LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 2, 1995



 TO:     Honorable Tom Craddick, Chair          IN RE: Committee Substitute
         Committee on Ways & Means                              for House
         House of Representatives               Bill No. 2627
         Austin, Texas









FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
2627 (relating to administration and collection of the franchise
tax) this office has determined the following:

The bill would change the calculation method determining the
franchise tax liability of banks, savings and loan associations
would be unaffected.  The new method would base the tax upon
three factors:  receipts, property, and payroll; the current
basis is gross receipts.

The bill would also codify current Comptroller rules relating to
the deductibility of interest income from federal securities and
obligations.

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 from  General
                     Revenue Fund 001 
                                      
          1996             $11,200,000
                                      
          1997              11,700,000
                                      
                                      
                                      

        1998                29,592,000

        1999                31,706,000
        2000                33,880,000



       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:   Comptroller of Public Accounts
          LBB Staff: JK, CT, DF