LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 5, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1746 by Brown, Betty (Relating to a franchise credit
for funding certain scholarships.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1746, As Introduced: negative impact of $(5,487,000) through *
* the biennium ending August 31, 2003. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 (5,487,000) *
* 2004 (6,637,000) *
* 2005 (7,102,000) *
* 2006 (7,613,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $0 *
* 2003 (5,487,000) *
* 2004 (6,637,000) *
* 2005 (7,102,000) *
* 2006 (7,613,000) *
*****************************************************
Fiscal Analysis
The bill amends Chapter 171 of the Tax Code, authorizing a franchise tax
credit to certain corporations for funding higher education scholarships
for their employees.
The tax credit would be limited to companies with fewer than 50
employees. For qualifying companies, the tax credit would be equal to 50
percent of the amount of qualified employee scholarships funded, up to
the amount of the company's total franchise tax liability.
A qualified scholarship would be a scholarship funded by the taxpayer at
an amount at least equal to 50 percent of the employee's tuition costs.
The employee would be required to attend an institution of higher
education and be enrolled for at least six semester hours.
The bill takes effect January 1, 2002. It would apply to a report
originally due on or after that date. Qualifying expenditures made
after the effective date of the bill and claimed on a report due after
January 1, 2002 would be eligible for the credit.
Methodology
This estimate is based on an analysis made by the Comptroller's Office
from data obtained from Comptroller's tax files and from the Texas
Workforce Commission.
The analysis assumes that the rate at which private industry would fund
employee scholarships would be the same rate at which the state funds
higher education payments for state employees. To determine the total
private sector impact, the state tuition funding rate was compared with
private sector wages of employers having fewer than 50 employees. The
fiscal impact was computed by reducing the total private sector impact by
the corporate share of private sector wages.
The bill would have no fiscal impact in fiscal year 2002, because the
corporate accounting year on which the fiscal 2002 tax report is based
would be concluded before the effective date.
The bill has a reduced revenue impact in fiscal year 2003, because the
accounting year for non-calendar year corporations would be partially
complete before the effective date. Full implementation would begin in
fiscal year 2004.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, CT