LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 13, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 856 Committee on State Affairs By: Shapleigh Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB856 ( Relating to the authority of certain municipalities to impose a local tax on the gross rental receipts from the rental of a motor vehicle.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB856-As Introduced Implementing the provisions of the bill would result in a net negative impact of ($490,389) to General Revenue Related Funds through the biennium ending August 31, 1999. 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 Subtitle C, Title 3 of the Tax Code to allow certain municipalities to impose a tax not to exceed 5 percent on vehicle rentals and to use the tax revenues only to pay costs associated with a postseason intercollegiate football bowl game. Under this bill, the only municipalities eligible to impose the tax would be those with a population of more than 500,000 situated in a county bordering the Republic of Mexico in which a postseason intercollegiate football bowl game is held annually. The municipality would not be able to impose the tax unless it was first approved by a majority of the qualified voters of the municipality voting at an election held for that purpose. The bill would require the Comptroller to administer, collect, and enforce the municipal vehicle rental tax, to adopt rules and prescribe forms, and to collect the municipal rental tax along with the state vehicle rental tax. The Comptroller would be required to prepare quarterly reports to a municipality that had adopted the tax. The bill would require the Comptroller to deposit in the State Treasury the municipal motor vehicle rental taxes collected. The Comptroller would be required to keep the deposits in trust in a separate Suspense Account of the municipality. Interest earned on those deposits would be credited to the General Revenue Fund 0001. The Comptroller would be required to retain 2 percent of all municipal motor vehicle rental taxes collected for deposit into the General Revenue Fund 0001 after the payment of certain expenses. Methodolgy The administrative cost estimate reflects the funds for staff and equipment that would be needed by the Comptroller's office to handle the anticipated increased workload for allocation activities. The cost estimate for fiscal 1998 also includes funds to hire contract programmers that would be required to make enhancements to the allocation, enterprise, and tax processing automated systems. No significant fiscal impact to the state is anticipated, other than the costs incurred by the comptroller to administer the bill's provisions. 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 Change in Number Savings/(Cost) of State to General Employees from Revenue Fund FY 1997 0001 1998 ($456,908) 1.0 1998 (33,481) 1.0 2000 (33,481) 1.0 2001 (33,481) 1.0 2002 (33,481) 1.0 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 ($456,908) 1999 (33,481) 2000 (33,481) 2001 (33,481) 2002 (33,481) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Because the bill would not have statewide impact on units of local government of the same type or class, no comment from this office is required by the rules of the Senate as to its probable fiscal implication on units of local government. Source: Agencies: 302 Office of the Attorney General 304 Comptroller of Public Accounts LBB Staff: JK ,JD ,SM