LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                           May 6, 1995



 TO:     Honorable John T. Montford, Chair      IN RE:  Senate BillNo. 1658
         Committee on Finance                           By: Gallegos
         Senate
         Austin, Texas







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:

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 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 to 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, Higher Education
Coordinating Board
          LBB Staff: JK, CT, DF