Disabled vet property tax bill passes House, headed to Senate

The bill passed with a vote of 136-9 Thursday, though the count is not yet official, according to the state’s website.

Shine’s bill is one of a few that have been introduced in the past couple of legislative sessions aimed at aiding cities and counties that lose revenue as a result of the property tax exemptions awarded to 100% disabled veterans.

Property taxes are the primary source of revenue a city or county has, and the passage of the 100% disabled veterans property tax exemption caused an unintended consequence that resulted in cities and counties losing money that they need to provide better services.

A few years after the state Legislature approved the exemption program, it approved the reimbursement program, which ensured that cities and counties that abut a military installation and lost a certain percentage of tax revenue from the exemption, would receive a slight reimbursement from the state.

In his freshman term in 2019, Shine’s Bell County counterpart, Rep. Brad Buckley, R-Salado, secured more funding for the reimbursement program, but it wasn’t nearly enough, and he worked diligently in his second term to pass bills that would increase said funding and increase the number of cities that qualified for reimbursement — all of which failed in the 87th Legislative Session.

Shine’s House Bill 1613 solves both dilemmas — provided it passes the Senate and is signed by Gov. Greg Abbott.

Shine said there are 15 military installations in Texas that provide about $120 billion to the state’s economy. He explained that for the last 13 years, communities that surround the military installations have been disproportionately impacted.

“I’ll give you an example: 29 of the most impacted cities account for 20% of the statewide loss — out of 1,200 cities,” Shine said. “And 27 counties — out of 254 — account for 50%.”

Currently, only five cities — including Killeen and Copperas Cove — receive funds in return from the state. The current law stipulates that only cities that share a border with a military installation qualify for reimbursement.

HB 1613 takes geography out of the equation and simply states any city or county that loses 1% or greater of its property tax revenue to the exemption qualify for reimbursement from the state.

Trust Fund

So where is the money coming from?

Originally, the money was projected to come from sales tax revenue brought in by vendors on military installations as well as from online purchases made by people on a military installation.

Working for around a year and a half on the bill, Shine said the state Comptroller’s Legislative Budget Board initially anticipated the funding pool would amount to up to $300 million per biennium, or about $140 million to $150 million per year.

The day before a committee hearing on the bill, which took place April 10, the Legislative Budget Board informed Shine the actual figure would be around $46 million per biennium.

The critical error drew an apology from the Comptroller, Glenn Hegar, Shine said.

In response, Hegar said the Comptroller’s office would set up a trust fund and directly fund the cities and counties outside of the state Treasury. Shine said that should the bill pass the Senate and be signed by the governor, the Comptroller’s office would deposit $200 million into the trust fund at the beginning of each fiscal year starting on Sept. 1.

Reading directly from the substituted funding mechanism in his bill, Shine said this about the trust fund: “The Disabled Veteran Local Government Assistance Trust Fund is established as a trust fund outside the state Treasury. The fund consists of money deposited to the credit of the fund under Section 151.801 of the Tax Code and other money deposited to the credit of the fund at the direction of the Legislature. The Comptroller shall administer the fund as trustee on behalf of qualified local governments. The Comptroller shall allocate the money deposited to the credit of the fund and for the purpose of making payments to which the local governments are entitled under this section, and the Comptroller may make a payment from the fund to a qualified local government without the necessity of an appropriation.”