LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 13, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB845 by Fraser (Relating to an exemption from the motor vehicle use tax for motor vehicles brought into this state by certain military personnel or retired military personnel.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB845, As Introduced: a negative impact of $(7,345,000) through * * the biennium ending August 31, 2003, if the effective data of the * * bill is July 1, 2001; and a negative impact of $(6,771,000) * * through the biennium ending August 31, 2003, if the effective date * * of the bill is September 1, 2001. * ************************************************************************** The following table assumes a July 1, 2001 effective date: All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) to * * General Revenue Fund * * 0001 * * 2001 $(574,000) * * 2002 (3,403,000) * * 2003 (3,368,000) * * 2004 (3,336,000) * * 2005 (3,304,000) * * 2006 (3,273,000) * ***************************************************** The following table assumes a September 1, 2001 effective date: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) to * * General Revenue Fund * * 0001 * * 2002 $(3,403,000) * * 2003 (3,368,000) * * 2004 (3,336,000) * * 2005 (3,304,000) * * 2006 (3,273,000) * ***************************************************** Fiscal Analysis The bill would amend Chapter 152 of the Tax Code to exempt certain members of the U.S. armed forces from provisions of the motor vehicle use tax. The exemption would be limited to motor vehicles purchased at retail outside of the state and used on Texas roads by active members of the U.S. armed forces residing in Texas on military orders, or by retired members who applied to register their vehicle in the state before the first anniversary of their date of retirement. The bill also would provide an exemption from the tax due, currently $90, on a motor vehicle previously registered or leased in another state or foreign country and brought into the state by active members of the U.S. armed forces residing in the state on military orders, or by retired members of the armed forces who applied to register a vehicle before the first anniversary of their date of retirement. The bill would take effect July 1, 2001, if it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2001. Methodology Active duty military personnel and former military personnel retired less than one year would be exempt from paying the $90 new resident fee that is currently charged to new residents in lieu of the use tax. Based on estimates of the number of active duty and recently retired military personnel entering Texas with a vehicle, it was determined that approximately 24,000 vehicles would qualify annually for this exemption. Similarly, active duty military personnel and former military personnel retired less than one year would be exempt from paying motor vehicle use tax on a motor vehicle purchased out-of-state. It was estimated that approximately 1,000 motor vehicles would be purchased in this manner in fiscal 2002, at an average use tax implication of $1,200 per vehicle. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, SM