’s participation in certain tax increment financing reinvestment zones may be taken into account in determining the total taxable value of property in the school district.

 

Rep. Pacheco

  • Would make it possible for the San Antonio Southside School District to build over 2,000 new affordable homes
  • Large influx of growth due to new factories and work opportunities
  • TIRZ in place now will expire in 2025
  • Need more time to ensure the area can benefit from current and future growth
  • Includes rebatements for SISD
  • Meyer – Is this bracketed to just your district?
    • Yes

 

Thad Rutherford, Southstar Communities – For

  • Current code would penalize school districts for participating in TIRZ extensions
  • This bill would allow extension without increasing taxes or penalizing the district
  • Southside ISD is a small and poor district, but growing
  • Currently 1,300 affordable homes built, have another 1,200 planned by 2032
  • New homes being built are priced between $140,000 and $180,000, in a planned community – lowest priced homes in the county
  • 80% of homes within the community attend Southside
  • Bill is a pathway to growing the population – key infrastructure
  • Rodriguez – How long is the extension?
    • Current TIRZ expires in ’25, will be extended to ’32, however if the development is completed early it will expire upon completion
  • Murphy – Why did you not finish the development on original schedule?
    • Original developer is no longer involved, we revised the timeline when we acquired the project
    • Revised plan for the community due to slowing real estate market resulting from 2009 recession, needed to extend the timeline
  • Murphy – TIRZ pays for public infrastructure, not houses?
    • Yes, only public infrastructure
  • Murphy – Original TIRZ agreement had set goals for 2025. Where is the development in relation to those goals?
    • About 20% behind original schedule
    • Needed to calculate with TIRZ for the length of the extension
    • Likely will not need full 7 years but we need to ask for it because it’s a one-time extension
    • District wants us to finish as soon as possible to gain the funding from tax revenue
  • Murphy – The developer entity has received fewer dollars due to the slowdown, so are you asking for more time to achieve the same dollar amount?
    • Yes, we have also reduced the increment that comes back to the developers, Increased amount to district
  • Guerra – Are any charter schools affected by this project and TIRZ?
    • There are many charter schools in the county, but none in our development zone
    • We were approached by these schools, but chose not to do those projects
  • Cole – Are there not commercial properties in the zone?
    • Yes, there are, great number of commercial investments in the region
    • The commercial aspect of our property is much more reduced, but we have some businesses in the development
    • Would like to see grocery store on or near development

 

Rep. Pacheco

  • Thanks committee
  • Meyer – What happened with the bill last session?
    • Vetoed by the Governor, but have since worked out the language that was of concern

Left pending without objection

 

HB 115 (Rodriguez) (Committee Substitute)– Relating to the exemption from ad valorem taxation of certain property owned by a charitable organization and used in providing housing and related services to certain homeless individuals.

 

Rep. Rodriguez

  • Previous limited extension was bracketing to the City of Austin and its ETJ
  • Limited extension allowed nonprofits to establish great work such as Mobile Loaves and Fishes
  • Helps meet growing need for housing and services
  • The restrictive bracketing language prevents other organizations from taking advantage of benefits
  • New bill removes single campus requirement so that organizations can receive the tax exemption at more than one property
  • Also allows for development in other municipalities where there is substantial support, such as Midland
  • Substitute for the bill has strong local support
  • Meyers – Just allowing expansion of multiple location charities?
    • Essentially yes, bracket harms growing organizations or larger organizations

 

Amber Fogarty, President of Mobile Loaves and Fishes – For

  • Homelessness has been impacting the state for years
  • MLF created Community First Village to lift homeless off the streets
  • Midland’s Field’s Edge is seeking to replicate our project, supportive of this
  • Average age of residents is 56, average age of death is 59, average time spent on streets is 10 years
  • MLF creates meaningful lives for those without hope
  • MLF is completely privately funded, this bill helps the state save money
  • New development phases will add 1,400 new homes to the project
  • Expansion will help us do even more work
  • Cole – How many homeless individuals do you service?
    • We have around 260 individuals in the community, currently constructing an increase to 530, then will add another 1,400
    • Total will eventually exceed 1,800
    • Submitting site planning this year, hope to begin construction next year
    • Raised more than $50 million so far for expansions
  • Cole – How will Midland benefit?
    • Rodriguez – original bill only applied to Austin, was very strictly bracketed
    • Field’s Edge in Midland is attempting to replicate the Community First Village in Midland, this bill will help them get the same tax benefit
    • Fogarty – We have a replication pathway for local organizations, have been working with FE in Midland to help them replicate Village

 

Rep. Rodriguez

  • Model works and is replicable
  • Sustainable way to address homelessness

Left pending without objection, Substitute withdrawn

 

HB 535 (Shine) (Committee Substitute) – Relating to the rate at which interest accrues in connection with the deferral or abatement of the collection of ad valorem taxes on the residence homestead of an individual who is elderly or disabled or a disabled veteran.

 

Rep. Shine

  • Working with stakeholders in Austin, we have come up with pro-taxpayer bills
  • Those defined as disabled may file an affidavit with the county to defer or abate tax collection
  • Changes interest rate to 3.5% on deferred or abated collections from 5%

 

Kevin Kieschnick, Nueces County Tax Assessor-Collector – On (Self and Tax Assessors-Collectors Association of Texas)

  • Meyers – Why are you for the bill?
    • Prefer fixed over floating rate
  • Software cannot support the floating rate as well or as efficiently as a fixed rate
  • Face significant time and expense to adjust software for floating rates
  • Less confusing to taxpayers, they can count on constant rates

 

Charles Reed, Dallas County Commissioner’s Court – On

  • Supports the bill, available for questions

 

Adam Hanes, Conference of Urban Counties – On

  • Fixed rate is a service to taxpayers
  • Martinez-Fisher – Why is the floating rate more difficult?
    • The initial programming of the variable rate is not difficult, but tracking changes is
    • The accounting for ongoing expenses for the process is difficult, means we would have to increase the interest rate to cover those expenses
  • Martinez-Fisher – Curious to see how it works

 

Rep. Shine

  • Original bill had an index, based off of 10-year Treasury
  • Fluctuation has been massive for this standard – creates confusion and varying rates
  • Discussion holds that 3.5% is a fair rate, and provides stability in the process

Substitute is withdrawn

Left pending without objection

 

HB 988 (Shine) – Relating to the authority of a property owner to bring suit to compel an appraisal district, chief appraiser, or appraisal review board to comply with a procedural requirement applicable to an ad valorem tax protest.

 

Rep. Shine

  • Called the “Remedy Bill” – part of a series of property tax legislation to continue fairness and equity
  • Have been working on this over the past year
  • Issues have been worked out in the substitute, but it is not yet available, will be bringing it back
  • Taxpayers need a system that is efficient and reliable
  • Appraisal Review Boards are a key component to perception of fairness of process of the system
  • There are instances where procedures employed by ARB are contrary to intent of property tax code
  • Currently no legal mechanism to require ARB or chief appraiser to follow appropriate hearing process
  • Bill would require Comptroller’s office to review compliance and procedural rules by ARB, allow taxpayer to file a complaint, expedited binding arbitration, etc
  • Worked this weekend on substitute that resolves much of the technical issues we found
  • Rodriguez – Who all is the group you are working with to negotiate substitute?
    • Tax assessor collectors, chief appraiser association, property tax consultants, schools, counties, and cities
    • Been working since 2017 on these issues, and we have been very successful in bring different individuals together to compromise and create good public policy

 

Ray Head, Texas Association of Property Tax Professionals– For

  • Supports bill as TAPTP and individually
  • From time to time find property owners are subjected to denials of their procedural rights by ARBs and appraisal districts
  • Comptroller has no authority to enforce the rules although it is charged with developing model hearing procedures
  • Needs to be a compliance reviews and remedies available to property owners and appraisal districts
  • Bill provides Comptroller, in additional to rule and procedural abilities, responsibility to examine ARB operations
  • If comptroller finds lack of compliance in ARB operations, the bill would allow them to order remedial action or remove Chair of the ARB, bill also provides a process for board of directors to remove the ARB chair
  • Bill also provides a low-cost process to resolve complaints if procedural right denied
  • 10 days to resolve the issue
  • If issue cannot be resolved in 10 days, the property owner can file for expedited arbitration
  • Virtually self-funded so not big cost involved to state
  • Legislation addresses need and void, contributes to make system more transparent, efficient, and cost effective

 

James Popp, Law Firm of Popp Hutchison – For

  • Been a property tax attorney for over 40 years – believes this is a very good bill
  • Have been meeting in group with 50-60 people on zoom, diverse group working together to improve bill/property tax system
  • Open to answer any technical questions

 

Alvin Lankford, Chief Appraiser for Williamson Appraisal District – For Substitute

  • Have been working with Rep. Shine and many stakeholders on the bill, appreciate work over the weekend that went into the bill
  • Agreement has been reached on all points of the substitute just waiting on substitute language to be drafted

 

Rep. Shine

  • Stakeholders involved in helping craft language and they have agreement
  • Murphy – Like the bill and idea of fairness. Is the significant change you anticipate with the substitute is a move to arbitration rather than a move to court?
    • Yes, pretty much it
    • Committee substitute will be reviewed for technical aspects, and will make sure it is all worked out before it is brought back to the committee

 

Left pending without objection