LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 4, 1995



 TO:     Honorable Tom Craddick, Chair          IN RE:  House Bill No. 3155
         Committee on Ways & Means                      By: Coleman
         House of Representatives
         Austin, Texas







FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
3155 (Relating to tax credits for real property contributed to
institutions of higher education.) this office has determined the
following:

The bill allows a state university to acquire real estate, which
would otherwise not be acquired due to insufficient funding
sources, in exchange for a state sales or franchise tax credit
granted to the property owner by the Higher Education
Coordinating Board.

The bill allows a university to seek approval from the Higher
Education Coordinating Board to obtain the desired real estate. 
The board could approve the acquisition if the real estate were
included in the university's master plan as a desired
acquisition, if the real estate were fairly priced, and if the
university otherwise lacked sufficient funds to purchase the
property.

Upon board approval, the comptroller would be required to grant
the property owner a franchise or sales tax credit.  The credit
would be taken in equal increments over five years (20 percent of
the total credit per year) and could be carried over up to 10
years.

To the extent that real property previously taxed by local
jurisdictions becomes the property of a state institution of
higher learning and, thus, tax exempt; local property tax rolls
and tax payments would be reduced.  The loss of local property    




taxation would result in an adverse effect upon local educational 
financing.

The revenue estimates were developed by the Comptroller's Office
and reflect the minimum amount of expected cost to the state. 
Actual revenue losses could be dramatically greater.

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     Administrative  
          Year    Loss from  General     Cost to the    
                   Revenue Fund 001     Comptroller's   
                                         Office from    
                                       General Revenue  
                                           Fund 001     
                                                        
          1996             $5,459,000            $83,322
          1997              5,459,000                   
                                                        
          1998              5,459,000                   
                                                        
          1999              5,459,000                   
          2000              5,459,000                   
                                                        
                                                        
                                                        
       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
          LBB Staff: JK, CT, DF