LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 10, 1997 TO: Honorable Pete Patterson, Chair IN RE: House Bill No. 2011, Committee Report 1st House, Substituted Committee on Agriculture & Livestock By: Patterson, L.P. "Pete" House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB2011 ( Relating to the promotion of Texas agricultural products and the sale of wine; creating a vintner's permit; imposing a tax on the sale of wine; providing penalties.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB2011-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net impact of $0 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 several changes in the Alcoholic Beverage Code relating to the promotion, sale, and taxation of wine, by establishing a new $300 Farm Winery permit and creating a wholesale tax of five cents per gallon of wine sold for resale. The tax would be paid monthly to the Texas Alcoholic Beverage Commission by permit holders authorized to sell wine for resale. Revenue collected from the retail wine tax could be appropriated only to the Texas Department of Agriculture for the promotion of research and marketing of wine in Texas. This bill would take effect September 1, 1997. Methodolgy The revenue from the wholesale wine tax was estimated by transforming projected wine excise tax revenue into an equivalent number of gallons, which was then multiplied by the 5 cents per gallon wholesale wine tax rate. This figure was adjusted for breakage, reporting and collection lags, and possible tax evasion effects. Revenue from the retail wine tax would be dedicated to the Texas Department of Agriculture's wine programs. 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 Probable Gain/(Loss) from Savings/(Cost) New - GR Dedicated from New - GR Dedicated NEW-DED NEW-DED 1998 $851,000 ($851,000) 1998 1,123,000 (1,123,000) 2000 1,137,000 (1,137,000) 2001 1,146,000 (1,146,000) 2002 1,157,000 (1,570,000) 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 $0 1999 0 2000 0 2001 0 2002 0 Source: Agencies: 304 Comptroller of Public Accounts 551 Department of Agriculture 458 Alcoholic Beverage Commission LBB Staff: JK ,BB ,RT