HBA-JLV H.B. 2738 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2738 By: Turner, Bob Ways & Means 4/5/2001 Introduced BACKGROUND AND PURPOSE The 59th Legislature provided a special valuation for land that is used for agricultural purposes and provided that the land is taxed according to productivity value, rather than market value. There was concern that as large cities expanded and the market values on rural land near the cities began to increase exponentially, farmers who were taxed at market value would be forced to sell their farms. The legislature later enacted provisions that made the productivity valuation of land easier for farmers to obtain. In order to qualify for the tax advantage of productivity valuation, property owners must ensure their land is devoted to agricultural use. Current law provides that if the use of land receiving a productivity valuation changes to a use which does not qualify for the special valuation, an additional tax must be imposed. The amount of the additional tax is the difference between the tax paid on productivity valuation and what the tax would have been if the property was taxed at market value for each of the preceding five years, plus a seven percent interest rate. Many believe that in smaller counties, the problems caused by the administration of the additional taxes exceed the revenue collected. House Bill 2738 provides that an additional tax and interest charges do not apply to an appraisal district established for a county having a population of 75,000 or less. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2738 amends the Tax Code to provide that additional taxes and charges for the change of use of agricultural land do not apply to land located in an appraisal district established for a county having a population of 75,000 or less. EFFECTIVE DATE September 1, 2001.