LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 3, 1997
         
         
      TO: Honorable David Sibley, Chair            IN RE:  Senate Bill No. 1557
          Committee on Economic Development                              By: Sibley
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1557 ( Relating 
to certain contributions and tax abatement agreements of a school 
district for the support of reinvestment zones.) this office 
has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB1557-As Introduced
         
Implementing the provisions of the bill could result in a  net 
POSITIVE impact to General Revenue Related Funds through the 
biennium ending August 31, 1999to the extent that the state 
would save money for the Foundation School Program
         

         
 
Similar annual fiscal implications FISCAL ANALYSIS

The bill 
would provide that tax increment financing agreements or tax 
abatement agreements approved before September 1, 1997 could 
not be amended on or after September 1, 1997 to increase a school 
district's payments. 

The bill would take effect September 
1, 1997 and would only apply to a reinvestment zone or project 
plan created enlarged, or modified on or after that date.

METHODOLOGY

Section 
403.302 of the Government Code allows school districts' taxable 
values computed for state funding purposes to be reduced for 
property values subject to tax increment financing agreements 
under Chapter 311 Tax Code.  It does not allow districts' values 
to be reduced for property value lost to tax abatement agreements 
entered into after May 31, 1993 under Chapter 312 of the Tax 
Code.  Removal of school districts from tax increment financing 
agreements would save money for the Foundation School Program.

However, 
the amount of state savings cannot be estimated because it is 
not known how many school districts would enter into tax increment 
financing agreements after September 1, 1997, or the value of 
property that might be located in those reinvestment zones.

For 
purposes of illustration, the amount of school district value 
in reinvestment zones was approximately $243 million in the 
1996 tax year.  This amount was deducted from the districts' 
values used for state funding purposes.  The $243 million lost 
to reinvestment zones generated a levy loss to those school 
districts of approximately $3.4 million.
          
To the extent that local school districts are restricted from 
entering tax abatement or tax increment financing agreements, 
local revenue could increase for those district's who do not 
receive state public education funding due to current funding 
formulars.
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,TH ,BR