LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 26, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  House Bill No. 760, Committee Report 1st House, Substituted
          Committee on Ways & Means                              By: Shields
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB760 ( Relating 
to a franchise tax credit for contributions made to medical 
savings accounts.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB760-Committee Report 1st House, Substituted
         
Implementing the provisions of the bill would result in a net 
impact of $0 to General Revenue Related Funds through the biennium 
ending August 31, 1999.
         

         
 
Fiscal Analysis
 
The bill would allow corporations, employing 50 or fewer employees 
and not offering employer-paid health insurance, eligible for 
a franchise tax credit.  The credit would be limited to 50 percent 
of the total amount of money contributed by the employer to 
the employee medical savings accounts, on and after January 
1, 1997.  

Unused credits could be carried over until another 
tax year or until completely used.

The bill would apply to 
franchise tax reports and payments due on or after January 1, 
2000 and would be effective September 1, 1997.
 
Methodolgy
 
The estimate assumes that the use of the medical savings accounts 
would allow a representative employer to reduce the cost of 
employer-provided health benefits by 30 percent, a cost savings 
that would be split between contributions to a medical savings 
account and the cost of high deductible insurance policy.

The 
estimate assumes the use of medical savings accounts by corporations 
would begin slowly, but accelerate over time.

The bill has 
no fiscal impact in fiscal years 1998 and 1999, because the 
bill would apply only to franchise tax reports and payments 
due during and after fiscal year 2000.
The probable fiscal implications of implementing the provisions 
of the bill during each of the first five years following passage 
is estimated as follows:
 
Five Year Impact:
 
Fiscal Year Probable Revenue   
            Gain/(Loss) from                                                                              
            General Revenue                                                                               
            Fund                                                                                          
            0001                                                                                           
       1998                $0                                                                        
       1998                 0                                                                        
       2000      (15,184,000)                                                                        
       2001      (31,936,000)                                                                        
       2002      (58,512,000)                                                                        
 
 
         Net Impact on General Revenue Related Funds:
 
The probable fiscal implication to General Revenue related funds 
during each of the first five years is estimated as follows:
 
              Fiscal Year      Probable Net Postive/(Negative)
                               General Revenue Related Funds
                                             Funds
               1998                   $0
               1999                    0
               2000         (15,184,000)
               2001         (31,936,000)
               2002         (58,512,000)
 
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
          
No fiscal implication to units of local government is anticipated.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,RR ,CT