LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 1, 2001 TO: Honorable Mike Moncrief, Chair, Senate Committee on Health & Human Services FROM: John Keel, Director, Legislative Budget Board IN RE: SB833 by Moncrief (Relating to child-care services and to an exemption from the sales and use tax for certain equipment purchased or used to provide child-care services.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB833, As Introduced: negative impact of $(9,545,675) through the * * biennium ending August 31, 2003. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(4,279,675) * * 2003 (5,266,000) * * 2004 (5,505,000) * * 2005 (5,755,000) * * 2006 (6,010,000) * **************************************************** 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 * * 2002 $(4,279,675) $(683,000) $(263,000) $(81,000) * * 2003 (5,266,000) (951,000) (367,000) (112,000) * * 2004 (5,505,000) (994,000) (384,000) (118,000) * * 2005 (5,755,000) (1,039,000) (401,000) (123,000) * * 2006 (6,010,000) (1,085,000) (419,000) (128,000) * *************************************************************************** ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * Federal Funds - Federal * * 0555 * * 2002 $(412,125) * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * ***************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt items sold, leased, or rented to or stored, used or consumed by certain child-care facilities from the sales tax if the items were used in the provision of child-care services. A child-care facility would qualify for the exemption if at least 25 percent of the children receiving child-care services at the facility were from families with a household income not more than 85 percent of the State median income, adjusted for family size. For the purposes of making this calculation, the facility could not include children whose child-care costs were subsidized by federal child-care development funds. A child-care facility would have to provide the seller an exemption certificate that certified in writing to the seller that the facility qualified for the exemption. The bill would amend the Human Resources Code to require the Department of Protective and Regulatory Services to conduct a statewide assessment of the need for child-care services. Training in specific areas for day-care center or group day-care home employees would be required, as would the creation of an inspection checklist to be used during inspections of certain child-care facilities. The bill would amend the Education Code to allow a parent to designate a child-care facility (instead of the child's residence) as the regular location for purposes of obtaining transportation to and from the child's school. The Commissioner of Education could not reduce allotments to which a district or county was entitled because the district or county provided transportation for an eligible student to and from a child-care facility instead of the student's residence, if the transportation was provided within the approved routes of the district or county for the student's school. The provisions of the bill relating to the sales and use tax exemption would take effect October 1, 2001. The remaining provisions of the bill would take effect September 1, 2001. Methodology Concerning the sales tax provisions, data on expenses of child-care facilities were gathered from the U. S. Census Bureau and adjusted to reflect only those purchases and uses made by eligible facilities of taxable items. The taxable amounts were multiplied by the state sales tax rate, adjusted for an effective data of October 1, 2001, and extrapolated through 2006. The fiscal impact on units of local government were estimated proportionally. The Department of Protective and Regulatory Services indicates that to conduct a statewide assessment of the need for child-care services and to create an checklist to be used during inspections of certain child-care facilities would result in a one-time cost to the department of $490,800 in fiscal year 2002, $412,125 from federal funds and the remainder from general revenue. The Texas Education Agency (TEA) indicates that although the additional mileage could affect a district's reimbursement rate, the net impact of this change in law would be minimal. Therefore, TEA indicates there would be no significant fiscal impact to the foundation school program from the provisions of the bill. 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: 530 Department of Protective and Regulatory Services, 304 Comptroller of Public Accounts, 701 Texas Education Agency LBB Staff: JK, HD, WP, SM