LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session March 23, 1995 TO: Honorable Ken Armbrister, Chair IN RE: House Bill No. 889, Committee on State Affairs as engrossed Senate By: Marchant,et al. Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 889 (Relating to a prohibition on merger transactions involving out-of-state banks and a prohibition on interstate branches.) this office has determined the following: The bill would prohibit interstate branch banking that otherwise will be permissible after June 1, 1997 under the federal Interstate Banking and Branching Efficiency Act (IBBEA). Under current franchise tax law, the provisions of the IBBEA would allow some multi-state banks operating in Texas to avoid some or all of their franchise tax obligations. The proposed bill would allow Texas to "opt out" of the IBBEA plan thereby avoiding a future loss in franchise tax collections. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Revenue Year Gain to General Revenue Fund 001 1996 $0 1997 0 1998 18,000,000 1999 18,000,000 2000 18,000,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Department of Banking, Comptroller of Public Accounts LBB Staff: JK, VS, DF