LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 1, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2821 by Swinford (Relating to eligibility for certain
franchise tax credits.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2821, As Introduced: negative impact of $(58,200,000) 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 $(37,200,000) *
* 2003 (21,000,000) *
* 2004 (22,400,000) *
* 2005 (23,900,000) *
* 2006 (25,600,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $(37,200,000) *
* 2003 (21,000,000) *
* 2004 (22,400,000) *
* 2005 (23,900,000) *
* 2006 (25,600,000) *
*****************************************************
Fiscal Analysis
The bill amends a portion of the franchise tax law, Section 171.721(2) of
the Tax Code, and changes the definition of a "strategic investment
area" (SIA).
Under the bill, a county with a population of less than 50,000 and that
is not included in federal metropolitan statistical area, primary
metropolitan statistical area, or consolidated metropolitan statistical
area would qualify as an SIA.
The bill takes effect January 1, 2001.
Methodology
This estimate is based on analyses done by the Comptroller's Office.
Comptroller staff estimated, based on 2000 Census data, that the bill
would add 100 counties to the 114 counties that are designated as SIA's
under current law. SIA's also include subcounty areas that are
federally-designated urban enterprise communities or urban enhanced
enterprise communities. The 100 counties that the bill would add have a
total population of 1,382,774. The total population of the 114 counties
currently designated as SIA's have a population of 5,458,668. The
state's population is 20,851,820. Employment (1999) in the 100 counties
that would be added was 615,339; employment in the 114 current SIA
counties is 2,332,220. Statewide employment was 9,734,431.
Additional franchise tax credits would become available in the
newly-designated counties. These additional credits include a larger
base for calculating the credit for research and development
expenditures, and credits for job creation and for capital investment in
certain industries other than agricultural processing. Counties with a
population of less than 50,000 may currently qualify for credits related
to activities in agricultural processing under present franchise tax
provisions.
The Comptroller estimate is based on the relative share of employment in
the counties to be added compared to all current non-SIA counties for the
research and development (R&D) credit. The existing R&D credit
attributable to the added counties was increased to reflect the larger
base available in an SIA. The estimate for the investment and jobs
credits was based on employment in the counties that would be added as
SIAs relative to employment in existing SIA counties. The estimated
impact was reduced to account for the availability of credits in
agricultural processing industries in these counties under current law.
Because the effective date of the bill would be January 1, 2001, reports
due after that date could reflect the changes made by this bill. The
impact calculated for fiscal year 2001 has been moved to fiscal year
2002, because most taxpayers would have prepared and filed their reports
before this bill could become law. Taxpayers with credits established
by this bill were assumed to claim refunds in fiscal year 2002.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, CT