LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 14, 1997
TO: Honorable Paul Sadler, Chair IN RE: House Joint Resolution
No. 4
Committee on Revenue and Public Education Funding By: Craddick/et al.
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HJR4 ( Proposing
a constitutional amendment to provide a school property tax
cut, create the Texas School Trust Fund, authorize the replacement
of certain taxes, and dedicate certain revenue for primary and
secondary public) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HJR4-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(1,600,357,000) to General Revenue Related
Funds through the biennium ending August 31, 1999.
The resolution 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 resolution would propose a constitutional amendment establishing
the Texas School Trust Fund (trust fund). The Comptroller of
Public Accounts would have authority to administer and invest
the money in the trust fund. School districts would be reimbursed
for the local taxes lost because of the enactment of a new $20,000
homestead exemption, a business inventory exemption, and a tax
rate reduction.
The trust fund would consist of:
(1)
the net state revenue for the business activity tax on businesses
not excluded by this resolution;
(2) the total net revenue
for a one-half percent state general sales and use tax;
(3)
the total net revenue for a one-half percent state sales and
use tax on the sale, rental and use of motor vehicles;
(4)
interest on trust money; and
(5) any other revenue deposited
to the trust by the Legislature.
The Comptroller would have
the authority to transfer any non-dedicated funds into the Texas
State Trust Fund in the event that fund obligations exceeded
resources. The Comptroller would also have the authority to
transfer excess funds from the trust fund to the General Revenue
Fund. Any funds remaining in the trust fund after all disbursements
would be available for legislative appropriation.
The resolution
would add a business inventory exemption for school maintenance
and operation taxes. Old language relating to county education
districts would be eliminated.
The business activity tax
would not be subject to the prohibition of a personal income
tax or subject to the dedication of revenue. An affirmative
vote of at least three-fifths of the members of each house of
the Legislature would be required to increase the business activity
tax rate. The proposed amendment would exclude other types
of state taxes from this requirement.
The proposed constitutional
amendment would be submitted to the voters at an election to
be held August 9, 1997. The Secretary of State's office indicated
that the cost of publishing the proposed constitutional amendment
will be paid from existing fiscal year 1997 appropriations.
Note:
The Texas School Trust Fund would be required to be distributed
as provided by general law. Since the resolution does not appear
to contain a self-enacting appropriation, it is assumed that
the Legislature would make the requisite appropriations each
biennium for the distribution of money to the school districts.
(The fiscal impact noted assumes appropriations.)
Methodolgy
The estimated impact of this bill is based on the following
methodology.
The Comptroller estimated the number of homeowners
qualified for the homestead exemption and the total 1996 cost.
This cost was trended up to reflect the growth in homeowners,
property values and maintenance and operations tax rates through
the projection period. From fiscal year 1999 forward, the estimate
incorporates the additional cost to the tax ceiling on homesteads
of the elderly.
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
Savings/(Cost)
from Texas
School Trust Fund
0001
1998 ($702,967,000)
1998 (897,390,000)
2000 (936,039,000)
2001 (976,135,000)
2002 (1,017,728,000)
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 ($702,967,000)
1999 (897,390,000)
2000 (936,039,000)
2001 (976,135,000)
2002 (1,017,728,000)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
LOCAL
The bill would impact other local taxing units that
provide funding for their local appraisal district operating
budget. Under current law, each taxing unit participating in
the district is allocated a portion of the amount of the budget.
This is equal to the percentage of unit levy to the total district
levy for all taxing units. A reduction in school district levies,
will increase the proportional cost to other taxing units in
the appraisal district. It has been estimated that other taxing
units will experience an increase of approximately $20 million
per year in their pro rata cost of appraisal district operations.
This figure does not include increases in administrative cost
incurred by appraisal districts from the provisions of the bill.
Source: Agencies: 304 Comptroller of Public Accounts
307 Secretary of State
302 Office of the Attorney General
701 Texas Education Agency - Administration
LBB Staff: JK ,RR ,BR