LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 20, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB939 by Hodge (Relating to the application of certain taxes on persons involved in television, motion picture, video, and audio productions.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB939, As Introduced: a negative impact of $(2,098,417) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(1,861,750) * * through the biennium ending August 31, 2003, if the effective date * * of the bill is October 1, 2001. * ************************************************************************** The following table assumes an effective date of July 1, 2001. All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Revenue Revenue * * Gain/(Loss) to Gain/(Loss) Gain/(Loss) Gain/(Loss) * * General Revenue from Hotel from Cities from Counties * * Fund Occupancy Tax * * 0001 Deposits * * Account * * 5003 * * 2001 $(148,250) $(750) $(9,000) $(1,000) * * 2002 (962,667) (9,333) (114,000) (9,000) * * 2003 (987,500) (9,500) (117,000) (9,000) * * 2004 (1,014,167) (9,833) (120,000) (9,000) * * 2005 (1,041,917) (10,083) (123,000) (10,000) * * 2006 (1,068,667) (10,333) (126,000) (10,000) * *************************************************************************** The following table assumes an effective date of October 1, 2001. *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Revenue Revenue * * Gain/(Loss) to Gain/(Loss) Gain/(Loss) Gain/(Loss) * * General Revenue from Hotel from Cities from Counties * * Fund Occupancy Tax * * 0001 Deposits * * Account * * 5003 * * 2002 $(874,250) $(7,750) $(95,000) $(7,000) * * 2003 (987,500) (9,500) (117,000) (9,000) * * 2004 (1,014,167) (9,833) (120,000) (9,000) * * 2005 (1,041,917) (10,083) (123,000) (10,000) * * 2006 (1,068,667) (10,333) (126,000) (10,000) * *************************************************************************** Fiscal Analysis The bill would exempt certain items involved in television, motion pictures, video, and audio production from the taxes imposed by Chapters 152 and 156 of the Tax Code. The bill would amend Chapter 152 to exempt from the motor vehicle sales and use tax the purchase, rental, or use of a motor vehicle in connection with the commercial production of a television film, commercial, program, motion picture, or a video or audio recording. The tax that would have been remitted on the gross rental receipts without this exemption would be deemed to have been remitted for the purpose of computing the minimum gross rental receipts tax. The bill would amend Chapter 156 to exempt from the hotel occupancy tax a person involved in the commercial production of a television film, commercial, program, motion picture, or a video or audio recording, provided that the person had the right to use or possess a room in one hotel or in a series of two or more hotels for at least 15 consecutive days. 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 were collected from public and private sources, including the Texas Film Commission. Motor vehicle rentals were estimated as a percentage of production budgets and extrapolated using the Consumer Price Index. For the hotel occupancy tax exemption, the state tax rate was applied to the estimated budget for lodging by commercial production companies meeting the 15-day minimum stay requirement. The fiscal impacts for years after 2000 were adjusted using the Consumer Price Index. Note: The language in the bill does not precisely specify who could qualify for the exemptions ("in connection with"). As such, the estimated impact to the motor vehicle sales and use tax was doubled. The hotel occupancy tax exemption was increased by 25 percent for this ambiguity. Local Government Impact Local units of government would have a corresponding fiscal impact from motor vehicle sales tax revenues, as indicated in the tables above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, SM