LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 30, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2627 by Bonnen (Relating to an exemption from the sales and use tax for membership in or admission to a health spa.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2627, As Introduced: a negative impact of $(38,975,000) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(34,451,000) * * 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 $(1,466,000) $0 $0 $0 * * 2002 (18,345,000) (3,312,000) (1,278,000) (392,000) * * 2003 (19,164,000) (3,460,000) (1,335,000) (409,000) * * 2004 (20,035,000) (3,617,000) (1,396,000) (428,000) * * 2005 (20,943,000) (3,782,000) (1,459,000) (447,000) * * 2006 (21,873,000) (3,949,000) (1,524,000) (467,000) * *************************************************************************** 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 $(15,287,000) $(2,484,000) $(959,000) $(294,000) * * 2003 (19,164,000) (3,460,000) (1,335,000) (409,000) * * 2004 (20,035,000) (3,617,000) (1,396,000) (428,000) * * 2005 (20,943,000) (3,782,000) (1,459,000) (447,000) * * 2006 (21,873,000) (3,949,000) (1,524,000) (467,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exclude membership in or admission to a health spa, as defined by Section 702.003 of the Occupations Code, from the definition of amusement services. 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 The sale of memberships in, or admission to, fitness clubs and health spas would be exempted from the state sales and use tax. Data on health club/spa memberships were gathered from Comptroller data files. Sales were multiplied by the state sales tax rate, adjusted for the potential effective dates of July 1, 2001 and October 1, 2001, and extrapolated through 2006. The fiscal impact on units of local government were estimated proportionally. Local Government Impact Local units of government would have a corresponding fiscal impact from sales tax revenues, as indicated in the table above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, SM