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