LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 25, 1995 TO: Honorable John T. Montford, Chair IN RE: Committee Substitute Committee on Finance for Senate Senate Bill No. 345 Austin, Texas 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.) 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 Subchapter C, Chapter 111, Tax Code and Chapter 312, Tax Code by requiring the Comptroller to issue a partial refund of State taxes paid by a taxpayer when presented with an application of 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 state would refund 80% of this amount subject to certain conditions and limitations. To be eligible for the partial 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 $10,000,000 since the date of the abatement agreement. The partial 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, whichever is less; and 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 repeal the section in Chapter 312, Tax Code, that sunsets the Property Redevelopment and Tax Abatement Act. The Comptroller has estimated the impact of the 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 Probable Probable Loss to Probable Loss to Year of General Administrative Counties Cities Revenue Fund 001 Cost Out of General Revenue Fund 001 1996 $0 $0 $22,350,000 $3,857,000 1997 0 6,240 27,451,000 4,737,000 1998 23,066,000 212,384 31,966,000 5,516,000 1999 48,733,000 177,884 34,371,000 5,931,000 2000 54,107,000 177,884 34,795,000 6,004,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Source: Comptroller of Public Accounts LBB Staff: JK, BR, DF