LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  February 23, 1997
         
         
      TO: Honorable Eddie Lucio, Jr., Chair            IN RE:  Senate Bill No. 236, Committee Report 1st House
          Committee on Intergovernmental Relations                              By: Lindsay
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB236 ( Relating 
to the right of voters in a municipality to participate in municipal 
elections.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB236-Committee Report 1st House
         
No fiscal implication to the State is anticipated.
         

         
 
          
This bill would prohibit a municipality from holding certain 
municipal elections and imposing taxes in a newly annexed area 
for 120 days after the annexation is approved, or until Voting 
Rights Act clearance is received from the United States Department 
of Justice.  

The extent to which this bill would have fiscal 
impact on local governments would depend on the timing of annexations 
and the amount of tax to be collected in a newly annexed area.

Since 
property taxes are generally assessed on January 1 of each year, 
and areas not assessed on that day are not subject to property 
tax until the following year, some cities would opt only to 
annex in the first eight months of the year and only at least 
120 days before a scheduled election.  Consequently, such cities 
would not be able to collect sales and occupancy tax revenues 
during the initial period (until the voters in the area are 
certified) in the first year of the annexation, and could therefore 
lose roughly 25 percent to 33 percent of annual sales and occupancy 
tax revenues generated in the newly annexed area.

Annexations 
that are approved in the last four calendar months of any given 
year could result in the loss of municipal property tax revenues 
to the municipality for the upcoming year.  Whereas a municipality 
that annexed in November would, under current law, be able to 
collect property taxes in the following calendar year, this 
bill would not allow such taxes to be imposed for one more calendar 
year.

Based on data from an annexation of approximately 50,000 
residents completed by the City of Houston in December 1996, 
the City of Houston estimates that it would lose revenues of 
$9.3 million in the first year following annexation as a result 
of this bill's enactment, plus an additional loss of $746,000 
in sales tax revenues.  An annexation this size that did not 
affect the following year's property taxes could result in lost 
revenues of $746,000 in the year of the annexation.  It is expected 
that other cities would experience similar impacts in annexations 
of comparable size.  
 
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,TL