LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 23, 2001
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2901  by Burnam (Relating to the imposition of a tax on
               the purchase of coal in this state; providing
               penalties.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB2901, As Introduced:  a positive impact of $240,346,000 through     *
*  the biennium ending August 31, 2003, if the effective date of the     *
*  bill is June 1, 2001, or a positive impact of $213,321,000 for the    *
*  biennium ending August 31, 2003, if the effective date of the bill    *
*  is  September 1, 2001.                                                *
**************************************************************************
  
The following table assumes a June 1 , 2001 effective date for the bill.
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year     Probable Revenue Gain/(Loss) to    *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2001                              $18,013,000 *
         *      2002                              110,278,000 *
         *      2003                              112,055,000 *
         *      2004                              110,331,000 *
         *      2005                              109,995,000 *
         *      2006                              110,202,000 *
         *****************************************************
  
The following table assumes a September 1, 2001 effective date for the
bill.
  
         *****************************************************
         * Fiscal Year     Probable Revenue Gain/(Loss) to    *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2002                             $101,171,000 *
         *      2003                              112,150,000 *
         *      2004                              110,806,000 *
         *      2005                              110,545,000 *
         *      2006                              110,669,000 *
         *****************************************************
  
Fiscal Analysis
  
The bill amends the Tax Code to create a tax on coal and lignite either
purchased or used in Texas.  A person would be able to deduct any taxes
reported and paid on coal or lignite purchased in this state from any tax
due on coal or lignite used in this state.

The bill imposes a tax rate of 7.5 percent of the price paid for the
coal, including transportation costs.  Tax due, and a report of coal
purchased and used in this state, would be filed with the Comptroller's
Office on or before the 25th day of the month following the month in
which the tax is incurred.     

The bill requires persons to maintain a complete record of the amount of
coal purchased for use in this state, the total price of the coal, plus
any other information that the Comptroller would need.

A delinquent tax payment would be subject to interest as provided by
Section 111.060.  A person not filing a report as required, or paying the
tax when due, would be subject to a penalty of 12 percent of the amount
of the delinquent tax.  If the report were not paid within 30 days after
its due date, an additional 12 percent penalty would be imposed.  The
minimum penalty would be $1.00.  A person who violated the provisions of
this bill would commit a Class C misdemeanor.

Revenue from the new coal tax would be credited to the General Revenue
Fund 0001.

This bill would take effect immediately upon enactment, assuming that it
received the requisite two-thirds majority votes in both houses of the
Legislature.  Otherwise, it takes effect September 1, 2001.
  
  
Methodology
  
This estimate is based on analyses done by the Comptroller's Office.

The Comptroller's Office used the Public Utility Commission's coal and
lignite forecast of price and production to estimate revenue collections.
For the immediate enactment date, the Comptroller's Office assumed the
effective date would be June 1, 2001 and the first month with tax
receipts would be July 2001, and for the September 1, 2001 effective
date, the first month with tax receipts would be October 2001.

Once the static fiscal impact was estimated by the Comptroller's Office,
the dynamic fiscal impact was calculated using a Texas-specific general
equilibrium model to distribute the amount that otherwise would have been
saved or spent on other items by businesses and consumers among the
state's economic sectors.  The revenue feedback calculation was based on
the historical relationship between state tax revenues and associated
economic factors.

The first revenue table assumes the June 1, 2001 effective date; the
second table, the September 1, 2001 effective date.
  
  
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