LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 20, 2001
TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB615 by Harris (Relating to the definition of security
services for purposes of the application of the sales
tax.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB615, As Introduced: a negative impact of $(77,586,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is July 1, 2001; and a negative impact of $(68,621,000) *
* 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 $(2,892,000) $0 $0 $0 *
* 2002 (36,436,000) (6,743,000) (2,538,000) (778,000) *
* 2003 (38,258,000) (7,080,000) (2,665,000) (817,000) *
* 2004 (40,170,000) (7,434,000) (2,799,000) (858,000) *
* 2005 (42,179,000) (7,806,000) (2,939,000) (901,000) *
* 2006 (44,288,000) (8,196,000) (3,086,000) (946,000) *
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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 $(30,363,000) $(4,934,000) $(1,904,000) $(584,000) *
* 2003 (38,258,000) (7,080,000) (2,665,000) (817,000) *
* 2004 (40,170,000) (7,434,000) (2,779,000) (858,000) *
* 2005 (42,179,000) (7,806,000) (2,939,000) (901,000) *
* 2006 (44,288,000) (8,196,000) (3,086,000) (946,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to exclude from the term
"security service" a charge for a service or expense directly related
to, and incurred while, providing a security service. Examples such
items would be: meals, telephone calls, hotel rooms, and airplane
tickets.
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 taxable sale of security services were gathered from
Comptroller tax files and adjusted to exclude expenditures for services
or expenses directly related to providing a security service. This
analysis assumes the taxable charge of a security service would be
reduced to include only a payroll component and profit.
The expenditure data were multiplied by the state sales tax rate,
adjusted for the potential effective dates of July 1, 2001 and October
1, 2001, and extrapolated through fiscal 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, WP, SM