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