LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
March 7, 1997
TO: Honorable Rene Oliveira, Chair IN RE: House Bill No. 777
Committee on Economic Development By: Tillery
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB777 ( Relating
to the authority of a municipality to create an industrial development
corporation and to levy a sales and use tax to carry out the
projects of the corporation.) this office has detemined the
following:
Biennial Net Impact to General Revenue Funds by HB777-As Introduced
Implementing the provisions of the bill could result in negative
fiscal impacts under the various scenarios possible.
The bill would amend the Development Corporation Act of 1979.
Under current law, Section 4B defines an eligible city as a
city in a county with a population of more than 1,100,000, in
which there are more than 40 incorporated cities, and where,
in no area, does the combined state and local sales tax rate
exceed 7.75 percent. This definition of an eligible city is
due to expire on September 1, 1997. The bill would remove the
expiration date provision.
The bill would change the definition
of an eligible city by reducing the number of required incorporated
municipalities from 40 to 29.
Note: This bill would become
effective immediately upon enactment, assuming that it received
the requisite two-thirds majority votes in both houses of the
Legislature. Otherwise, it would become effective 90 days after
adjournment.
Methodology
This bill could apply to those
cities in four counties--Harris, Dallas, Bexar, and Tarrant--that
do not have a total combined state and local sales tax rate
exceeding 7.75 percent.
The fiscal impact on the state
and on local governments in reduced property tax revenue would
vary depending on which cities and counties enacted the provisions
of the bill and converted taxable property to exempt "public-use
property," as allowed under Section 4B.
Section 403.302,
Government Code, requires the Comptroller to conduct a property
value study to determine the total taxable value for each school
district. Total taxable value is an element in the state's
school funding formula. Passage of the bill could cause a reduction
in a school district's taxable values reported to the Commissioner
of Education by the Comptroller.
When calculating state aid
for public education, the state must recognize the loss in local
property value due to exemptions granted to qualified organizations
within the school district. Depending on a school district's
wealth per student, this could result in an increased cost to
state-funded public education.
The fiscal impact on the state
would depend on the number and amount of local taxable property
removed from the local tax rolls due to being converted to public-use
property, but it is possible to provide a hypothetical example
of such an impact. In a hypothetical school district that qualifies
for both tier-one and tier-two state aid for public education,
it would cost the state one dollar for each dollar of local
school district property tax revenue loss due to the provisions
of the bill. In such a hypothetical school district in which,
for example, $100 million of taxable property would be converted
to public-use property, the probable cost to General Revenue-related
funds during each fiscal year that the property remained off
the local tax rolls would be $1.5 million, based on a tax rate
of $1.50 per $100 of valuation.
Fiscal Impact
The fiscal
impact on the state and on local governments would vary depending
on which cities and counties enacted taxes under the provisions
of the bill.
The fiscal impact on the state would likely
be negative under many scenarios possible under the bill.
The
probable fiscal implications of the bill would continue as long
as the provisions of the bill are in effect.
Source: Agencies: 304 Comptroller of Public Accounts
465 Department of Commerce
LBB Staff: JK ,TH ,SM ,TL