LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 4, 1997
         
         
      TO: Honorable David Sibley, Chair            IN RE:  Senate Bill No. 746, Committee Report 1st House, Substituted
          Committee on Economic Development                              By: Sibley
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB746 ( Relating 
to property tax increment financing and property tax abatements.) 
this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB746-Committee Report 1st House, Substituted
         
No significant fiscal implication to the State is anticipated.
         

         
 
Similar annual fiscal implications The bill would amend Chapters 
11 (Taxable Property and Exemptions), 311 (Tax Increment Financing 
Act), and 312 (Property Redevelopment and Tax Abatement Act) 
of the Tax Code.

The bill would provide extensive amendments 
to the Tax Code relative to the granting and administration 
of tax abatement in Texas.  The bill would authorize taxing 
units to grant different abatement terms and require taxing 
units to conduct a cost benefit analysis before granting an 
abatement.  The bill would modify procedures taxing units must 
follow when granting a tax abatement, including monitoring and 
enforcing compliance with tax abatement agreements and state 
reporting of tax abatement activity.  The additional requirements 
proposed in the bill could have an impact on future tax abatement 
agreements.
          
The Texas Department of Commerce has estimated that the bill 
will have a significant impact on local taxing jurisdictions 
and businesses receiving tax abatements.  Stricter requirements 
for tax abatement agreement language coupled with the requirement 
to perform cost/benefit analyses will impact communities in 
the state.  

The bill will have a significant impact on municipalities 
performing the analysis of costs and benefits.  Computer software 
is available on the market to perform both simple and relatively 
sophisticated cost/benefit analyses.  The largest municipalities 
likely have this analytical capability.  Smaller municipalities 
likely do not.  The cost of acquiring software to do the most 
simple analysis would range from $250-$1,000 per copy.  The 
more sophisticated software would range from $5,000 to $20,000 
with additional costs for training in its use.

Consultants 
also perform these services for fees ranging from $1,000 to 
$20,000.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,TH ,BR