LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 11, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: HB3667 by Cook (Relating to insurance for, and a fireworks sales tax for the support of, certain volunteer fire departments.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3667, As Engrossed: impact of $0 through the biennium ending * * August 31, 2003. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Six-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2001 $0 * * 2002 0 * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Six-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Revenue Savings/(Cost) Savings/(Cost) Number of State * * Gain/(Loss) from New from New Employees from * * from New General Revenue General Revenue FY 2001 * * General Revenue Dedicated--- Dedicated--- * * Dedicated--- Volunteer Fire Volunteer Fire * * Volunteer Fire Department Department * * Department Assistance Fund Assistance Fund * * Assistance Fund for Grants for * * Administration * * 2001 $197,000 $0 $(19,700) 1.0 * * 2002 413,000 0 (41,300) 1.0 * * 2003 434,000 (390,600) (43,400) 1.0 * * 2004 456,000 (410,400) (45,600) 1.0 * * 2005 479,000 (431,100) (47,900) 1.0 * * 2006 503,000 (452,700) (50,300) 1.0 * *************************************************************************** Fiscal Analysis The bill would amend Chapter 614 of the Government Code to create the Rural Volunteer Fire Department Insurance Program to be administered by the Texas Forest Service. The program would assist rural volunteer fire departments in paying for worker's compensation and accidental death and disability insurance. The director of the Texas Forest Service would appoint an advisory committee to advise concerning program administration. The bill would create GR Account--Rural Volunteer Fire Department Insurance, which would consist of money collected under a new fireworks tax and contributions to the account from any other source. Money in the account only could be used to administer the program. The bill would amend the Tax Code to add Chapter 161, which would impose a state fireworks tax of 2 percent on the retail sale of fireworks. The fireworks tax would be in addition to the limited sales and use tax imposed under Chapter 151 of the Tax Code. The tax would not apply to a sale unless the limited sales and use tax also applied to the sale. The tax would be administered, imposed, collected, and enforced in the same manner as the limited sales and use tax governed by Chapter 151 of the Tax Code. Any change in the law related to the taxation of the sale of fireworks under Chapter 151 also would apply to the fireworks tax. The Comptroller would be required to allocate revenues from the fireworks tax to the new account. Penalties and interest would remain in the General Revenue Fund 0001. The director of the Texas Forest Service could not grant a request for assistance before September 1, 2002. The bill would take effect July 1, 2001, if 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 sale of fireworks were gathered from Comptroller tax files. Sales were multiplied by the proposed 2 percent (including January 1, 2002 and July 4, 2002) tax rate, adjusted for the potential effective dates of July 1, 2001 (including July 4, 2001) and October 1, 2001, and extrapolated through 2006. The Texas Forest Service estimates 10 percent of the volunteer fire department assistance funds generated by the fireworks sales tax will be used to pay the salaries, benefits and operating costs needed to administer the program. The proposed legislation would allow the Texas Forest Service to hire additional FTE's to administer the program. Given Comptroller estimates, 10 percent of the above amounts would fund at best a single FTE. Local Government Impact Upon successful grant petition of the Texas Forest Service, local volunteer fire departments will gain additional funding resources for equipment costs and personnel training out of the volunteer fire department assistance fund. Source Agencies: 576 Texas Forest Service, 304 Comptroller of Public Accounts LBB Staff: JK, SD, CL, JW