LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 2, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  House Bill No. 2929
          Committee on Ways & Means                              By: Coleman
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB2929 ( Relating 
to the taxes of which a qualified hotel project is entitled 
to a refund, rebate, or payment and to the collection of those 
taxes.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB2929-As Introduced
         
Implementing the provisions of the bill could result in negative 
fiscal implications to the State.  The fiscal implication of 
the mixed beverage tax refund would depend on the number of 
qualified hotel projects built or remodeled.
         

         
 
FISCAL ANALYSIS
The bill would amend Chapter 151 of the Tax 
Code to provide that 100 percent of mixed beverage taxes paid 
by permittees located in a qualified hotel project and not rebated 
to a county or municipality under section 183.051 of the Tax 
Code, would be available for rebate, refund, or payment to the 
owner of the project.  The rebate, refund, or payments would 
be effective for a ten-year period.

The Comptroller of Public 
Accounts would be required to enter into agreements with hotel 
project owners entitled to receive rebates, refunds, or payments 
of state tax revenue under which the hotel project owner would 
collect and retain the taxes.  An agreement would specify the 
beginning and ending dates of the agreement, require a hotel 
project owner to file periodic reports with the Comptroller, 
and require the owner of a project to keep records detailing 
the amount of each tax collected and retained. 

After entering 
into an agreement, the comptroller would be required to issue, 
to the owner of a hotel project and to each owner of a business 
in a project, certificates that would authorize the holder to 
make state-tax-free purchases of taxable items relating to the 
project or to businesses in a project.  Businesses in a project 
making such tax-free purchases would be required to remit to 
the project owner the amount of tax otherwise remitted to the 
Comptroller.

The bill would take effect on July 1, 1997 if 
the measure passes by a two-thirds majority in both houses. 
Otherwise, the bill would take effect on October 1, 1997.  The 
bill would not affect taxes imposed before the effective date 
of the bill. The law in effect before that date would be continued 
in effect for purposes of the liability for and collection of 
those taxes. 

METHODOLOGY
A qualified hotel project means 
a hotel proposed to be built by a municipality or non-profit 
municipally-sponsored corporation within 1,000 feet of a convention 
center and owned by a municipality of 1.5 million population 
or more.  

The fiscal implication of the mixed beverage tax 
refund would depend on the number of qualified hotel projects 
built or remodeled.  A large hotel located near a convention 
center in a major Texas city could be expected to collect and 
remit $400,000 in state mixed beverage taxes per year.  

The 
bill would allow each owner of a business within a hotel project 
to make state-tax-free purchases of taxable items to be used 
in the project.  Under current law, a qualified hotel project 
could be designated as an enterprise project.  As such, it would 
be allowed refunds of state sales taxes paid on purchases of 
machinery and equipment, building materials, construction labor 
for remodeling, and natural gas and electricity.  Refunds would 
be allowed at the rate of $2,000 per job created/retained and 
subject to an annual maximum of $250,000.  The bill would allow 
the hotel and project businesses to purchase all items tax-free, 
without the restrictions of job creation/retention or an annual 
ceiling. Consequently, state sales tax refunds to hotel projects 
could increase under the bill's provisions.
          
LOCAL
No significant fiscal implication to units of local government 
is anticipated.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,JD