LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 2, 2001
  
  
          TO:  Honorable Rodney Ellis, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB857  by Madla (Relating to exempting renewable energy
               devices from the sales and use tax.), As Introduced
  
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*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB857, As Introduced: a negative impact of $(16,162,000) through      *
*  the biennium ending August 31, 2003, if the effective date of the     *
*  bill is July 1, 2001; and a negative impact of $(14,286,000)          *
*  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        $(608,000)              $0              $0              $0 *
*  2002       (7,610,000)     (1,374,000)       (530,000)       (163,000) *
*  2003       (7,944,000)     (1,434,000)       (553,000)       (170,000) *
*  2004       (8,294,000)     (1,498,000)       (578,000)       (177,000) *
*  2005       (8,661,000)     (1,564,000)       (603,000)       (185,000) *
*  2006       (9,046,000)     (1,633,000)       (630,000)       (193,000) *
***************************************************************************
  
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      $(6,342,000)    $(1,031,000)      $(398,000)      $(122,000) *
*  2003       (7,944,000)     (1,434,000)       (553,000)       (170,000) *
*  2004       (8,294,000)     (1,498,000)       (578,000)       (177,000) *
*  2005       (8,661,000)     (1,564,000)       (603,000)       (185,000) *
*  2006       (9,046,000)     (1,633,000)       (630,000)       (193,000) *
***************************************************************************
  
Fiscal Analysis
  
The bill would amend Chapter 151 of the Tax Code to define "renewable
energy" and "renewable energy device."  The sale or use of a renewable
energy device, including its component parts and repair or replacement
parts, would be exempted from the state sales and use tax.

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 sale of renewable energy devices were gathered from several
sources, including the Energy Information Administration.  Sales were
adjusted to reflect only Texas, multiplied by the state sales tax rate,
adjusted for potential effective dates of July 1, 2001 and October 1,
2001, and extrapolated through 2006.  The fiscal impacts on units of
local government were estimated proportionally. 

Note:  Currently, renewable energy devices purchased to generate
electricity for sale are exempt from the state sales and use tax as
manufacturing equipment.
  
  
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