LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 14, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HJR25 by Gallego (Proposing a constitutional amendment
to exempt from ad valorem taxation certain tangible
personal property held at certain locations only
temporarily for assembling, manufacturing, processing,
or other commercial purposes.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HJR25, As Introduced: 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 (35,900,000) *
* 2006 (36,977,000) *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Revenue Revenue Revenue *
* from General Gain/(Loss) Gain/(Loss) Gain/(Loss) *
* Revenue Fund from School from Counties from Cities *
* 0001 Districts *
* 2002 $0 $0 $0 $0 *
* 2003 0 0 0 0 *
* 2004 0 (35,900,000) (7,800,000) (11,200,000) *
* 2005 (35,900,000) (1,077,000) (8,034,000) (11,536,120) *
* 2006 (36,977,000) (1,109,310) (8,275,134) (11,882,244) *
***************************************************************************
Fiscal Analysis
The resolution would propose a constitutional amendment to provide for a
new exemption for "goods in transit." To qualify for the exemption,
personal property would have to be acquired or imported into Texas and
stored at a location in Texas not owned or under the control of the owner
of the goods. Oil and gas and their immediate derivatives would not
qualify for the exemption. In addition, the inventory would have to be
transported or distributed to another location no later than 270 days
after the property was acquired in or imported into the state .
The exemption would have to be granted by all taxing units unless, before
April 1, 2002, the governing body of a county, school district, junior
college district, or city proposed by official action to tax goods in
transit. The voters of the county, school district, junior college
district, or city would then have to approve the taxation of goods in
transit at an election held on November 5, 2002. A taxing unit voting to
tax goods in transit could subsequently exempt the property through the
same governing body and voter approval process.
NOTE: Currently, Article VIII, Section 1-j of the Texas Constitution and
Section 11.251 of the Tax Code provide for a "freeport exemption." This
exemption, which can be granted at the option of each city, county,
school district, or junior college district, exempts goods, wares, ores,
raw materials, and other types of inventory that are brought into or
acquired in the state and transported out of the state within 175 days
of acquisition.
Methodology
It is not known how many jurisdictions might hold an election and vote to
continue taxing the covered items. For purposes of this analysis, it's
assumed that all taxing jurisdictions would provide the exemption. The
Comptroller's Property Tax Division estimated the losses for fiscal 2004.
These amounts were trended upward based on historical property tax levy
increases, to reflect losses to local governments for fiscal 2005-2006.
Section 403.302 of the Government Code requires the Comptroller to
conduct a property value study to determine the total taxable value for
each school district. Total taxable value is an element in the state's
school funding formula. The cost to the state was estimated by assuming
that the state would reimburse school districts for their total levy
losses, including losses for this exemption, after a one-year lag.
Local Government Impact
The tax revenue losses to local units of government are reflected in the
above tables.
Source Agencies: 307 Secretary of State, 304 Comptroller of Public
Accounts
LBB Staff: JK, SD, WP, BR