LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 6, 1999
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2574 by Hilbert (relating to allocation for ad valorem
               tax purposes of the value of certain business aircraft
               used both in and outside of this state), As Introduced
  
**************************************************************************
*  Estimated Two-Year Net Impact to General Revenue Related Fundsfor     *
*  HB2574, As Introduced:  $0 through the biennium ending August 31,     *
*  2001.                                                                 *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                                   $0  *
          *       2001                                    0  *
          *       2002                         (11,537,000)  *
          *       2003                         (11,883,000)  *
          *       2004                         (12,240,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal      Probable        Probable        Probable        Probable     *
* Year    Savings/(Cost)     Revenue         Revenue         Revenue      *
*          from General    Gain/(Loss)     Gain/(Loss)     Gain/(Loss)    *
*          Revenue Fund    from School     from Cities    from Counties   *
*              0001         Districts                                     *
*  2000                $0              $0              $0              $0 *
*  2001                 0    (11,537,000)     (2,500,000)     (3,461,000) *
*  2002      (11,537,000)       (346,000)     (2,575,000)     (3,565,000) *
*  2003      (11,883,000)       (357,000)     (2,652,000)     (3,672,000) *
*  2004      (12,240,000)       (367,000)     (2,732,000)     (3,782,000) *
***************************************************************************
  
Fiscal Analysis
  
Business aircraft in Texas are currently taxable at a single location
(situs) in the state.  Once situs is established under Section 21.02 of
the Tax Code, the aircraft is appraised and taxed at that single
location. This bill would decrease appraised values for local
governments by providing for the allocation of a business aircraft's
appraised value to Texas and other locations.
  
  
Methodology
  
The Comptroller staff estimated the property value loss to local
governments by first determining the number of business aircraft with
situs in Texas and the average appraised value of a business aircraft in
Texas, to determine the current appraised value of all business aircraft
in the state.  The staff then estimated the reduction in appraised value
that would occur using the allocation formula proposed in the bill.  The
resulting reduction represents the value loss to local governments.  The
value loss was converted to a property tax levy loss by applying
estimated average property tax rates.  A moderate growth rate was used,
consistent with the current growth for commercial property in Texas

Section 403.302 of the Government Code requires the Comptroller to
conduct a property value study to determine the total taxable value for
each school district.  Total taxable value is an element in the state's
school funding formula.   The cost to the state was estimated by
assuming that the state would reimburse school districts for their total
levy losses, after a one-year lag
  
  
Local Government Impact
  
The impact on local taxing units is reflected in the above table.
  
  
Source Agencies:   
LBB Staff:         JK, BB, BR