LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 27, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB57 by Oliveira (Relating to exempting the purchase of
certain school supplies, school books, and other school
materials from the sales tax.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB57, As Introduced: a negative impact of $(66,709,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is July 1, 2001; and a negative impact of $(39,394,000) *
* through the biennium ending August 31, 2003, if the effective date *
* of the bill is October 1, 2001. *
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The following table assumes an effective date of July 1, 2001.
All Funds, Five-Year Impact:
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*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 *
* 2001 $(9,498,000) $0 $0 $0 *
* 2002 (27,840,000) (5,027,000) (1,940,000) (595,000) *
* 2003 (29,371,000) (5,303,000) (2,046,000) (627,000) *
* 2004 (31,030,000) (5,603,000) (2,162,000) (663,000) *
* 2005 (32,761,000) (5,915,000) (2,282,000) (700,000) *
* 2006 (34,721,000) (6,269,000) (2,419,000) (742,000) *
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The following table assumes an effective date of October 1, 2001.
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*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 *
* 2002 $(10,023,000) $0 $0 $0 *
* 2003 (29,371,000) (5,303,000) (2,046,000) (627,000) *
* 2004 (31,030,000) (5,603,000) (2,162,000) (663,000) *
* 2005 (32,761,000) (5,915,000) (2,282,000) (700,000) *
* 2006 (34,721,000) (6,269,000) (2,419,000) (742,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to exempt certain school
supplies, textbooks, books and other instructional materials from the
limited sales and tax. Items would be exempt if they were required for
classroom use by a student in a public or private elementary or secondary
school, had a value of less than $75, and were purchased in the month of
August.
A retailer would not have to obtain an exemption certificate except in
instances where the quantity purchased would indicate a non-school usage.
The governing body of a local taxing authority that imposes a local
sales and use tax would be able to repeal an exemption authorized by this
bill if the governing body found by an appropriate order that the
exemption would materially impair the obligation of any contract existing
at the time the bill would become effective and to which the local
taxing authority is a party.
The bill would take effect on the first day of the first calendar quarter
beginning on or after the date provided for under Section 39, Article
III of the Texas Constitution.
Methodology
Data on the sale of school supplies and textbooks were obtained from
public and private sources, including the U.S. Census Bureau. The data
were adjusted for the appropriate price range and time period, multiplied
by the state sales tax rate, adjusted for the potential effective dates
of July 1, 2001 and October 1, 2001, and extrapolated through fiscal
2006. The fiscal impacts on units of local government were estimated
proportionally.
Note: This analysis assumes that a portion of the sale tax generated by
college textbooks would be exempted by this bill, as well as a portion
of the sales tax collected on books sold at non-college, public
bookstores.
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: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, SM