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:  HB3609  by Davis, Yvonne (Relating to the sales and use
               tax exemption for gas and electricity.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB3609, As Introduced:  negative impact of $(3,913,000) 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                         $(1,833,000)  *
          *       2003                          (2,080,000)  *
          *       2004                          (2,163,000)  *
          *       2005                          (2,250,000)  *
          *       2006                          (2,340,000)  *
          ****************************************************
  
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                                                       *
*  2002      $(1,833,000)      $(301,000)      $(116,000)       $(36,000) *
*  2003       (2,080,000)       (376,000)       (145,000)        (44,000) *
*  2004       (2,163,000)       (391,000)       (151,000)        (46,000) *
*  2005       (2,250,000)       (406,000)       (157,000)        (48,000) *
*  2006       (2,340,000)       (422,000)       (163,000)        (50,000) *
***************************************************************************
  
Fiscal Analysis
  
The bill would amend Chapter 151 of the Tax Code to exempt natural gas or
electricity from the state sales and use tax in certain circumstances.

If gas or electricity were sold to an owner of a building or a management
company that directly passed the actual charge for that gas or
electricity to a tenant for use directly in providing, under contracts
with or on behalf of the United States government or foreign governments,
defense or intelligence-related services, the charge would be exempt
from taxation.

The bill would take effect September 1, 2001.
  
  
Methodology
  
Data on the sale of gas and electricity were gathered from Comptroller
tax files.  Sales were adjusted for the specified uses, multiplied by the
state sales tax rate, adjusted for the effective date, and extrapolated
through 2006.  The fiscal impact on units of local government were
estimated proportionally.

Note:  In the bill, the word "subsection" (p. 2, line 3) does not refer
to a specific part of this bill or the Tax Code.  For the purposes of
this analysis, it was interpreted as, "in subsection (a)(8)."
  
  
Local Government Impact
  
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, SM