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
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* 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. *
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The following fiscal implications assume an effective date of July 1,
1999.
All Funds, Five-Year Impact:
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*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) *
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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