LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 17, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB3389 by Oliveira (Relating to franchise tax credits for telecommunications corporations for job creation activities and capital investments.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3389, As Introduced: negative impact of $(60,200,000) 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 $(23,400,000) * * 2003 (36,800,000) * * 2004 (40,600,000) * * 2005 (43,200,000) * * 2006 (47,600,000) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) from * * General Revenue Fund * * 0001 * * 2002 $(23,400,000) * * 2003 (36,800,000) * * 2004 (40,600,000) * * 2005 (43,200,000) * * 2006 (47,600,000) * ***************************************************** Fiscal Analysis The bill amends Texas franchise tax law, Chapter 171 of the Tax Code, by adding telecommunications to the definition of a "qualified business" eligible to receive franchise tax credits for job creation and capital investment and increased credits for research and development in strategic investment areas. Telecommunications would be defined in terms of seven 1997 North American Industry Classification System categories. The categories include cable networks, cable and other program distribution, wired telecommunications carriers, paging, cellular and other wireless telecommunications, telecommunications re-sellers, and satellite telecommunications. The bill takes effect January 1, 2002 and applies to a report originally due on or after that date. Methodology This estimate is based on analyses done by the Comptroller's Office. The Comptroller's Office estimated the fiscal impact of this bill based on the forecasted credits earned by qualified businesses, as currently defined. This amount was increased to reflect the addition of telecommunications, based on the ratio of telecommunications production to all production for the businesses that would qualify for the credit. 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