LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
May 13, 1999
TO: Honorable David Sibley, Chair, Senate Committee on
Economic Development
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB899 by Sibley (relating to certain investments by
insurance companies and related organizations; providing
an administrative penalty), Committee Report 1st House,
Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB899, Committee Report 1st House, Substituted: negative impact *
* of $(10,817,961) through the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(317,650) *
* 2001 (10,500,311) *
* 2002 (10,133,975) *
* 2003 (10,133,975) *
* 2004 (10,133,975) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* General Revenue Fund General Revenue Fund FY 1999 *
* 0001 0001 *
* 2000 $0 $(317,650) 4.0 *
* 2001 (10,000,000) (500,311) 4.0 *
* 2002 (10,000,000) (133,975) 4.0 *
* 2003 (10,000,000) (133,975) 4.0 *
* 2004 (10,000,000) (133,975) 4.0 *
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Technology Impact
The Comptroller of Public Accounts estimates a one-time cost of $366,000
in fiscal year 2001 for programming changes to the premium tax system.
Fiscal Analysis
The bill would allow for the creation of "certified capital companies,"
which would have as their primary business activity the investment of
cash in qualified businesses. The bill would define a "certified
investor" as an insurance company or other entity with an insurance
premium tax liability who either contributes certified capital to a
certified capital company or who prepared and filed a premium tax credit
allocation claim under this bill.
The bill would also allow certified investors in certified capital
companies to earn vested premium tax credits equal to 100 percent of
their investment of certified capital. No more than 10 percent of the
credit could be applied to the investor's insurance premium tax liability
each year, and the credit taken could not exceed the premium tax
liability for that year. The credit could not trigger any additional
retaliatory tax liability, and it could be transferred or sold.
The bill would take effect immediately upon enactment, assuming that it
received the requisite two-thirds majority votes in both houses.
Otherwise, it would take effect 90 days following adjournment.
Methodology
The Comptroller of Public Accounts estimated the maximum potential fiscal
impact by assuming that the bill's maximum limit on the aggregate amount
of capital for which premium tax credits could be claimed ($100 million
per year) would be certified in 2000. Since the credit could be claimed
at a rate of 10 percent per year against the certified investor's premium
tax liability, the maximum loss in fiscal 2001 would be 10 percent of
$100 million, or $10 million, with $10 million in additional credits
taken each year thereafter. The first credit could not be claimed until
the report due on March 1, 2001, for the 2000 tax year.
The Comptroller also estimates the need for four additional FTEs and
associated operating costs to process and audit applications and
credits.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 454 Department of Insurance, 304 Comptroller of
Public Accounts
LBB Staff: JK, TH, RT, DP