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
  
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*  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