LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 5, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  House Bill No. 3210, Committee Report 1st House, 
as amended
          Committee on Ways & Means                              By: Raymond
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB3210 ( Relating 
to assistance to certain volunteer fire departments and to the 
imposition of a tax to finance that assistance.) this office 
has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB3210-Committee Report 1st House, as amended
         
No significant fiscal implication to the State is anticipated.
         

         
 
FISCAL ANALYSIS
The bill would amend Chapter 614 of the Government 
Code to create a rural volunteer fire department assistance 
program (program) administered by the Texas Forest Service at 
Texas A&M University.  The program would assist rural volunteer 
fire departments in paying for equipment and training personnel. 
 The bill would create a new, dedicated Rural Volunteer Fire 
Department Assistance Account (account) in the General Revenue 
Fund 0001.  Annual administrative costs of the program would 
not exceed 7 percent of the prior fiscal year's fireworks tax 
revenues.

The bill would amend Subtitle E, Title 2 of the 
Tax Code to create Chapter 161 to impose a state fireworks tax 
of two percent on the retail sale of fireworks.  This tax would 
be in addition to the limited sales and use tax imposed under 
Chapter 151 of the Tax Code.  However, if this additional tax 
would cause the overall sales tax rate to exceed 8.25 percent, 
the additional tax would not be collected.  The proposed fireworks 
sales tax would not apply to a sale unless the limited sales 
and use tax also applied to the sale.  

The fireworks tax 
would be administered, imposed, collected, and enforced in the 
same manner as the limited sales and use tax governed by Chapter 
151 of the Tax Code.  Any change in the law related to the taxation 
of the sale of fireworks under Chapter 151 would apply to the 
fireworks tax.   

The fireworks tax would not apply to retail 
sales of toy cap guns; model rockets used to propel recoverable 
aero models; certain propelling charges; novelty noisemakers; 
emergency signaling devices; railway torpedoes; blank cartridges 
used for radio and film productions, athletic ceremonies, or 
industrial purposes; or pyrotechnic devices for use by the military. 


The Comptroller would allocate revenues from the fireworks 
sales tax to the new account.  Penalties and interest would 
remain in the General Revenue Fund 0001. 

The director of 
the Texas Forest Service would prepare and submit an annual 
report on the activity, status, and effectiveness of the new 
account to the Lieutenant Governor, the Speaker of the House 
of Representatives, and the Comptroller before September 1 of 
each year.  The director could not grant a request for assistance 
before September 1, 1998.

The bill would take effect July 
1, 1997 if it received the requisite two-thirds majority votes 
in both houses of the Legislature.  Otherwise, it would take 
effect October 1, 1997.  

METHODOLOGY
Since the bill specifies 
that the additional fireworks tax could not be collected in 
areas of the state where the additional tax could cause the 
overall sales tax rate to exceed 8.25 percent, this would effectively 
eliminate the tax in over half the counties in the state.  Currently, 
123 counties and parts of three additional counties have a county 
sales tax or special purpose district sales tax.  This means 
that the tax could not be collected in any of these areas, because 
the overall sales tax rate would exceed 8.25 percent.  

For 
the same reason, the additional tax could not be collected in 
cities with a city sales tax or in the unincorporated portions 
of metropolitan counties covered by a transit authority.  This 
would eliminate the additional tax in nearly all incorporated 
cities in the state, all unincorporated areas of Bexar and Nueces 
counties, and parts of the unincorporated areas of Williamson, 
Travis, and Harris counties.  

Thus, the additional tax could 
only be collected in certain areas of the state.  The increase 
in revenue would depend on the volume of fireworks sales in 
those areas.
          
LOCAL
The fiscal impact on local governments would vary depending 
how many areas could impose the additional fireworks sales tax 
and the volume of fireworks sales in those areas.  This would 
determine the amount of funds available to assist rural volunteer 
fire departments in paying for equipment and training personnel.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,SM