LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 6, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB802 by Hope (Relating to incentives for the sale,
purchase, or use of certain vehicles.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB802, As Introduced: negative impact of $(15,848,000) through *
* the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(5,781,000) *
* 2003 (10,067,000) *
* 2004 (13,264,000) *
* 2005 (17,123,000) *
* 2006 (5,341,000) *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Savings/(Cost) Revenue *
* Gain/(Loss) to Gain/(Loss) to to State Gain/(Loss) to *
* General Revenue State Highway Highway Fund Clean Air *
* Fund Fund 0006 Account/ *
* 0001 0006 GR-Dedicated *
* 0151 *
* 2002 $(5,781,000) $0 $(95,941) $0 *
* 2003 (10,067,000) (101,000) 0 (5,000) *
* 2004 (13,264,000) (226,000) 0 (11,000) *
* 2005 (17,123,000) (384,000) 0 (19,000) *
* 2006 (5,341,000) 0 0 0 *
***************************************************************************
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) to *
* Counties' Road and Bridge Funds *
* 2002 $0 *
* 2003 (77,000) *
* 2004 (172,000) *
* 2005 (292,000) *
* 2006 0 *
*****************************************************
Fiscal Analysis
The bill would amend the Tax Code and the Transportation Code relating to
the taxation of and fees assessed upon certain clean-air vehicles.
The bill would amend Chapter 152 of the Tax Code by adding a new section
for certain clean-air motor vehicles. The credit only would apply to
purchases of vehicles made on or after September 1, 2001 and before
October 1, 2005. The amount of the credit would be the lesser of $2,000
or the total amount of motor vehicle sales and use tax due. This part of
the bill would expire September 30, 2005.
The bill would amend Chapter 171 of the Tax Code to allow a corporation
that is a franchised dealer a credit of $1,500 per qualifying vehicle.
At the time of sale, the dealer would have to provide the purchaser of
the new motor vehicle either a rebate, discount, or other financial
adjustment equal to at least $1,000. This part of the bill is effective
January 1, 2002, and would expire December 31, 2005.
The bill would amend the Transportation Code to allow a previously
registered clean-air vehicle six or fewer model years old to pay no state
or county registration fees. A new clean-air vehicle and a vehicle more
than six model years old would pay all applicable state and county
registration fees. This part of the bill only would apply to new motor
vehicles purchased on or after September 1, 2001, and it would expire
September 1, 2005.
The Texas Department of Transportation (TxDOT) would issue
specially-designed license plates for clean-air vehicles. This part of
the bill only would apply to new motor vehicles purchased on or after
September 1, 2001, and it would expire September 1, 2005.
New clean-air vehicles would be subject to an initial four-year safety
inspection period. The fee for this inspection would be set by TxDOT by
rule on or before September 1 of each year. This part of the bill would
expire September 1, 2005.
Except as noted, this bill would take effect September 1, 2001.
Methodology
Only new cars would be eligible for the motor vehicle sales tax credit;
motorcycles, golf carts, light trucks, and buses would not be eligible.
The amount of the credit would be the lesser of $2,000 or the total
amount of motor vehicle sales and use tax due on purchases made on or
after September 1, 2001 and before October 1, 2005.
Currently, only two passenger models would qualify for a credit under the
provisions of this bill. The supply of such vehicles by other
manufacturers during the allowable period is unknown. The proposed
exemption would produce a negative fiscal impact through reduced motor
vehicle sales tax collections on original purchases, reduced franchise
tax collections, and reduced vehicle registration and inspection fees.
It is estimated that over the life of the bill fewer than 15,950 vehicles
would be purchased.
Note: The bill is unclear as to how purchasers might secure the motor
vehicle sales tax credit. Note also that the 45 miles-per-gallon of
gasoline or conventional diesel fuel requirement is significant to this
estimate. Any reduction in the requirement could produce significant
greater negative revenue implications.
The franchise tax incentive to authorized dealers would be a $1,500
credit for each vehicle sold.
New vehicle owners would pay a first-year registration fee, but they
would pay no registration fees for years two through six. TxDOT
estimates that, under the county sharing formula, sixty-six percent of
the fee goes to the state and thirty-four percent goes to counties. New
clean-air vehicle owners would purchase a four-year safety inspection for
a fee to be specified by TxDOT.
TxDOT estimates that it would incur costs for professional services in
the first year, totaling $95,941 to modify the Registration and Title
System (RTS), costs for designing and manufacturing special vehicle
plates, and cost to make notification to all County Tax
Assessor-Collector offices, Texas vehicle dealers, and Texas law
enforcement agencies.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
motor vehicle sales taxes and motor vehicle registration fees, as
indicated in the table above.
Source Agencies: 601 Texas Department of Transportation, 582 Texas
Natural Resource Conservation Commission, 405 Texas
Department of Public Safety, 304 Comptroller of
Public Accounts
LBB Staff: JK, SD, SM, WP