LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                               May 21, 1999
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB5 by Sibley (relating to the authorization of certain
               franchise tax incentives promoting economic development),
               Committee Report 2nd House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Fundsfor     *
*  SB5, Committee Report 2nd House, Substituted:  negative impact of     *
*  $(179,405,000) 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                        (179,405,000)  *
          *       2002                        (245,759,000)  *
          *       2003                        (300,304,000)  *
          *       2004                        (366,511,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year    Probable Revenue Gain/(Loss) from   *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2000                                       $0 *
         *      2001                            (179,405,000) *
         *      2002                            (245,759,000) *
         *      2003                            (300,304,000) *
         *      2004                            (366,511,000) *
         *****************************************************
  
Fiscal Analysis
  
The bill would create four new franchise tax credits: a day care credit,
a research and development credit, a job creation credit, and an
investment credit.

The bill would require the Comptroller to report to the Legislature
information on the four credits, including the geographic location within
Texas of the day care expenses incurred, the research performed, the
jobs created, and the investments made.  The Comptroller would be
required to report on the economic and tax impact of the credits.  The
reports by the Comptroller would be due before the beginning of each
regular legislative session.

The bill would take effect January 1, 2000.  The credits would be
effective for day care expenses incurred, research expenditures made,
jobs created, and investment made on or after this date.

The credits would expire December 31, 2009.

  
  
Methodology
  
This note is based on analysis by the Comptroller's Office of the
Office's franchise tax report files and data from the Texas Workforce
Commission, U.S. Bureau of the Census, U.S. Bureau of Economic Analysis
and Internal Revenue Service.

The Comptroller's Office has indicated that administrative costs to
implement provisions of this legislation would not be significant.
  
  
Local Government Impact
  
Local units of government would benefit from any increased economic
activity and local tax revenues induced by the new franchise tax
credits.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, BB, CT