LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 1, 1999 TO: Honorable Bill Ratliff, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB441 by Ellis, Rodney (relating to exemptions from the sales tax), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * SB441, Committee Report 1st House, Substituted: negative impact * * of $(251,277,000) 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 $(85,153,000) * * 2001 (166,124,000) * * 2002 (172,880,000) * * 2003 (179,971,000) * * 2004 (187,164,000) * **************************************************** 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 * * 2000 $(85,153,000) $(7,110,000) $(2,791,000) $(861,000) * * 2001 (166,124,000) (28,976,000) (11,378,000) (3,509,000) * * 2002 (172,880,000) (30,155,000) (11,841,000) (3,651,000) * * 2003 (179,971,000) (31,391,000) (12,327,000) (3,801,000) * * 2004 (187,164,000) (32,645,000) (12,819,000) (3,954,000) * *************************************************************************** Fiscal Analysis The bill would amend the Tax Code to exempt non-prescription drugs from the sales tax, provided that they are labeled with a national drug code and are specifically for use by children 12 years of age and younger. The bill also would exempt diapers from taxation. Clothing and footwear costing less than $200 per article would be exempt from the sales tax if purchased during a specified two-week period each August. The exemption would not apply to clothing and footwear primarily designed for athletic activity or protective use. Methodology Data were gathered from public and private sources, including the U.S. Census Bureau and Comptroller tax files. Clothing and footwear sales data were adjusted for the appropriate price range and time period. Resulting data were multiplied by the state sales tax rate, extrapolated through fiscal 2004, and adjusted for an effective date of October 1, 1999. The 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: LBB Staff: JK, BB, BR, SM