LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 16, 1997
TO: Honorable Rene Oliveira, Chair IN RE: House Bill No. 2001, Committee Report 1st House, Substituted
Committee on Economic Development By: Oliveira
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB2001 ( Relating
to the enterprise zone program.) this office has detemined the
following:
Biennial Net Impact to General Revenue Funds by HB2001-Committee Report 1st House, Substituted FN Revision 1
Implementing the provisions of the bill would result in a net
negative impact of $(800,000) 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
This bill would amend Chapter 2303 of the Government Code and
Chapters 151 and 171 of the Tax Code in order to make several
changes to the Texas Enterprise Zone Program administered by
the Department of Commerce (TDOC). The most significant changes
would increase the amount of the sales tax refund for new and
retained jobs created by businesses designated as enterprise
projects and the removal of a limit on the number of years an
area could be designated as an enterprise zone.
The bill
would delay the tax refund payments to enterprise zone projects
designated after August 31, 1997 and August 31, 1999 and set
a limit of $8 million per biennium on the amount of sales tax
refunds these projects could receive.
In addition, the
bill would revise the definition of retained jobs that are eligible
for a sales tax refund and the criteria that must be met in
order for a business to qualify as an enterprise project. The
bill would lower the number of new and retained jobs that can
be eligible for a refund granted an enterprise project.
Methodolgy
The 1996 level of state sales tax refunds reported by the Department
of Commerce in the Enterprise Zone Program Fiscal Year 1996
Cost-Benefit Analysis was used to estimate the increase in sales
tax refunds. The bill increases sales tax refunds by 25 percent
for new and retained jobs.
Data from the fiscal year 1996
report was used to estimate the cost resulting from the franchise
tax provision of the Enterprise Zone program. The cost was
estimated as the average of the last five years of franchise
tax refunds.
The estimate assumes that the maximum number
of enterprise projects, created after August 31,1997, would
be eligible for the sales tax refunds and would be awarded refunds
equal to the biennial limit set in the bill.
The estimate
assumes TDOC would have sufficient appropriation authority to
cover any costs associated with administering the provisions
of this bill .
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 Probable
Savings/(Cost) Savings/(Cost)
from General from General
Revenue Fund Revenue
Sales Tax Fund
Franchise
Tax
0001 0001
1998 ($400,000) $0
1998 (400,000) 0
2000 (4,400,000) (814,000)
2001 (4,400,000) (814,000)
2002 (4,400,000) (814,000)
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 ($400,000)
1999 (400,000)
2000 (5,214,000)
2001 (5,214,000)
2002 (5,214,000)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Source: Agencies:
LBB Staff: JK ,TH ,CG