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
          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 
         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.  
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
            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
               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