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 ************************************************************************** * 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: *************************************************************************** *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. *************************************************************************** *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