LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 21, 1999 TO: Honorable Bill Ratliff, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB1068 by Fraser (relating to the disposition of revenue from the motor vehicle sales tax by certain counties), As Introduced ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * SB1068, As Introduced: negative impact of $(1,993,000) 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 $(777,000) * * 2001 (1,216,000) * * 2002 (1,294,000) * * 2003 (1,352,000) * * 2004 (1,413,000) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Revenue Probable Revenue Probable Revenue * * Year Gain/(Loss) to Gain/(Loss) to State Gain/(Loss) to * * General Revenue Fund Highway Fund Counties * * 0001 0006 * * 2000 $(777,000) $493,000 $283,000 * * 2001 (1,216,000) 772,000 443,000 * * 2002 (1,294,000) 822,000 472,000 * * 2003 (1,352,000) 859,000 493,000 * * 2004 (1,413,000) 897,000 515,000 * ************************************************************************** Fiscal Analysis The bill would amend the Tax and Transportation Codes to set new sales tax collection and reporting procedures for counties with a population of 10,000 or less. These counties would be allowed to retain 5 percent of the motor vehicle sales taxes and penalties collected by the tax assessor-collector. Counties with a population greater than 10,000 would continue to retain from their registration collections an amount of up to 5 percent of the motor vehicle sales and use taxes and penalties. These counties would continue to remit to the Comptroller all motor vehicle sales and use taxes, and penalties collected. The bill would take effect January 1, 2000. Methodology There are 89 counties with a population of 10,000 or less, as of July 1997. These counties collected and remitted to the Comptroller approximately $1.2 million in motor vehicle sales and use taxes and penalties for fiscal 1998. Counties are allowed to retain from their registration fees and penalties an amount equaling up to 5 percent of their motor vehicle sales and use taxes and penalties collected the previous year. However, 26 of the 89 counties with a population of 10,000 or less have registration collections so low that they meet a special statutory provision that allows them to request from the Comptroller that they be allowed to retain the full portion (5 percent) of sales tax collected. In effect, the bill would allow the remaining 63 counties with a population of 10,000 or less to retain 5 percent of motor vehicle sales tax and penalty collections and to discontinue the practice of retaining from their registration collections an amount equaling up to 5 percent of the motor vehicle sales taxes and penalties. Motor vehicle sales and use taxes from seller financing would be included. The General Revenue Fund 0001 would lose an amount equal to approximately 5 percent of the motor vehicle sales and use tax collections in each qualifying county, while the State Highway Fund 0006 would gain from registration money no longer kept by the counties in lieu of sales tax. Counties also would gain revenues. Local Government Impact Counties would have a corresponding fiscal impact from motor vehicle sales taxes and penalties, as indicated in the table above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, BB, SM