LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 9, 1999
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB551  by Goolsby (relating to exempting certain small
               corporations from the franchise tax), Committee Report
               1st House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB551, Committee Report 1st House, Substituted:  negative impact      *
*  of $(57,167,000) 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                        $(28,234,000)  *
          *       2001                         (28,933,000)  *
          *       2002                         (30,658,000)  *
          *       2003                         (32,599,000)  *
          *       2004                         (34,697,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year    Probable Revenue Gain/(Loss) from   *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2000                            $(28,234,000) *
         *      2001                             (28,933,000) *
         *      2002                             (30,658,000) *
         *      2003                             (32,599,000) *
         *      2004                             (34,697,000) *
         *****************************************************
  
Fiscal Analysis
  
The bill would exempt from the franchise tax any corporation with
$100,000 or less in gross receipts.  This portion of the bill would take
effect January 1, 2000 and only would apply to franchise tax reports
originally due on or after that date.

Before the beginning of the 79th Legislative Session, the Comptroller
would be required to report to the Legislature and the 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
  
The proposed change in law was modeled on a firm-by-firm basis by the
Comptroller's Office.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, CT, BB, BR