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: HB2372 by Gutierrez (relating to exempting certain drugs and medicines from the sales tax), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * HB2372, Committee Report 1st House, Substituted: a negative * * impact of $(51,057,000) through the biennium ending August 31, * * 2001, if the effective date is July 1, 1999; and a negative * * impact of $(45,185,000) through the biennium ending August 31, * * 2001, if the effective date is October 1, 1999. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** The following fiscal implications assume an effective date of July 1, 1999. 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/SPDs * * Fund Authorities * * 0001 * * 1999 $(1,894,000) $0 $0 $0 * * 2000 (23,872,000) (4,164,000) (1,635,000) (504,000) * * 2001 (25,291,000) (4,411,000) (1,732,000) (534,000) * * 2002 (26,859,000) (4,685,000) (1,840,000) (567,000) * * 2003 (28,500,000) (4,971,000) (1,952,000) (602,000) * * 2004 (30,193,000) (5,266,000) (2,068,000) (638,000) * *************************************************************************** The following fiscal implications assume an effective date of October 1, 1999. *************************************************************************** *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/SPDs * * Fund Authorities * * 0001 * * 2000 $(19,894,000) $(3,123,000) $(1,226,000) $(378,000) * * 2001 (25,291,000) (4,411,000) (1,732,000) (534,000) * * 2002 (26,859,000) (4,685,000) (1,840,000) (567,000) * * 2003 (28,500,000) (4,971,000) (1,952,000) (602,000) * * 2004 (30,193,000) (5,266,000) (2,068,000) (638,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt non-prescription drugs from the sales tax, provided that they were labeled with a national drug code issued by the Food and Drug Administration and specifically formulated and labeled for children 12 years of age and younger. Methodology To estimate the fiscal implications of the bill, Texas-specific non-prescription drug sales data were obtained from the U.S. Census Bureau and adjusted to reflect only those items that would be exempted by the bill. The data were multiplied by the state sales tax rate and extrapolated through fiscal 2004. If the bill were to receive a two-thirds vote in each house, it could take effect July 1, 1999; otherwise, it would take effect October 1, 1999. Fiscal impacts on 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: 304 Comptroller of Public Accounts LBB Staff: JK, BB, SM