LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                               May 13, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2372 by Gutierrez (relating to exempting certain drugs,
               medicines, and medical devices from the sales tax),
               Committee Report 2nd House, as amended
  
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*  Estimated Two-year Net Impact to General Revenue Related Fundsfor     *
*  HB2372, Committee Report 2nd House, as amended:  a negative impact    *
*  of $(255,286,000) through the biennium ending August 31, 2001, if     *
*  the effective date is July 1, 1999; and a negative impact of          *
*  $(225,921,000) through the biennium ending August 31, 2001, if the    *
*  effective date is October 1, 1999.                                    *
**************************************************************************
  

The following table assumes 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      $(9,471,000)              $0              $0              $0 *
*  2000     (119,362,000)    (20,819,000)     (8,175,000)     (2,521,000) *
*  2001     (126,453,000)    (22,056,000)     (8,661,000)     (2,671,000) *
*  2002     (134,295,000)    (23,424,000)     (9,198,000)     (2,836,000) *
*  2003     (142,499,000)    (24,855,000)     (9,760,000)     (3,010,000) *
*  2004     (150,966,000)    (26,331,000)    (10,340,000)     (3,188,000) *
***************************************************************************
  


The following table assumes an effective date of October 1, 1999.
  
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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                                                       *
*  2000     $(99,468,000)   $(15,614,000)    $(6,131,000)    $(1,891,000) *
*  2001     (126,453,000)    (22,056,000)     (8,661,000)     (2,671,000) *
*  2002     (134,295,000)    (23,424,000)     (9,198,000)     (2,836,000) *
*  2003     (142,499,000)    (24,855,000)     (9,760,000)     (3,010,000) *
*  2004     (150,966,000)    (26,331,000)    (10,340,000)     (3,188,000) *
***************************************************************************
  
Fiscal Analysis
  
The bill would amend the Tax Code to exempt certain non-prescription
drugs,  medical devices, and blood glucose monitoring test strips from
the sales tax.
  
  
Methodology
  
Texas-specific non-prescription drug sales data were obtained from the
U.S. Census Bureau.  The data were multiplied by the state sales tax
rate and extrapolated through fiscal 2004.
  
  
Local Government Impact
  
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the tables above.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, BB, SM