LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 26, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2234 by Delisi (Relating to franchise tax deductions
and exemptions for certain business activities involving
wind energy devices.), Committee Report 1st House,
Substituted
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2234, Committee Report 1st House, Substituted: negative impact *
* of $(825,000) through the biennium ending August 31, 2003. *
**************************************************************************
General Revenue-Related Funds, Five-Year Net Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(385,000) *
* 2003 (440,000) *
* 2004 (495,000) *
* 2005 (525,000) *
* 2006 (545,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $(385,000) *
* 2003 (440,000) *
* 2004 (495,000) *
* 2005 (525,000) *
* 2006 (545,000) *
*****************************************************
Fiscal Analysis
The bill amends Texas franchise law, Chapter 171 of the Tax Code,
authorizing a franchise tax exemption for corporations with business
interest in wind energy devices. The term "wind energy device" means a
system or series of mechanisms designed primarily to provide heating or
cooling, or to produce electrical or mechanical power by collecting and
transferring wind-generated energy.
A corporation engaged solely in the business of manufacturing, selling,
or installing wind energy devices would be exempt from franchise tax.
A corporation would be authorized to deduct from its apportioned taxable
capital the amortized cost of a wind energy device, or from its
apportioned taxable earned surplus 10 percent of the amortized cost of a
wind energy device. To qualify for this deduction, the device would have
to be acquired by a corporation for heating or cooling or for the
production of power and be used in Texas. In addition, the cost of the
device would have to be amortized over a period of at least 60 months.
The bill takes effect on January 1, 2002 and applies to a tax report due
on or after that date and to exemptions, deductions, or expenditures
made on or after that date.
Methodology
This estimate is based on analyses done by the Comptroller's Office.
According to the Comptroller's Property Tax Division, $67 million in wind
power assets exist in Texas. However, most of the companies owning
these assets are new and have not filed franchise tax reports.
Therefore, for purposes of this estimate, the Comptroller's Office
estimates that the value of the tax benefit would be the same as the
future estimated values for current solar energy exemption and
deduction.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, WP, CT