LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 7, 1999 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2280 by Dutton (relating to sales tax exemptions for children's clothing and school supplies bought in August.), As Introduced ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * HB2280, As Introduced: negative impact of $(153,584,000) 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 $(40,474,000) * * 2001 (113,110,000) * * 2002 (117,898,000) * * 2003 (122,951,000) * * 2004 (128,110,000) * **************************************************** 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 * * Fund Authorities * * 0001 * * 2000 $(40,474,000) $0 $0 $0 * * 2001 (113,110,000) (19,729,000) (7,747,000) (2,389,000) * * 2002 (117,898,000) (20,563,000) (8,075,000) (2,490,000) * * 2003 (122,951,000) (21,445,000) (8,420,000) (2,697,000) * * 2004 (128,110,000) (22,345,000) (8,774,000) (2,706,000) * *************************************************************************** Fiscal Analysis The bill would amend the Tax Code to exempt the sale of articles of clothing or footwear designed for use by children and youth and costing less than $100 from the sales tax. The exemption would include the sale of components for the exempted clothing and footwear, such as fabrics and thread. The exemption would apply only during the month of August. The exemption would not apply to clothing or footwear primarily designed for athletic activity or protective use (and not normally worn except for use in those activities) or to accessories (e.g., handbags, jewelry, and wallets). The bill would also exempt school supplies costing less than $100 from the sales tax if they were items required for classroom use by a student in a public or private elementary or secondary school. This exemption would also be limited to the month of August. Methodology The fiscal implications of the bill were estimated using data obtained from the Census Bureau on the sale of clothing and footwear, and school supplies. Data on clothing on footwear were adjusted for the appropriate age group and price range, and all data were adjusted to reflect only those sales made during the month of August. The resulting figures were summed, multiplied by the state sales tax rate, and extrapolated through fiscal 2004. Estimates for fiscal 2000 assume an effective date of October 1, 1999. The fiscal implications for units of local government were estimated proportionally. 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, BR, SM