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
  
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*  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