LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 17, 1997
         
         
      TO: Honorable Pete Patterson, Chair            IN RE:  House Bill No. 2011
          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-As Introduced
         

Implementing the provisions of the bill would result in a 
net negative impact of $(972,098) 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 Vintner's Permit and creating a retail 
tax of one cent per 750 milliliters (ml) of wine sold.  

The 
tax would be paid monthly to the Texas Department of Agriculture 
(TDA) by permit holders authorized to sell wine at retail.  
Revenue collected from the retail wine tax could be appropriated 
only to TDA to promote research and market wine in Texas.  

This 
bill would take effect September 1, 1997.
 
Methodolgy
 
The revenue gain from the retail wine tax was estimated by translating 
estimated wine excise tax revenue, which is taxed on a per gallon 
basis, into an equivalent number of 750 ml containers and applying 
the one cent per container retail 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 TDA's wine programs.

The costs 
to administer the wine tax are based on auditing approximately 
five percent of current permit holders authorized to sell wine 
at retail, either for on-premises or off-premises consumption. 
 Most, if not all of them, would be required to pay this tax 
and submit monthly reports to the TDA.
The probable fiscal implications of implementing the provisions 
of the bill during each of the first five years following passage 
are estimated as follows:
 
Five Year Impact:
 
Fiscal Year Probable           Probable Revenue   Change in Number   
            Savings/(Cost)     Gain/(Loss) from   of State                                                
            from General       General Revenue    Employees from                                          
            Revenue Fund       Fund               FY 1997                                                 
            0001               0001                                                                        
       1998      ($1,364,799)          $859,000              14.2                                    
       1998       (1,600,299)         1,134,000              14.2                                    
       2000       (1,613,299)         1,147,000              14.2                                    
       2001       (1,623,299)         1,157,000              14.2                                    
       2002       (1,634,299)         1,168,000              14.2                                    
 


 
         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           ($505,799)
               1999            (466,299)
               2000            (466,299)
               2001            (466,299)
               2002            (466,299)
 
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
          
   Source:            Agencies:   551   Department of Agriculture
                                         304   Comptroller of Public Accounts
                                         458   Alcoholic Beverage Commission
                                         
                      LBB Staff:   JK ,BB ,RT