LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATURE 3rd CALLED SESSION - 2006
 
May 12, 2006

TO:
Honorable Jim Keffer, Chair, House Committee on Ways & Means
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB131 by Keffer, Jim (Relating to authority of certain enterprise projects to receive franchise tax credits for job creation and capital investment.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB131, As Introduced: a negative impact of ($10,000,000) through the biennium ending August 31, 2007.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2007 ($10,000,000)
2008 ($10,700,000)
2009 ($11,300,000)
2010 ($11,900,000)
2011 ($12,600,000)




Fiscal Year Probable Revenue Gain/(Loss) from
GENERAL REVENUE FUND
1
2007 ($10,000,000)
2008 ($10,700,000)
2009 ($11,300,000)
2010 ($11,900,000)
2011 ($12,600,000)

Fiscal Analysis

The bill would provide job creation and capital investment franchise tax credits to enterprise projects designated between September 1, 2004 and November 30, 2004 and approved as a triple jumbo project. 

A qualified enterprise project could establish jobs credits based on 25 percent of the
total wages paid for qualified jobs during the period starting on the date the project was designated through the ending date used to determine earned surplus for the report. The amount of jobs credit that could be claimed on the franchise tax report due in May of 2007 would be equal to the total
wages paid for qualified job during the account period for which earned surplus is based.

On subsequent reports the amount of credit would equal 25 percent of the wages paid to qualified jobs created during the accounting period for determination of earned surplus. Under the provisions of this bill, a qualified enterprise project could establish a credit equal to 7.5 percent of the qualified capital investment made between the date the project was designated and the ending date for the determination of earned surplus for the report. On the franchise tax report due in May 2007 a qualified project could claim a credit for the entire amount of capital investment made during the accounting period for the determination of earned surplus. On each subsequent report the credit would equal 7.5 percent of the qualified investment made during the period covered by the franchise tax report.


Methodology

This fiscal note is based upon information provided by the Comptroller's Office. 

NOTE: The bill would amend sections of the franchise tax which would be repealed by House Bill 3, 79th Legislature, 3rd Called Session.  As such, the fiscal impacts described above relate to the current franchise tax.  The fiscal implications would most likely be greater under the franchise tax as amended by House Bill 3. 


Local Government Impact

No significant fiscal implication to units of local government is anticipated.


Source Agencies:
304 Comptroller of Public Accounts, 307 Secretary of State
LBB Staff:
JOB, WP, SD, CT