LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
March 13, 1997
TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 935
Committee on State Affairs By: Madla
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB935 ( Relating
to the financing of community venues and related infrastructure
in certain municipalities or counties; authorizing the imposition
of certain local taxes and the issuance of local bonds; providing
penalties.) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB935-As Introduced
Implementing the provisions of the bill could result in a negative
fiscal impact to the State under the various possible scenarios.
The bill would amend the Local Government Code by adding two
additional chapters relating to community venues and community
venue districts. The new chapters would authorize cities or
counties (or a combination) to build community venues, to levy
certain taxes, and to issue bonds to finance the facilities.
A
"community venue" would be defined as an arena, coliseum, stadium,
or other type of facility for which a fee for admission to community,
athletic, and promotional events, including rodeos, livestock
shows, agricultural expositions, and other civic, charitable,
or promotional events, is charged or is planned to be charged.
The
first new chapter, relating to community venues, would only
apply to a county with a population of less than 1.5 million
and a municipality located in such a county.
A "community
venue project" would be defined as a community venue and the
related infrastructure that was planned, acquired, established,
developed, constructed, or renovated under the provisions of
the bill. Related infrastructure would include any store, restaurant,
concession, parking or transportation facility, road, street,
water or sewer, or other improvement, either on-site or off-site--that
related to and enhances the use, value, or appeal of a community
venue, and any other expenditure that was reasonably necessary
to construct, improve, renovate, or expand a community venue.
A municipality or county could use the provisions of this bill
for a community venue project constructed under other law, including
Section 4B of the Development Corporation Act of 1979 or Subchapter
E, Chapter 451 of the Transportation Code.
Before calling
an election on a resolution providing for the development or
construction of a stadium, a municipality or county would be
required to obtain from the Comptroller a determination that
the implementation of the resolution would not have a negative
fiscal impact on the state. Within 15 days of receipt of the
resolution, the Comptroller would be required to perform an
analysis to determine the fiscal impact on the state and to
provide the municipality or county with a written notice of
the results. No response from the Comptroller would be considered
to mean that there would be no negative fiscal impact on the
state.
If the Comptroller found that a resolution would
have a negative fiscal impact on the state, a municipality or
county could contest the finding by filing an appeal with the
Comptroller, or by asking the Comptroller to provide information
on how to change the resolution to avoid the negative fiscal
impact. Within 11 days of receipt of either an appeal or request
for assistance, the Comptroller would be required to reply with
either the results of a new analysis or with the assistance
that had been requested. If the new analysis also found a negative
fiscal impact on state revenue, the Comptroller would include
information on how to change the resolution so as to avoid a
negative fiscal impact. No response from the Comptroller would
be considered to mean that there would be no negative fiscal
impact on the state.
If the Comptroller determined that
a resolution would have no negative fiscal impact on the state,
a municipality or county could call an election on the proposed
community venue project. Once approved by a majority of the
voters, a municipality or county could proceed with the planning,
acquisition, establishment, development, construction, or renovation
of a community venue project.
The bill would state that a
community venue project would be owned, used, and held for public
purposes by the municipality or county. While a facility was
owned by a local government it would not be subject to property
taxation.
Several local-option taxes would be authorized
by this bill:
A short-term motor vehicle rental tax. Municipalities
and counties would be authorized to levy a tax on the rental,
of 30 days or less, of motor vehicles. The tax would be levied
in increments of one-eighth of one percent, not to exceed a
maximum rate of 10 percent.
An admissions tax and a parking
tax. A tax on each person admitted to an event at a community
venue project could be levied at a rate not to exceed $1 per
person. A tax on each motor vehicle parked in a facility of
a community venue project could be levied at an amount not to
exceed $0.50 per vehicle.
The second new chapter, would allow
the creation of "community venue districts." These districts
would be combinations of municipalities and counties. The provisions
of this chapter would only apply to: a county with a population
of less than 1.5 million; a municipality located in such a county;
a county adjacent to such a county; and a municipality located
in a county adjacent to a county with a population of less than
1.5 million.
The districts could consist of two or more counties,
two or more municipalities, or one or more municipality and
one or more county. Such districts would become a political
subdivision of the state. These districts would operate in
the same manner as municipalities or counties with regard to
community venues and community venue projects, subject to the
same determination of fiscal impact on the state by the Comptroller.
The districts would be allowed to impose the same local
option taxes discussed above and in the same manner. A district
would not be allowed to impose an ad valorem tax. A district
could use the provisions of this bill for a community venue
project originated under other law, including Section 4B of
the Development Corporation Act of 1979 or Subchapter E, Chapter
451 of the Transportation Code.
The bill would state that
the a community venue project would be owned, used, and held
for public purposes by the district. While a facility was owned
by a district it would not be subject to property taxation.
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.
This
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.
Fiscal Impact
The
fiscal impact on the state and on local governments would vary
depending on which cities, counties, or districts would choose
to form community venue projects and/or districts, and, of those,
what taxes would be enacted under the provisions of this bill.
The bill would likely have a negative fiscal impact on
the state under the various scenarios possible under the bill.
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