LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session February 26, 1999 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB209 by Cuellar (relating to exempting the purchase of certain school supplies from the sales tax), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB209, As Introduced: negative impact of $(5,844,000) through the * * biennium ending August 31, 2001. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $(919,000) * * 2001 (4,925,000) * * 2002 (5,271,000) * * 2003 (5,614,000) * * 2004 (6,005,000) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *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 $(919,000) $0 $0 $0 * * 2001 (4,925,000) (859,000) (337,000) (104,000) * * 2002 (5,271,000) (919,000) (361,000) (111,000) * * 2003 (5,614,000) (979,000) (384,000) (119,000) * * 2004 (6,005,000) (1,047,000) (411,000) (127,000) * *************************************************************************** Fiscal Analysis The bill would amend the Tax Code to exempt certain school supplies from the sales tax. Items would be exempt if required for classroom use by a student in a public or private elementary or secondary school, on a list issued by the teacher of the class or the school, and purchased in the month of August. Methodology The fiscal implications of the bill were estimated using data on school supplies obtained from the Census Bureau. Total school supplies sales in Texas was multiplied by the state sales tax rate, adjusted to reflect sales made in August, and extrapolated through fiscal 2004. The fiscal implications for units of local government were estimated proportionally. Estimates for fiscal 2000 reflect an assumed effective date of October 1, 1999. Note: It is estimated that August 2000 prepayments of sales tax would be reduced due to the exemption. Local government rebates, however, would not be affected until September 2000. 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: LBB Staff: JK, BB, SM