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:  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.), Committee
               Report 1st House, as amended
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB529, Committee Report 1st House, as amended: 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:
  
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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        $(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         (352,000)       (127,000)        (49,000)        (15,000) *
*  2005                 0               0               0               0 *
*  2006                 0               0               0               0 *
***************************************************************************
  
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         (352,000)       (127,000)        (49,000)        (15,000) *
*  2005                 0               0               0               0 *
*  2006                 0               0               0               0 *
***************************************************************************
  
Fiscal Analysis
  
The bill would amend Section 151.311(c) of the Tax Code to exempt from
sales tax 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.

Section 151.311(c), as amended by the bill, would expire on August 31,
2003.  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 the projection period.  The fiscal
impacts on units of local government were estimated proportionally.   

The bill's provisions would expire on August 31, 2003.  There would be,
however, a state revenue impact in fiscal 2004 as August tax-exempt
sales would be reflected on September tax reports; units of local
government would experience a revenue impact in 2004 equivalent to two
months due to the allocation schedule.
  
  
Local Government Impact
  
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the tables above.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, SM