LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 2, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB1953 by Longoria (Relating to exempting renewable energy devices from the sales and use tax.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1953, As Introduced: a negative impact of $(16,162,000) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(14,286,000) * * 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) to Gain/(Loss) to Gain/(Loss) to * * General Revenue Cities Transit Counties/SPDs * * Fund Authorities * * 0001 * * 2001 $(608,000) $0 $0 $0 * * 2002 (7,610,000) (1,374,000) (530,000) (163,000) * * 2003 (7,944,000) (1,434,000) (553,000) (170,000) * * 2004 (8,294,000) (1,498,000) (578,000) (177,000) * * 2005 (8,661,000) (1,564,000) (603,000) (185,000) * * 2006 (9,046,000) (1,633,000) (630,000) (193,000) * *************************************************************************** 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) to Gain/(Loss) to Gain/(Loss) to * * General Revenue Cities Transit Counties/SPDs * * Fund Authorities * * 0001 * * 2002 $(6,342,000) $(1,031,000) $(398,000) $(122,000) * * 2003 (7,944,000) (1,434,000) (553,000) (170,000) * * 2004 (8,294,000) (1,498,000) (578,000) (177,000) * * 2005 (8,661,000) (1,564,000) (603,000) (185,000) * * 2006 (9,046,000) (1,633,000) (630,000) (193,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to define "renewable energy" and "renewable energy device." The sale or use of a renewable energy device, including its component parts and repair or replacement parts, would be exempted from the state sales and use tax. 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 on the sale of renewable energy devices were gathered from several sources, including the Energy Information Administration. Sales were adjusted to reflect only Texas, multiplied by the state sales tax rate, adjusted for potential effective dates of July 1, 2001 and October 1, 2001, and extrapolated through 2006. The fiscal impacts on units of local government were estimated proportionally. Note: Currently, renewable energy devices purchased to generate electricity for sale are exempt from the state sales and use tax as manufacturing equipment. Local Government Impact Local units of government would have a corresponding fiscal impact from sales tax revenues, as indicated in the tables above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, SM