LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 20, 1997 TO: Honorable Tom Craddick, Chair IN RE: House Bill No. 1029, Committee Report 1st House, Substituted Committee on Ways & Means By: Hawley House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1029 ( Relating to qualifying certain municipalities to impose the municipal sales and use tax.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1029-Committee Report 1st House, Substituted No significant fiscal implication to the State is anticipated. FISCAL ANALYSIS The bill would amend Title 12 of the Government Code by adding Chapter 377 which would allow certain municipalities to impose an additional sales and use tax. This provision would apply only to a municipality with a population of less than 10,000 and located in more than two counties, with one of the counties bordering the Gulf of Mexico. The additional sales and use tax could be used for a municipal development district (district), but the adoption of such a tax could not result in a combined local sales and use tax in excess of 2 percent. A municipality could call an election on the question of creating a municipal development district and imposing an additional sales and use tax. The tax rate for a district could be one-eighth, one-fourth, three-eighths, or one-half of one percent. A district would be required to establish a Development Project Fund (fund) to which all proceeds of the additional sales tax would be required to be deposited, in addition to all revenue from the sale of bonds or other obligations . Money in the fund could only be used to pay the costs of planning, acquiring, constructing, or renovating development projects in the district and to pay principal, interest, and other costs of bonds or other obligations. A district would be authorized to issue bonds to pay the costs of development projects. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect 90 days after adjournment. LOCAL The fiscal impact on local governments would vary depending on how many municipalities that qualified under the provisions of the bill would choose to create a municipal development district and the rate of sales tax increment approved by the voters in the district. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,SM