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:
  
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*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