LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
                                Revision 1
  
                               May 13, 1999
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1321 by Ratliff (relating to the settlement and
               collection of taxes and penalties and interest on taxes,
               refunds, and credits), As Engrossed
  
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*  Estimated Two-year Net Impact to General Revenue Related Fundsfor     *
*  SB1321, As Engrossed:  positive impact of $12,089,000 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                           $8,004,000  *
          *       2001                            4,085,000  *
          *       2002                            2,117,000  *
          *       2003                            1,634,000  *
          *       2004                            1,309,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
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*Fiscal    Probable Revenue     Probable Revenue     Probable Revenue    *
* Year      Gain/(Loss) to    Gain/(Loss) to State  Gain/(Loss) to All   *
*        General Revenue Fund     Highway Fund        Local Units of     *
*                0001                 0006              Government       *
*  2000             $8,004,000             $728,000           $1,307,000 *
*  2001              4,085,000              366,000              665,000 *
*  2002              2,117,000              188,000              348,000 *
*  2003              1,634,000              142,000              270,000 *
*  2004              1,309,000              113,000              270,000 *
**************************************************************************
  
Fiscal Analysis
  
Under current law, the annual interest rate charged on delinquent state
taxes is 12%, and no interest is paid on tax refunds. The bill would set
the interest rate on delinquent taxes and tax refunds at the prime rate
plus one percent.  The revised rate would apply to taxes due or refunds
granted on or after January 1, 2000.

Under current law, the Comptroller may settle a claim for tax due,
penalty, and interest if the cost of collection would exceed the amount
due and the amount due is less than $300.  The bill would eliminate the
$300 limit, allowing the Comptroller to settle a claim for tax due,
penalty, and interest if the cost of collection would exceed the amount
due regardless of the amount due.  The bill would also allow the
Comptroller to settle a claim for a tax refund if the cost of defending
against the claim would exceed the amount of the refund claimed.
  
  
Methodology
  
The Comptroller estimates that the revenue gains from increased tax
settlements would be greater than the revenue loss from reduced interest
earnings on delinquent taxes and interest paid on tax refunds.  The
Comptroller used an 8.75 percent interest rate in the calculation.

The estimates are revenue only.  Any savings from reduced administrative
cost would be in addition to the revenue gains.
  
  
Local Government Impact
  
Local units of government would have a corresponding positive fiscal
impact, as indicated in the table above.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, BB, RS