LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                               May 11, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB551 by Goolsby (relating to exempting certain small
               corporations from the franchise tax and to the reporting
               requirements for those corporations), As Engrossed
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Fundsfor     *
*  HB551, As Engrossed:  negative impact of $(120,652,000) through       *
*  the biennium ending August 31, 2001.                                  *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                        $(59,588,000)  *
          *       2001                         (61,064,000)  *
          *       2002                         (64,705,000)  *
          *       2003                         (68,802,000)  *
          *       2004                         (73,229,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year    Probable Revenue Gain/(Loss) from   *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2000                            $(59,588,000) *
         *      2001                             (61,064,000) *
         *      2002                             (64,705,000) *
         *      2003                             (68,802,000) *
         *      2004                             (73,229,000) *
         *****************************************************
  
Fiscal Analysis
  
The bill would exempt from the franchise tax any corporation with annual
gross receipts of $250,000 or less.  The new exemption would become
effective for all franchise tax reports originally due after January 1,
2000 and before January 1, 2006.

Before the beginning of the 79th Legislative Session, the Comptroller
would be required to report to the Legislature and Governor regarding
the exemption's impact on the state economy and on the administration of
tax law, including a recommendation for retaining, eliminating, or
amending the exemption.
  
  
Methodology
  
This note is based on an analysis prepared by the Comptroller's Office
from data derived from Comptroller franchise tax files.
  
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, BB, BR, CT