LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 4, 1997
         
         
      TO: Honorable David Sibley, Chair            IN RE:  Senate Bill No. 1557, Committee Report 1st House, Substituted
          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-Committee Report 1st House, Substituted
         
Impleming the provisions of the bill could result in a net POSITIVE 
impact to General Revenue Related Funds through the biennium 
ending August 31, 1999 to the entent that state would save money 
for the Foundation School Program.
         

         
 
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:   
                                         
                      LBB Staff:   JK ,TH ,BR