LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 16, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB529 by Bernsen (Relating to an exemption from the sales and use tax for tangible personal property rented in connection with the improvement of realty of a navigation district or port authority.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB529, As Introduced: a negative impact of $(8,222,000) through * * the biennium ending August 31, 2003, if the effective date of the * * bill is July 1, 2001; and a negative impact of $(7,265,000) * * through the biennium ending August 31, 2003, if the effective date * * of the bill is October 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 $(311,000) $0 $0 $0 * * 2002 (3,875,000) (700,000) (270,000) (83,000) * * 2003 (4,036,000) (729,000) (281,000) (86,000) * * 2004 (4,221,000) (762,000) (294,000) (90,000) * * 2005 (4,408,000) (796,000) (307,000) (94,000) * * 2006 (4,605,000) (832,000) (321,000) (98,000) * *************************************************************************** The following table assumes an effective date of October 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 $(3,229,000) $(525,000) $(202,000) $(62,000) * * 2003 (4,036,000) (729,000) (281,000) (86,000) * * 2004 (4,221,000) (762,000) (294,000) (90,000) * * 2005 (4,408,000) (796,000) (307,000) (94,000) * * 2006 (4,605,000) (832,000) (321,000) (98,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt the rental of tangible personal property for use in the performance of a contract for an improvement of realty of a navigation district or port authority. To qualify for the exemption, the property would have to be necessary and essential to perform the contract, rented for the sole purpose of being used to perform the contract, and used only at the job site. The bill would take effect July 1, 2001, assuming that 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 rental of equipment used in the improvement of Texas water transportation facilities were gathered from the U. S. Census Bureau. The expenditure data were adjusted for improvements within navigation districts or port authorities, multiplied by the state sales tax rate, adjusted for the potential effective dates of July 1, 2001 and October 1, 2001, and extrapolated through 2006. The fiscal impacts 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 table above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, SM