LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                           May 11, 1995



 TO:     Honorable David Sibley, Chair          IN RE: Committee Substitute
         Committee on Economic Development      for
         Senate                                                Senate Bill
         Austin, Texas                          No. 1696
                                                        By: Bivins








FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No.
1696 (relating to the creation of development districts in
certain counties; authorizing certain taxes) this office has
determined the following:

The bill would amend the Commissioners' Courts chapter of the
Civil Statutes by adding an article which 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.

Counties with a population of not more than 400,000 could create
a county development district upon petition of the landowners in
a county.  The bill would specify the contents of the petition,
including a description of the district boundaries.  Creation of
a district would be subject to voter approval.

A district could issue bonds to pay all or part of the cost of
any project authorized by the bill.  The bonds would be payable
from district funds, including taxes, license fees, grants,
donations or other district revenues.

Subject to voter approval, a district could levy a sales and use
tax for the benefit of the district at a rate of up to one-half
of one percent.  The board by order could decrease or abolish the
tax, or could call an election to increase, decrease or abolish
the tax.  The imposition of this tax would be governed by the    




County Sales Tax chapter of the Tax Code, except that certain
sections would not apply.  Additionally, a district sales tax
would not count toward the limitation imposed by the County Sales 
Tax chapter on any sales tax levied by the county in which a
district is located.

A commissioners' court of a county with a population of less than
400,000 could impose a hotel occupancy tax at a rate not to
exceed 7 percent of the price of a hotel room located within the
boundaries of a district and not located within the corporate
limits of a municipality.  The bill would require a county to
remit to a district any hotel occupancy taxes collected no later
than the 10th day after the date the county receives the funds. 
The County Hotel Occupancy Tax chapter of the Tax Code would
govern the imposition of this tax.  As with the sales tax,
certain sections would not apply.  This tax would not count
toward the limitation imposed by the County Hotel Occupancy Tax
chapter on the hotel occupancy tax levied by the county in which
a district is located.

The provision of the bill specifying that the sales tax adopted
by a district would not count toward the limitation imposed by
Chapter 323 of the Tax Code appears to allow eligible counties to
exceed the maximum combined local sales tax rate of 2 percent for
city, county and other political subdivisions in the county
provided under Section 323.101(d) of the Tax Code.

No significant fiscal implication to the state is anticipated.

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, SM, RR