LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 18, 2001
  
  
          TO:  Honorable Frank Madla, Chair, Senate Committee on
               Intergovernmental Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB445  by Goodman (Relating to the imposition by certain
               municipalities of a sales and use tax dedicated to street
               maintenance.), As Engrossed
  
**************************************************************************
*  No significant fiscal implication to the State is anticipated.        *
**************************************************************************
  
The bill would add a new chapter in the Tax Code to create a municipal
sales tax with the rate of 0.25 percent for street maintenance.  A tax
levied under the new chapter would have to be approved at an election
held within the municipality. Revenue from such a tax could only be used
to maintain and repair streets existing on the date of the election to
adopt the tax.  A municipality would not be able to adopt the tax if, as
a result of the adoption of the tax, the combined rate of all sales and
use taxes imposed by the municipality and other political subdivisions
having territory in the municipality would exceed 2 percent at any
location in the municipality.

The adoption of a tax authorized by this chapter would take effect on the
first day of the first calendar quarter occurring after the expiration
of the first complete calendar quarter occurring after the date on which
the Comptroller received notice of the election results.

The sales and use tax would expire on the fourth anniversary of the date
the tax originally took effect.  A municipality could not call an
election on the question of authorizing a new tax before the first
anniversary of the date on which the previous tax expired.

The bill would take effect immediately upon enactment, assuming that it
received the requisite two-thirds majority votes in both houses of the
Legislature.  Otherwise, it would take effect September 1, 2001.
  
Local Government Impact
  
Municipalities surveyed indicated that street repair and maintenance
costs range from $12-$16 million. Municipalities with an average
population of 300,000 estimate that they could collect an additional
$4.5 million annually in revenue based upon the provisions in the bill.
Smaller municipalities (population less than 50,000) estimate an annual
revenue gain of $1 million.  The municipalities would continue to
experience this revenue gain to help pay expenses for street repair and
maintenance for the four-year period in which the sales and use tax
would be in effect.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, DB