LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 26, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 856, Committee Report 1st House, Substituted 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-Committee Report 1st House, Substituted No significant fiscal implication to the State is anticipated. 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. The bill would amend Subtitle C, Title 3 of the Tax Code to allow eligible municipalities to impose a tax not to exceed 10 percent on short-term vehicle rentals. An eligible municipality could use the tax revenues only to collect the tax and pay costs associated with a postseason intercollegiate football bowl game, including but not limited to the cost of planning, acquiring, establishing, developing, advertising, promoting, conducting, sponsoring, or otherwise supporting the 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 United Mexican States in which a postseason intercollegiate football bowl game is held annually. The only municipality currently eligible to impose a vehicle rental tax under this bill would be El Paso. (The Sun Bowl is played in El Paso.) 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 allow an eligible municipality to impose and collect a tax on the gross rental receipts from motor vehicle rentals within the municipality in increments of one-eighth of one percent, not to exceed 10 percent. The tax would be limited to rentals of 30 days or less. The municipal vehicle rental tax would not apply unless the state tax applied. The current exemptions for the state vehicle rental tax also would apply to the municipal vehicle rental tax. The bill would provide for municipal administration and collection of the tax. A municipality would be required to establish, by resolution, an Auto Rental Tax Fund (fund). The municipality would be required to deposit in the fund the proceeds of any tax it imposed and collected under this bill. The governing body of the municipality would establish, by ordinance, tax reporting requirements, remittance schedules, and penalties for failure to keep records, report as required, and pay the tax when due. A municipality's attorney would be permitted to file suit against a person who failed to collect the tax and remit it to the municipality. The bill would become effective immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would become effective 90 days after adjournment. Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,JD ,SM