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: HB3262 by Williams (Relating to the application of the sales tax to certain food served to students at institutions of higher education.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3262, As Introduced: a negative impact of $(32,551,000) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(28,773,000) * * 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 $(1,225,000) $0 $0 $0 * * 2002 (15,321,000) (2,766,000) (1,067,000) (327,000) * * 2003 (16,005,000) (2,890,000) (1,115,000) (342,000) * * 2004 (16,733,000) (3,021,000) (1,166,000) (357,000) * * 2005 (17,491,000) (3,158,000) (1,219,000) (374,000) * * 2006 (18,268,000) (3,299,000) (1,273,000) (390,000) * *************************************************************************** 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 $(12,768,000) $(2,075,000) $(801,000) $(245,000) * * 2003 (16,005,000) (2,890,000) (1,115,000) (342,000) * * 2004 (16,733,000) (3,021,000) (1,166,000) (357,000) * * 2005 (17,491,000) (3,158,000) (1,219,000) (374,000) * * 2006 (18,268,000) (3,299,000) (1,273,000) (390,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt food products, meals, soft drinks, and candy for human consumption from the state limited sales and use tax if the items were served to a student at an institution of higher education or at a private or independent institution of higher education as part of a meal plan program provided by the institution. 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 Data on the number of students attending institutions of higher education and average expenditures for meal plans were gathered from the Texas Higher Education Coordinating Board and the National Center for Education Statistics. Students assumed to be purchasing meal plans were multiplied by the average cost of a plan, multiplied by the state sales tax rate, adjusted for 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 tables above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, SM