LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 3, 1995 TO: Honorable Rene O. Oliveira, Chair IN RE: House Bill No. 2065 Committee on Economic Development By: Oliveira House of Representatives Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 2065 (relating to enterprise zones) this office has determined the following: The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The bill would require the Department of Commerce to prepare a cost-benefit analysis of the enterprise zone program on or before December 1 of each even-numbered year. The bill would require the State Auditor's office to submit the cost-benefit analysis and comments to the governor, the lieutenant governor, and the speaker of the House of Representatives. The bill would require the Office of the Attorney General to certify that an enterprise zone area is an area that has suffered from substantial economic hardship caused by significant and repeated criminal activity committed by gang members. The bill would limit the number of businesses that may be designated enterprise projects to 65 during any biennium. The Sales Tax Chapter of the Tax Code would be amended to allow an eligible enterprise project a refund of state sales taxes paid on purchases of labor for remodeling, rehabilitating, or constructing a structure; and electricity and natural gas. The portion of the code which provides for the rebate, refund, or payment of 100 percent of state sales and use taxes and 100 percent of state hotel occupancy taxes paid by a qualified hotel project would be repealed. The bill would eliminate references to qualified hotel projects in the Texas Enterprise Zone Act. An enterprise project designated under Chapter 2303, Government Code, after August 31, 1995 would not be eligible to receive a state sales tax refund or a reduction in state franchise taxes before September 1, 1997. Provisions of the bill affecting sales and used tax refunds would have no significant fiscal implication to the state. Such refunds have already been incorporated into the Comptroller's Biennial Revenue Estimate. 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 Probable Cost to Change in Year Administrative the State Number of State Cost Auditor's Employees from to the Office of Office Out of FY 1995 the General Revenue Attorney General Fund 001 Out of General Revenue Fund 001 1996 $139,118 $12,375 2.0 1997 133,812 2.0 1998 133,812 12,375 2.0 1999 133,812 2.0 2000 133,812 12,375 2.0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. The fiscal implication to units of local government cannot be determined. Source: Comptroller of Public Accounts, Department of Commerce, Office of the Attorney General, State Auditor's Office LBB Staff: JK, VS, RR