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: SB1114 by Brown, J. E. "Buster" (Relating to an
exemption from the sales and use tax for taxable items
used in the performance of a space flight contract.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1114, As Introduced: a negative impact of $(16,308,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is July 1, 2001; and a negative impact of $(14,390,000) *
* 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 $(629,000) $0 $0 $0 *
* 2002 (7,736,000) (1,397,000) (539,000) (165,000) *
* 2003 (7,943,000) (1,434,000) (553,000) (170,000) *
* 2004 (8,162,000) (1,474,000) (569,000) (174,000) *
* 2005 (8,384,000) (1,514,000) (584,000) (179,000) *
* 2006 (8,601,000) (1,553,000) (599,000) (184,000) *
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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 $(6,447,000) $(1,048,000) $(404,000) $(124,000) *
* 2003 (7,943,000) (1,434,000) (553,000) (170,000) *
* 2004 (8,162,000) (1,474,000) (569,000) (174,000) *
* 2005 (8,384,000) (1,514,000) (584,000) (179,000) *
* 2006 (8,601,000) (1,553,000) (599,000) (184,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to exempt from the sales
tax taxable items sold or used by a person in the performance of a
space-flight contract. Taxable items would be exempt if they were
included as a direct or indirect item of cost, regardless of whether the
contract was a cost-reimbursement contract.
A space-flight contract would be defined as a contract with the National
Aeronautics and Space Administration for the use or provision of taxable
items related to the development, construction or fabrication, testing,
research and development, vehicle assembly, processing, remodeling,
repair, operation, or maintenance of space vehicles.
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 shipments for contracts that would qualify as space-flight
contracts were gathered from the U.S. Census Bureau. Shipments data were
adjusted to reflect activity in Texas and contract-related costs that
would qualify for the exemption. The results were 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
impact on units of local government were estimated proportionally.
Note: Direct costs related to a person's space flight contract, as
defined by the bill, with NASA are currently exempt from the state sales
tax. The bill would exempt indirect costs related to space flight
contracts with NASA.
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