LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
May 17, 1995
TO: Honorable Tom Craddick, Chair IN RE: Senate Bill No.
Committee on Ways & Means 1658,
House of Representatives asengrossed
Austin, Texas By: Gallegos
FROM: John Keel, Director
In response to your request for a Fiscal Note on Senate Bill No.
1658 (Relating to tax credits for real property contributed to
institutions of higher education.) this office has determined the
following:
This bill allows certain universities 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. The bill's provisions would be
effective only for the University of Houston (UH) and only for
property transferred to UH before August 31, 1996.
The bill allows UH to petition the Higher Education Coordinating
Board for approval to obtain the desired real estate. The board
could approve the acquisition if the real estate was included in
UH's master plan as a desired acquisition, if the real estate
were fairly priced, and if UH did not have sufficient funds
available otherwise.
If the board approved the petition, the Comptroller would be
required to grant the property owner a franchise or sales tax
credit within 10 days of the approval. The tax credit would
equal 50 percent of the fair market value of the property. The
tax credit could be taken by the former property owners in equal
increments over twenty years (five percent of the total credit
per year)
against their franchise tax or sales tax liability.
The bill becomes effective September 1, 1995 and expires on
September 1, 1997.
This fiscal note is premised on the transfer of one property to
the University of Houston worth $13 million and is the minimum
estimate of revenue losses. Actual losses might be 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 Probable
Year Loss to General Administrative
Revenue Fund 001 Cost to the
Comptroller's
Office from
General Revenue
Fund 001
1995 $0 $83,322
1996 325,000 0
1997 325,000 0
1998 325,000 0
1999 325,000 0
2000 325,000 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
LBB Staff: JK, CT, DF