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