LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 2, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB3390 by Oliveira (Relating to sales tax exemption for certain property used in the repair, remodeling or maintenance of aircraft.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3390, As Introduced: a negative impact of $(8,461,000) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(7,831,000) * * through the biennium ending August 31, 2003, if the effective date * * of the bill is September 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 $(303,000) $0 $0 $0 * * 2002 (3,916,000) (707,000) (273,000) (84,000) * * 2003 (4,242,000) (766,000) (296,000) (91,000) * * 2004 (4,629,000) (836,000) (322,000) (99,000) * * 2005 (5,040,000) (910,000) (351,000) (108,000) * * 2006 (5,491,000) (991,000) (383,000) (117,000) * *************************************************************************** The following table assumes an effective date of September 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 $(3,859,000) $(589,000) $(227,000) $(70,000) * * 2003 (4,242,000) (766,000) (296,000) (91,000) * * 2004 (4,629,000) (836,000) (322,000) (99,000) * * 2005 (5,040,000) (910,000) (351,000) (108,000) * * 2006 (5,491,000) (991,000) (383,000) (117,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt machinery, tools, supplies, and equipment used or consumed exclusively in the repair, remodeling, or maintenance of aircraft, aircraft engines, or aircraft component parts. The relevant work would have to be performed by or on behalf of the United States, an unincorporated instrumentality of the United States, or by a corporation that is an agency or instrumentality of the United States and wholly-owned by the United States or by another corporation wholly-owned by the United States. The 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 would take effect September 1, 2001. Methodology Data on the sale of machinery and equipment used for the repair of aircraft were gathered from the U. S. Census Bureau. Sales were adjusted to reflect activity in Texas for the specified entities, multiplied by the state sales tax rate, adjusted for potential effective dates of July 1, 2001 and September 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, WP, SM