LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 19, 2001
  
  
          TO:  Honorable Rodney Ellis, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1689  by Ellis, Rodney (Relating to the franchise
               tax.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB1689, As Introduced:  positive impact of $2,400,000 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                           $1,200,000  *
          *       2003                            1,200,000  *
          *       2004                            1,200,000  *
          *       2005                            1,200,000  *
          *       2006                            1,200,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year    Probable Revenue Gain/(Loss) from   *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2002                               $1,200,000 *
         *      2003                                1,200,000 *
         *      2004                                1,200,000 *
         *      2005                                1,200,000 *
         *      2006                                1,200,000 *
         *****************************************************
  
Fiscal Analysis
  
The bill amends Texas franchise tax law, Chapter 171 of the Tax Code,
exempting certain insurance companies from the franchise tax if these
companies pay gross premium taxes and clarifying the use of the business
loss carry-forward when a merger has occurred.  According to the
Comptroller's Office, the business loss carry-forward clarification will
mitigate possible, significant, negative effects on state revenues...on
the order of $300 million in possible refunds and base losses during the
2002-2003 biennium.

The bill takes effect September 1, 2001.
  
  
Methodology
  
This estimate is based on analyses done by the Comptroller's Office using
tax payer file information.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   304   Comptroller of Public Accounts
LBB Staff:         JK, SD, CT