LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
May 3, 1999
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB175 by Chavez (relating to the expansion of the sales
tax exemptions for film and video producers and music
producers), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Fundsfor *
* HB175, Committee Report 1st House, Substituted: a negative impact *
* of $(12,332,000) through the biennium ending August 31, 2001, if *
* the effective date were July 1, 1999; and a negative impact of *
* $(10,936,000) through the biennium ending August 31, 2001, if the *
* effective date were October 1, 1999. *
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The fiscal implications in the following table assume an effective date
of July 1, 1999:
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 1999 $(554,000) $0 $0 $0 *
* 2000 (5,651,000) (776,000) (305,000) (94,000) *
* 2001 (6,127,000) (842,000) (330,000) (102,000) *
* 2002 (6,657,000) (914,000) (359,000) (111,000) *
* 2003 (7,212,000) (991,000) (389,000) (120,000) *
* 2004 (7,854,000) (1,079,000) (424,000) (131,000) *
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The fiscal implications in the following table assume an effective date
of October 1, 1999:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 2000 $(4,809,000) $(582,000) $(229,000) $(71,000) *
* 2001 (6,127,000) (842,000) (330,000) (102,000) *
* 2002 (6,657,000) (914,000) (359,000) (111,000) *
* 2003 (7,212,000) (991,000) (389,000) (120,000) *
* 2004 (7,854,000) (1,079,000) (424,000) (131,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to exempt from sales tax
items of tangible personal property if used in connection with the
production of a television program, motion picture, or video or audio
recording. The produced media would have to be intended for sale, and a
copy of the production would have to be offered for sale, licensed, or
broadcast.
Similarly, Chapter 152 of the Tax Code would be amended to exempt from
motor vehicle sales and rental taxes vehicles when used in connection
with the production of such media under the same conditions.
The existing sales tax exemption for items used directly in the
production of motion pictures would be repealed.
Methodology
The bill would effectively expand the existing exemption under the
limited sales tax for certain items used directly in the production of
motion pictures. The bill would broaden the existing exemption by adding
currently taxable items such as distribution and transmission equipment
(e.g., broadcast towers and coaxial cable), provided the items were used
in connection with the production of media addressed by the bill.
The fiscal implications of the additional exemptions were estimated using
capital expenditure data from the U.S. Census Bureau. These data were
adjusted to reflect transmission/distribution equipment used in the
production of eligible media, adjusted to Texas-specific values, summed,
and multiplied by the state sales tax rate. The resulting figure was
extrapolated through fiscal 2004 and adjusted for the two possible
effective dates: July 1, 1999 and October 1, 1999.
The fiscal implications of the proposed exemption to the motor vehicle
sales tax were estimated using the Texas Film Commission publication,
1999 Texas Production Manual. The number of vehicles purchased or rented
by companies providing services to the motion picture, television, and
audio/video industries was estimated, multiplied by an average taxable
purchase price per vehicle (or rental rate), multiplied by the
appropriate tax rate, and extrapolated through fiscal 2004. An
adjustment was made for the two possible effective dates.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, BB, BR, SM