LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 13, 1997
         
         
      TO: Honorable David Sibley, Chair            IN RE:  Senate Bill No. 747
          Committee on Economic Development                              By: Sibley
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB747 ( Relating 
to the administration and financing of certain industrial development 
corporations.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB747-As Introduced
         
The bill would make no appropriation but could provide the legal 
basis for an appropriation of funds to implement the provisions 
of the bill.

The bill would amend the Development Corporation 
Act of 1979 (act) to provide additional flexibility to municipalities 
with industrial development corporations. The fiscal impact 
on the state and on local governments would vary depending on 
which cities and counties enacted taxes under the provisions 
of the bill.
         

         
 
Similar annual fiscal implications METHODOLOGY

The fiscal 
impact on the state and on local governments in reduced property 
tax revenue would vary depending on which cities enacted the 
provisions of the bill and converted taxable property to exempt 
"public-use property."  Article 5190.6, Development Corporation 
Act, Section 4B. (k) provides a property tax exemption for all 
approved projects owned, used and held by an eligible municipality. 
 The exemption is based on a provision that defines all such 
projects as "public-use property" which is exempt from ad valorem 
taxes.
 
Section 403.302, Government Code, requires the Comptroller 
to conduct a property value study to determine the total taxable 
value for each school district.  Total taxable value is an element 
in the state's school funding formula.  Passage of the bill 
could cause a reduction in a school district's taxable values 
reported to the Commissioner of Education by the Comptroller.

When 
calculating state aid for public education, the state must recognize 
the loss in local property value due to exemptions granted to 
qualified organizations within the school district.  Depending 
on a school district's wealth per student, this could result 
in an increased cost to state-funded public education.

The 
fiscal impact on the state would depend on the number and amount 
of local taxable property removed from the local tax rolls due 
to being converted to public-use property, but it is possible 
to provide a hypothetical example of such an impact.  In a hypothetical 
school district that qualifies for both tier-one and tier-two 
state aid for public education, it would cost the state one 
dollar for each dollar of local school district property tax 
revenue loss due to the provisions of the bill.  In such a hypothetical 
school district in which, for example, $100 million of taxable 
property would be converted to public-use property, the probable 
cost to General Revenue-related funds during each fiscal year 
that the property remained off the local tax rolls would be 
$1.5 million, based on a tax rate of $1.50 per $100 of valuation.

FISCAL 
IMPACT

The fiscal impact on the state and on local governments 
would vary depending on which cities and counties enacted taxes 
under the provisions of the bill.
          
   Source:            Agencies:   465   Department of Commerce
                                         304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,TH ,BR