LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 21, 1997 TO: Honorable Ron Wilson, Chair IN RE: House Bill No. 2538, Committee Report 1st House, Substituted Committee on Licensing & Administrative Procedures By: Oliveira House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB2538 ( Relating to the regulation of boxing and wrestling.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB2538-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net positive impact of $637,714 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 the Texas Boxing and Wrestling Act (Article 8501-1, V.T.C.S) to require the Department of Licensing and Regulation (TDLR) to regulate wrestling contests and promotion. The provisions of this bill would require licensure of those involved in wrestling contests and promotion. The bill would also allow TDLR to assess a 3 percent gross receipts tax on live contests, closed circuit telecasts, television rights, and pay-per-view events. The 3 percent gross receipts tax on television rights and pay-per-view events would be capped at $50,000 per person. The bill would also require the Comptroller to deposit the lesser of 20% of the gross receipts tax or $50,000 annually into the Texas Boxing and Wrestling Sports Fund to be used for grant awards. According to TDLR, this tax would generate a revenue of $471,240 per year of which $50,000 would be deposited into the Texas Boxing and Wrestling Sports Fund. According to TDLR, in order to implement the provisions of the bill, TDLR would need to hire one Administrative Technician and one Inspector. The total cost to General Revenue to hire the two FTEs would be $90,423 in FY 1998 and $78,343 per year thereafter, including equipment and benefits. In addition, other inspectors would be hired on an as-needed contractual basis, at a cost to General Revenue of $18,000 per year. Methodolgy The following assumptions were used when estimating the revenue gain to General Revenue: (1) Licenses would be required for 117 individuals including wrestling promoters, wrestling managers, wrestling matchmakers, referees, time keepers, and professional wrestlers. (2) TDLR would change the following annual license fees: $1,000 for promoters; $150 for managers and matchmakers; $50 for referees; $20 for timekeepers; and $30 for professional wrestlers. (3) $457,100 per year would be generated in gross receipts tax revenue. 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 Revenue Probable Revenue Change in Number Savings/(Cost) Gain/(Loss) from Gain/(Loss) from of State from General General Revenue Texas Boxing and Employees from Revenue Fund Fund Wrestling Sports FY 1997 Fund 0001 0001 OTHER-OTH 1998 ($108,423) $421,240 $50,000 2.0 1998 (96,343) 421,240 50,000 2.0 2000 (96,343) 421,240 50,000 2.0 2001 (96,343) 421,240 50,000 2.0 2002 (96,343) 421,240 50,000 2.0 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 $312,817 1999 324,897 2000 324,897 2001 324,897 2002 324,897 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Agencies: LBB Staff: TH ,BK