LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 19, 1997
TO: Honorable Tom Craddick, Chair IN RE: House Bill No. 760
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-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(29,215,000) to General Revenue Related
Funds through the biennium ending August 31, 1999.
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
The bill would make corporations, employing 50 or fewer employees
and making contributions to medical savings accounts for their
employees, eligible for a franchise tax credit. The credit
amount would be limited to the total amount the employer contributed
to employee medical savings accounts during the reporting period.
The amount claimed for credit during the reporting could be
no more than the amount of franchise tax due in the reporting
period, but could be carried forward until completely used.
The
bill applies to franchise tax reports due on or after January
1, 1998.
Methodolgy
The estimate assumes that the implementation of a medical savings
account plan would save the typical employer 30 percent of its
costs for employee health benefits. The remaining 70 percent
of the employer's original costs would be split between contributions
to the medical savings account and the cost of the higher-deductible
insurance policy acquired in concert with the medical savings
account.
The estimate also assumes that use of medical savings
account plans by corporations would start slowly but accelerate
over time.
Data on corporations was obtained from the Comptroller's
tax records, the Texas Workforce Commission, the Internal Revenue
Service, and the Texas Department of Insurance. Tax computations
specified by the bill were performed, and the fiscal impact
was summarized.
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 ($8,026,000)
1998 (21,189,000)
2000 (44,268,000)
2001 (94,754,000)
2002 (168,568,000)
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 ($8,026,000)
1999 (21,189,000)
2000 (44,268,000)
2001 (94,754,000)
2002 (168,568,000)
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: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JK ,RR ,CT