SB 1201 proposes changes to the way residence homesteads are appraised for property tax purposes. The bill allows appraisal offices to adjust the appraised value of a homestead, regardless of whether the property has been appraised for that tax year. It lowers the cap on annual increases in appraised value from 10% to 3%, providing homeowners with greater protection against rapid increases in property taxes. Additionally, if the market value of a homestead decreases, the bill requires the appraisal office to proportionally reduce the appraised value instead of keeping it artificially high. These changes aim to stabilize property tax burdens for homeowners by preventing large fluctuations in appraised values from year to year.