LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 12, 2001
TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB547 by Sibley (Relating to an exemption from the sales
and use tax for certain assessments and fees related to
telecommunications services.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB547, As Introduced: negative impact of $(158,077,000) through *
* the biennium ending August 31, 2003. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(73,569,000) *
* 2003 (84,508,000) *
* 2004 (75,555,000) *
* 2005 (71,844,000) *
* 2006 (73,658,000) *
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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 Telecommunicat- Cities Transit *
* Fund ions Authorities *
* 0001 Infrastructure *
* Fund *
* 0345 *
* 2002 $(73,569,000) $(12,028,000) $(10,868,000) $(2,656,000) *
* 2003 (84,508,000) (13,673,000) (13,733,000) (3,356,000) *
* 2004 (75,555,000) 0 (12,278,000) (3,000,000) *
* 2005 (71,844,000) 0 (11,675,000) (2,853,000) *
* 2006 (73,658,000) 0 (11,970,000) (2,925,000) *
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*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) to *
* Counties/SPDs *
* 2002 $(400,000) *
* 2003 (505,000) *
* 2004 (452,000) *
* 2005 (430,000) *
* 2006 (441,000) *
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Fiscal Analysis
The bill would amend Section 151.007 of the Tax Code to exempt from the
limited sales and use tax certain telecommunications assessments and fees
that are passed through to purchasers and listed as separate line items
on the customer's bill. The bill would exclude from the sales price of
telecommunications services the following assessments and fees: (1) the
utility gross receipts assessment imposed under Subchapter A, Chapter 16,
Utilities Code, (2) the state universal service fund assessment imposed
under Subchapter B, Chapter 56, Utilities Code, (3) the federal universal
service fund charge, (4) the Telecommunications Infrastructure Fund
(TIF) assessment imposed under Subchapter C, Chapter 57, Utilities Code,
and (5) municipal franchise fees or right-of-way fees authorized under
Chapter 283, Local Government Code.
The bill would take effect on September 1, 2001.
Methodology
Telecommunications services are taxable by the state and units of local
government under Chapter 151 and Chapters 321 through 323 of the Tax
Code. Telecommunications services taxed under Chapter 151 of Tax Code
also are subject to the TIF assessment under Section 57.043 of the
Utilities Code.
Under current law, the Public Utility assessment, state and federal
universal service charges, the TIF assessment, and municipal franchise
fees are included in the sales price of telecommunications services and
are subject to state and local sales tax. These assessments and fees are
an expense to the company and are presumably recovered from purchasers
either through separate line-item charges on bills or through inclusion
in the price of the service. This fiscal estimate assumes that
telecommunications companies would include these assessments and fees as
separate line-item charges on customer bills, if they are not doing so
now.
The bill would negatively affect state and local sales tax collections
and TIF assessment revenues by excluding these assessments and fees from
the taxable sales price of telecommunications services. The total amount
of fees and assessments that would be excluded was determined using
Comptroller tax files and data provided by the Public Utility Commission
and the Federal Communications Commission. Assuming an implementation
date of September 1, 2001, the estimated losses were extrapolated through
fiscal 2006. The fiscal impacts on units of local government were
estimated proportionally.
A revenue loss to Fund 0345 in the 2002-03 biennium would occur because
the TIF assessment base also would be reduced if the Public Utility
assessment, state and federal universal service charges, and municipal
franchise fees were excluded from the sales price of telecommunications
services. After 2003, the loss to Fund 0345 would drop to zero because
the TIF assessment is expected to end sometime in 2004. The assessment
rate would be adjusted that year to generate the amount of revenue
necessary to reach the statutory cap of $1.5 billion.
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