As is required by the Texas Constitution, lawmakers passed a balanced budget, and Comptroller Susan Combs has certified that it is indeed balanced. This is the only piece of legislation that has to pass during a legislative session, and this time around it was comprised of five different bills, Senate Bill 1 (budget), House Bill 6 (transparency), House Bill 7 (System Benefit Fund), House Bill 1025 (supplemental appropriations), and Senate Joint Resolution 1 (requires voter approval in November 2013 elections for funding water projects from Rainy Day Fund). General revenue spending is up $7.5 billion (8.6%) with most of the new money going to public education and Medicaid.
The Texas Association of REALTORS® identified this issue as its top legislative priority for 2013. With the passage of the aforementioned Senate Joint Resolution 1, Texans have the opportunity to secure the state’s water supply for decades. If voters approve of this measure in November, it will make historic strides in Texas’s future water planning and sustainability, all while not imposing additional fees or taxes for Texans.
- Lawmakers made broad reforms to public education:
- Five (5) end-of-course exams, instead of fifteen (15)
- Flexible “endorsement” plans, like Business and Industry or STEM (Science, Technology, Engineering, and Math), as a specialty on top of foundational courses
- Charter schools authorized to expand
- TEA granted greater authority to crack down on low-performing charter schools
Property tax and appraisal reform
For years, Texas REALTORS® have advocated for a property-appraisal and taxation process that is more transparent and equitable. There were a number of property tax and appraisal-reform bills that have been signed in to law. Chief among these were Senate Bill 1510, which dramatically simplifies the tax notice jurisdictions must provide and House Bill 585, which is an “omnibus” appraisal-reform bill.
House Bill 500 reforms the franchise tax and provides an across-the-board tax cut of 5% phased in over two years (2.5% first year and 5% second year). The bill also effectively expands the small-business exemption by replacing the $1 million small-business exemption with a guarantee of at least a $1 million deduction from total revenue. Under this bill, a business would deduct the greater of $1 million, 30% of total revenue, cost of goods sold, or compensation from total revenue.
Some other interesting provisions:
- Provides that subcontractor payments related to real-property improvements and remediation projects can be deducted from total revenue
- Provides that new entities to Texas may deduct relocation costs in the first filed franchise tax return
- Creates a new tax credit for certified rehabilitation of certified historic structures only for returns filed for report year 2014
Property tax lenders
Senate Bill 247 addresses regulation of property-tax lenders, adding some positive consumer-protection provisions and addresses the unlicensed (and very lucrative) secondary market. The new law forbids the sale, transfer, assignment, or release of rights associated with a property-tax lien to a person not licensed by the Office of Consumer Credit Commissioner. Additionally, SB 247 removes the non-judicial foreclosure authority property-tax lenders utilize. Other provisions include enhanced disclosure and the prohibition of “evergreen” loan-renewal provisions, which enable lenders to pay a property-owner’s taxes in subsequent years, even if the taxes are not delinquent.
83rd Special Legislative Session
At time of publication, Governor Perry called a special legislative to cover the topics of: redistricting, abortion restrictions, transportation and criminal sentencing for teenagers.
The Texas Association of REALTORS® supports dedicated, permanent and sustainable funding for a statewide, multi-modal transportation system, but does not take a position on additional special session agenda items.