Austin, Texas
                    FISCAL NOTE, 76th Regular Session
                              March 28, 1999
          TO:  Honorable Teel Bivins, Chair, Senate Committee on
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  SB1061  by Bivins (Relating to the ad valorem taxation of
               a certain leasehold or other possessory interest in real
               property constituting a certain project of an industrial
               development corporation), As Introduced
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB1061, As Introduced:  positive impact of $4,500,000 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.                                                             *
General Revenue-Related Funds, Five-Year Impact:
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                                   $0  *
          *       2001                            4,500,000  *
          *       2002                            9,000,000  *
          *       2003                           13,500,000  *
          *       2004                           18,000,000  *
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      $4,500,000      $1,800,000      $1,050,000 *
*  2001         4,500,000       4,500,000       3,600,000       2,100,000 *
*  2002         9,000,000       4,500,000       5,400,000       3,150,000 *
*  2003        13,500,000       4,500,000       7,200,000       4,200,000 *
*  2004        18,000,000       4,500,000       9,000,000       5,250,000 *
Fiscal Analysis
The bill would amend the (Development Corporation Act of 1979), to
provide that a leasehold or other possessory interest in exempt property
owned by a corporation formed under the Development Corporation Act would
be taxable under Section 25.07 of the Tax Code.

The bill would take effect September 1, 1999 and only would apply to
leaseholds entered into on or after the effective date. 
Current law specifically provides that leaseholds or other possessor
interests in property owned by a corporation formed under the Development
Corporation Act are not listed on property tax rolls in name of the
lessee.  This bill provides that such leaseholds and possessory interests
are taxable.  Passage of this bill could result in an increase in
appraisal roll values and property tax levies for some taxing units.

Based on historical development values in 4B development, it is estimated
that $300 million in new property would be added to the appraisal tax
rolls annually.  Statewide average tax rates, by taxing unit were then
applied to the increase valuations to develop the estimated gain of tax
revenue by local taxing unit.

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 gain to the state was estimated by
assuming that the state would save the amount of total levy gain
received by school districts, after a one-year lag.
Local Government Impact
The estimated amount of tax levy gain to units of local government is
reflected in the above table.
Source Agencies:   
LBB Staff:         JK, CT, BR