LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 12, 2001
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        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 Introduced
  
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*  No significant fiscal implication to the State is anticipated.        *
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Local Government Impact
  
The bill would add a new chapter in the Tax Code to create a municipal
sales tax for street maintenance.  Municipalities would be authorized to
adopt a sales and use tax for street maintenance with the rate of 0.25
percent.  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.

Budget information was provided by the cities of Arlington, Bedford, Fort
Worth, and Round Rock. 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.     

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.  Many municipalities are disqualified from imposing
additional sales and use tax based upon the limitations outlined in the
Tax Code.  For the municipalities that would be eligible to impose an
additional sales tax, the revenue gain would vary.

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 90 days after adjournment.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, DB