LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 5, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB256 by Gallego (Relating to the application of the
sales tax to certain material used to restore a damaged
residence in a disaster area.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB256, As Introduced: negative impact of $(7,783,000) through the *
* biennium ending August 31, 2003. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(3,840,000) *
* 2003 (3,943,000) *
* 2004 (4,052,000) *
* 2005 (4,162,000) *
* 2006 (4,270,000) *
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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 *
* 2002 $(3,840,000) $(693,000) $(268,000) $(82,000) *
* 2003 (3,943,000) (712,000) (275,000) (84,000) *
* 2004 (4,052,000) (732,000) (282,000) (87,000) *
* 2005 (4,162,000) (751,000) (290,000) (89,000) *
* 2006 (4,270,000) (771,000) (297,000) (91,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to create a sales tax
exemption for certain building materials used to restore residence
homesteads in disaster areas, as declared by the Governor of Texas or the
President of the United States.
To qualify for the exemption, the building materials would have to be
incorporated into a homestead residence damaged by a disaster in which
the damage was not covered by a residential insurance policy and within
18 months after the date the area had been declared a disaster. The term
"restore" would be defined to include the repair, restoration,
remodeling, cleaning, or modification of an improvement of a residence
homestead.
The bill would take effect July 1, 2001, assuming that it received the
requisite two-thirds majority votes in both houses of the Legislature.
Otherwise, it would take effect October 1, 2001.
Methodology
Data on the number of homes damaged and destroyed by declared disasters
and the cost of materials required to repair the damages from disasters
were estimated based on data gathered from the U.S. Bureau of the Census
and the Texas A&M University Real Estate Center. The estimated cost of
materials to restore a residence was multiplied by the number of homes
damaged or destroyed by declared disasters, multiplied by the state sales
tax rate, adjusted for homes not covered by a residential insurance
policy, projected through 2006 based on the consumer price index, and
adjusted for effective date. The fiscal implications for units of local
government were estimated proportionally.
Note: This analysis assumes the number of homes damaged or destroyed by
disasters in fiscal 2002-2006 would equal the average number damaged or
destroyed annually from 1996 to 2000. It is also assumed that there
would be no significant fiscal impact difference between an effective
date of July 1, 2001 and an effective date of October 1, 2001.
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