LEGISLATIVE BUDGET BOARD
			Austin, Texas


			  FISCAL NOTE
		74th Regular Session


May 27, 1995

TO Honorable Bob Bullock Honorable Pete Laney
: Lieutenant Governor Speaker of the House
Senate Chamber House of Representatives
Austin, Texas Austin, Texas

IN RE: Conference Committee Report for
Senate Bill No. 345

FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No. 345 (Relating to tax abatement,
reinvestment zones, and the refund of certain taxes by the comptroller to reimburse certain taxes
paid on property in a reinvestment zone; and to the creation of development districts in certain
counties.) 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 amend Chapter 111, Tax Code, by requiring the Comptroller to issue a refund of
state sales and franchise tax payments paid by a taxpayer when presented with an application for
refund. The application would specify the amount of school taxes paid on property abated by a
county or a municipality that would not have been paid if the school district had abated the
property under an agreement with terms identical to those in the county or municipality's
abatement agreement. The total amount of tax refunds would be capped at $10,000,000 per
fiscal year.

To be eligible for the refund the property owner must have established a new business (or
expanded or modernized an existing business) and must have increased the business's payroll by
$3,000,000 or increased the appraised value of the business's property by $4,000,000 since an
initial base year beginning on or after January 1, 1996. In addition, no refund would be made if
the person makes a payment in lieu of taxes to a municipality or county during the period of a tax
abatement agreement between the person and the municipality or county.

The refund would be limited to the net amount of state franchise and sales taxes paid into general


revenue during the calendar year or the total school property tax paid for that year. The refund
would be limited to 5 years or the term of the abatement, whichever is less.

The bill would amend Chapter 312, Tax Code, by requiring an abatement agreement to provide
for criteria, specific agreed terms and conditions, cancellation or modification if the terms are not
met, and an annual report from the property owner to the taxing unit certifying that the terms
were met. The bill would also require each taxing unit to provide the abatement criteria, a copy
of the abatement agreement and any amendments or modifications to the Comptroller, and the
Texas Department of Commerce.

The bill would amend the section in Chapter 312, Tax Code, that sunsets the Property
Redevelopment and Tax Abatement Act, by extending the sunset date to 2001.

The Comptroller has estimated the impact of the above provisions of this bill as follows:

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 Cost Out of		Probable				Probable Revenue	Probable Revenue	Change in
Year		General Revenue			Administrative Cost			Loss to Counties	Loss to Cities		Number of State
			Fund 001		Out of General										Employees from
						Revenue Fund 001									FY 1995
1996 		        $0 				     $0 			$23,350,000 		$3,857,000 		0.0
1997 		         0 				      0 			 27,451,000 		 4,737,000 		0.0
1998 		         0 				218,624		 		 31,966,000 		 5,516,000 		4.5
1999 	  	10,000,000 				177,884		 		 34,371,000 		 5,931,000 		4.5
2000 	  	10,000,000 				177,884		 		 34,795,000 		 6,004,000 		4.5

Similar annual fiscal implications would continue as long as the above provisions of the bill are
in effect.

In addition, the bill would establish the "County Development District Act." The act would
authorize the creation of development districts in certain counties to provide incentives for the
location and development of projects to attract visitors and tourists.

No significant fiscal implication to the state is anticipate due to this provision.

The fiscal implication to units of local government cannot be estimated as the number of counties
that would choose to create development districts cannot be determined.


Source: Comptroller of Public Accounts
LBB Staff: JK, BR, DF