LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 23, 2001
TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB86 by Ellis, Rodney (Relating to exemptions from the
sales tax.), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB86, Committee Report 1st House, Substituted: a negative impact *
* of $(8,775,000) through the biennium ending August 31, 2003, if *
* the effective date of the bill is July 1, 2001; and a negative *
* impact of $(5,208,000) through the biennium ending August 31, *
* 2003, if the effective date of the bill is October 1, 2001. *
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The following table assumes an effective date of July 1, 2001.
All Funds, Five-Year Impact:
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*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 $(1,230,000) $0 $0 $0 *
* 2002 (3,651,000) (659,000) (254,000) (78,000) *
* 2003 (3,894,000) (703,000) (271,000) (83,000) *
* 2004 (2,670,000) (753,000) (291,000) (89,000) *
* 2005 0 0 0 0 *
* 2006 0 0 0 0 *
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The following table assumes an effective date of October 1, 2001.
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*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 $(1,314,000) $0 $0 $0 *
* 2003 (3,894,000) (703,000) (271,000) (83,000) *
* 2004 (2,670,000) (753,000) (291,000) (89,000) *
* 2005 0 0 0 0 *
* 2006 0 0 0 0 *
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Fiscal Analysis
The bill would add Section 151.327 to the Tax Code to exempt the sale of
certain school supplies from the state sales and use tax if the items
were purchased for use by a student in a class in a public or private
elementary or secondary school, were purchased for a sales price of less
than $75, and were purchased during the existing three-day sales tax
holiday period for clothing and footwear.
A retailer would not be required to obtain an exemption certificate
except in instances where the quantity purchased would indicate a
non-school usage. The bill would allow the repeal of the exemption for
school supplies by local taxing jurisdictions as it would relate to their
local sales taxes as provided by Chapter 326 of the Tax Code.
Section 151.326(c), relating to the ability of a local taxing authority
to repeal the current sales tax holiday, would be repealed. 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.
The bill's provisions would expire on August 31, 2003.
Methodology
Data on the sale of school supplies were gathered from the U.S. Census
Bureau. The data were adjusted for the appropriate price range and time
period, multiplied by the state sales tax rate, adjusted for the
potential effective dates of July 1, 2001 and October 1, 2001, and
extrapolated through the projection period. The fiscal impacts on units
of local government were estimated proportionally.
The bill's provisions would expire on August 31, 2003. However, there
would be a revenue impact in fiscal 2004 because most of August sales
activities are reflected on September sales tax reports.
Note: Although the title of the newly-created Section 151.327 includes
textbooks, books, and instructional materials, the bill, as substituted,
would not exempt those items, and the following fiscal implications do
not include them.
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