LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 13, 2001
  
  
          TO:  Honorable Bill G. Carter, Chair, House Committee on Urban
               Affairs
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB693  by Bosse (Relating to the creation, powers, and
               boundaries of certain municipal development districts.),
               As Introduced
  
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*  No fiscal implication to the State is anticipated.                    *
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Local Government Impact
  
The bill would remove the population cap that determines applicability of
Chapter 377, Local Government Code to municipalities.  The statute would
be applicable to all municipalities located in more than one county and
would allow for an election to create a municipal development district
and impose a sales and use tax for the purpose of financing development
projects beneficial to the district.   In calling an order for an
election under the proposed statute, the applicable municipalities would
be authorized to provide for the district boundaries to conform
automatically to any changes in the boundaries of the portion of the
municipality included in the district. The act would take effect
immediately upon receiving a favorable vote by two-thirds of both houses;
otherwise, it would take effect September 1, 2001.

Of the applicable counties, only those under the 2 percent tax cap set
forth in the Tax Code would be able to impose a sales and use tax. Three
municipalities were contacted that fit the criteria.  The City of
Burleson estimated a one-half cent tax would yield a revenue gain of $1.4
million in fiscal year 2001. The revenue gain would increase by 5
percent each year through 2006.

The City of Corpus Christi would only be able to implement a one-eighth
of a cent tax increase, which would generate a revenue gain of $3.4
million, increasing by 2 percent each of the next five years.

The City of Booker reported that their current tax revenue base is
sufficient for their community needs and would not seek to implement a
municipal development district or to raise taxes.

Very few cities that would be meet the criteria of the bill are under the
2 percent tax cap.  For the cities below the cap, the revenue gain would
be significant.
  
  
Source Agencies:   
LBB Staff:         JK, DB