LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 23, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  Senate Bill No. 461, 
As Engrossed
          Committee on Ways & Means                              By: Moncrief
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB461 ( Relating 
to the authority of the comptroller to contract for certain 
tax collection services.)) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB461-As Engrossed
         
Implementing the provisions of the bill would result in a net 
positive impact of $40,127,000 to General Revenue Related Funds 
through the biennium ending August 31, 1999.
         
The bill would appropriate revenue received from tax audits, 
which would vary depending on the amount of revenue received 
by the Comptroller for out-of-state audits by contract audit 
entities.

         
 
Fiscal Analysis
 
The bill would amend Chapter 111 of the Tax Code to authorize 
the Comptroller to contract with an appropriate vendor to develop 
and implement an advanced database system to enhance tax collections. 
 The contract would allow the vendor that developed, implemented, 
and maintained the system to receive compensation equal to the 
product of the percentage stated in the contract and the amount 
of revenue collected from audit and enforcement actions taken 
by the Comptroller as a result of cases identified by the system. 
 The amount of compensation paid to a vendor could not exceed 
any maximum amount stated in the contract.

The bill would 
authorize the Comptroller to contract with one or more appropriate 
persons to perform tax audits in states that were not covered 
by Comptroller field offices.  The contract would provide that 
the person performing the audits receive compensation equal 
to the product of a percentage stated in the contract and the 
amount of revenue deposited into the State Treasury as a result 
of the audits.  The amount of compensation paid to a vendor 
could not exceed any maximum amount stated in the contract.

The 
bill would appropriate the revenue resulting from tax audits 
conducted under the bill to the Comptroller for the fiscal biennium 
ending August 31, 1999.  The Comptroller could use this appropriation 
only to pay contract expenses and the Comptroller's direct administrative 
costs associated with those contracts.  Any amounts that exceed 
the amount necessary to pay these expenses and costs would be 
transferred to the General Revenue Fund or any dedicated or 
special funds to which the excess amount belongs.
 
Methodolgy
 
The state would receive additional revenue from audit payments, 
collections through enforcement actions, and enhanced voluntary 
compliance.
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 Revenue   
            Gain/(Loss) from                                                                              
            General Revenue                                                                               
            Fund                                                                                          
            0001                                                                                           
       1998        $3,210,000                                                                        
       1998        36,917,000                                                                        
       2000        47,328,000                                                                        
       2001        59,567,000                                                                        
       2002        74,665,000                                                                        
 
 
         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           $3,210,000
               1999           36,917,000
               2000           47,328,000
               2001           59,567,000
               2002           74,665,000
 
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
          
If a taxpayer, delinquent in state taxes, was also delinquent 
in local taxes, the comptroller would attempt to collect the 
delinquent local taxes on behalf of the appropriate locality 
or localities.  The comptroller would not attempt to collect 
delinquent local taxes from a taxpayer who was not also delinquent 
in state taxes.  Consequently, the potential exists for units 
of local government to receive a revenue gain due to increased 
collection of delinquent local taxes.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,RN