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