LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
March 13, 1997
TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 944
Committee on State Affairs By: Whitmire
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB944 ( Relating
to the financing of sports venues and related infrastructure;
authorizing the imposition of certain local taxes and the issuance
of local bonds; providing civil penalties.) this office has
detemined the following:
Biennial Net Impact to General Revenue Funds by SB944-As Introduced
Implementing the provisions of the bill could result in negative
fiscal impacts under the various possible scenarios.
The bill would amend the Local Government Code by adding an
additional chapter for sports venue authorities. The new chapter
would authorize a city and a county, jointly, to build sports
venues, levy certain taxes, and issue bonds to finance the stadiums.
A
"sports venue" would be defined as an arena, coliseum, stadium,
or other type of facility that is primarily used (or planned
to be used) for one or more professional or amateur athletic
events; that is used for rodeo, agricultural, or livestock
events, exhibitions, and fairs; and for which a fee for admission
would be charged, or planned to be charged. The use of a sports
venue for events not related to athletics, however, would not
be prohibited.
The bill would only apply to a municipality
with a population of more than 1.2 million and a county with
a population of more than 2.2 million.
A "sports venue project"
would be defined as a sports 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, automobile
parking facility, area transportation facility, road, street,
water or sewer, or other improvement, either on-site or off-site--that
related to and enhanced the use, value, or appeal of a sports
venue, and any other expenditure that was reasonably necessary
to construct, improve, renovate, or expand a sports venue.
An authority could use the provisions of this bill for a sports
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.
An authority would
be required to establish, by resolution, a Sports Venue Project
Fund. Into the fund would be deposited the proceeds from any
taxes levied under the provisions of this bill and any other
monies required by law to be deposited into the fund. In addition,
the deposit of proceeds from the sale of luxury boxes, seat
licenses, stadium rental payments, or concessions or parking
would be allowed. An authority would not be able to levy an
ad valorem tax.
Bonds could be issued by an authority to
pay the costs of a sports venue project. Proceeds from the
sale of bonds would be deposited in accordance to the documents
accompanying the issuance of the bonds. Bonds would have to
be payable from monies in the sports venue project fund and
would mature in not more than 30 years. The bill would state
that the a sports venue project would be owned, used, and held
for public purposes by the authority. While a facility would
be owned by an authority it would not be subject to property
taxation.
Several local option taxes would be authorized
under the provisions of this bill:
A short-term motor vehicle
rental tax. Authorities would be authorized to levy a tax on
the rental, of 30 days or less, of motor vehicles. The tax
would be imposed in increments of one-eighth of one percent,
not to exceed 5 percent.
A hotel occupancy tax. An authority
would be authorized to impose a hotel occupancy tax at a rate
not to exceed 2 percent.
An admissions tax and a parking
tax. A tax on each person admitted to an event at a sport venue
project could be levied at a rate not to exceed $2 per person.
A tax on each motor vehicle parked in a facility of a sport
venue project could be levied at an amount not to exceed $1
per vehicle.
A sports venue authority would be eligible to
receive a refund of state and local sales taxes related to the
incremental increase in state and local sales taxes paid by
or collected at a sports venue project. These refunds would
be made if the Comptroller of Public Accounts, in response to
a written request for refund from an authority, determined that
such a refund would not have a negative fiscal impact on state
revenue.
The bill would specify that all acts and proceedings
authorized or undertaken by a municipality, county, or authority
undertaken before the effective date of this bill would be validated
and confirmed in all respects.
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.
Methodology
The
fiscal impact on the state and on local governments would vary
depending on which cities and counties would form authorities
and, of those, what taxes the authorities would choose to enact
under the provisions of this bill.
At the current time,
it appears as though only the City of Houston and Harris County
would be eligible to form an authority under this bill.
The
provision authorizing a refund of state (and local) sales taxes
is not anticipated to have any fiscal impact on the state, as
such a refund of taxes would not have a negative effect on state
revenue.
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.
Fiscal Impact
The fiscal
impact on the state and on local governments would vary depending
on which cities and counties enacted taxes under the provisions
of the bill.
The bill would likely have negative fiscal impacts
on the state under the various possible scenarios.
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: 304 Comptroller of Public Accounts
LBB Staff: JK ,JD ,SM