LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 23, 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.), Committee Report
1st House, as amended
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB857, Committee Report 1st House, as amended: a negative impact *
* of $(1,834,000) through the biennium ending August 31, 2003, if *
* the effective date of the bill is July 1, 2001; and a negative *
* impact of $(1,619,000) 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 $(70,000) $0 $0 $0 *
* 2002 (868,000) (157,000) (60,000) (19,000) *
* 2003 (896,000) (162,000) (62,000) (19,000) *
* 2004 (77,000) (28,000) (11,000) (3,000) *
* 2005 0 0 0 0 *
* 2006 0 0 0 0 *
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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 $(723,000) $(118,000) $(45,000) $(14,000) *
* 2003 (896,000) (162,000) (62,000) (19,000) *
* 2004 (77,000) (28,000) (11,000) (3,000) *
* 2005 0 0 0 0 *
* 2006 0 0 0 0 *
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Fiscal Analysis
The bill would add Chapter 151.357 to the Tax Code to define "renewable
energy" and "renewable energy device." The term, "renewable energy
device" would not include air-source heat pump systems. 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 newly-created Section 151.357 would expire August 31, 2003. This
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 Texas-only sales, multiplied by the state sales tax
rate, adjusted for potential effective dates of July 1, 2001 and October
1, 2001, and extrapolated through the projection period. 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