LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 24, 1997
         
         
      TO: Honorable Kenneth Armbrister, Chair            IN RE:  Senate Bill No. 759, Committee Report 1st House, Substituted
          Committee on State Affairs                              By: Armbrister
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB759 ( relating 
to the appraisal and ad valorem taxation of heavy equipment; 
providing penalties.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB759-Committee Report 1st House, Substituted
         
The bill 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 bill would amend Chapter 23 of the Tax 
Code to include heavy equipment dealers when providing for personal 
property inventory appraisal based on prior year sales.  The 
bill would define as a "dealer" a person who was engaged in 
the business of selling heavy equipment.  "Heavy equipment" 
would be defined as equipment weighing over 3,000 pounds and 
intended to be used for agricultural, construction, industrial, 
maritime, mining, or forestry uses.  The bill would exclude 
vehicles titled or registered under Chapters 501 and 502 of 
the Transportation Code.

Legislation in 1993 and 1995 exempted 
motor vehicle and boat dealer inventories from the statutory 
requirement that the market value for business inventory is 
the price for which it would sell on January 1 as a unit to 
a purchaser who would continue the business.  The legislation 
created a new, required method for appraising motor vehicle 
and boat dealer inventories.  The market value of these inventories 
is determined by dividing the total annual sales from the special 
inventory for the prior calendar year by 12.  This bill would 
apply the same appraisal methodology to heavy equipment dealer 
inventories.  

The bill would take effect January 1, 1998 
and apply to a tax year beginning on or after that date.   

METHODOLOGY:

Section 
 403.302 of the 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 this bill 
could cause a change in school district taxable values reported 
to the Commissioner of Education by the Comptroller.  A reduction 
in school district taxable values could increase the state's 
cost of public education based on current law funding formulas.
          
To the extent that the provisions of this bill reduce taxable 
heavy equipment inventory valuations from current law, there 
would be a reduction in local tax levies
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,JD ,BR