LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
May 16, 2005

TO:
Honorable Steve Ogden, Chair, Senate Committee on Finance
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
SB222 by Zaffirini (Relating to exempting books purchased by university and college students from the sales tax for a limited period.), Committee Report 1st House, Substituted



Estimated Two-year Net Impact to General Revenue Related Funds for SB222, Committee Report 1st House, Substituted: a negative impact of ($55,379,000) through the biennium ending August 31, 2007, if the effective date of the bill is July 1, 2005; or a negative impact of ($39,106,000) through the biennium ending August 31, 2007, if the effective date of the bill is October 1, 2005.

The following table assumes an effective date of July 1, 2005.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2005 ($3,832,000)
2006 ($24,882,000)
2007 ($26,665,000)
2008 ($28,578,000)
2009 ($30,630,000)
2010 ($32,841,000)




Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2006 ($12,441,000)
2007 ($26,665,000)
2008 ($28,578,000)
2009 ($30,630,000)
2010 ($32,841,000)




Fiscal Year Probable Revenue Gain/(Loss) from
GENERAL REVENUE FUND
1 		Probable Revenue Gain/(Loss) from
Cities		 Probable Revenue Gain/(Loss) from
Transit Authorities		 Probable Revenue Gain/(Loss) from
Counties/SPDs
2005 ($3,832,000) $0 $0 $0
2006 ($24,882,000) ($4,635,000) ($1,594,000) ($577,000)
2007 ($26,665,000) ($4,967,000) ($1,709,000) ($618,000)
2008 ($28,578,000) ($5,324,000) ($1,831,000) ($662,000)
2009 ($30,630,000) ($5,706,000) ($1,963,000) ($710,000)
2010 ($32,841,000) ($6,118,000) ($2,104,000) ($761,000)

The following table assumes an effective date of October 1, 2005.



Fiscal Year Probable Revenue Gain/(Loss) from
GENERAL REVENUE FUND
1 		Probable Revenue Gain/(Loss) from
Cities		 Probable Revenue Gain/(Loss) from
Transit Authorities		 Probable Revenue Gain/(Loss) from
Counties/SPDs
2006 ($12,441,000) ($2,318,000) ($797,000) ($288,000)
2007 ($26,665,000) ($4,967,000) ($1,709,000) ($618,000)
2008 ($28,578,000) ($5,324,000) ($1,831,000) ($662,000)
2009 ($30,630,000) ($5,706,000) ($1,963,000) ($710,000)
2010 ($32,841,000) ($6,118,000) ($2,104,000) ($761,000)

Fiscal Analysis

The bill would amend Chapter 151 of the Tax Code to exempt books from the sales tax if they are purchased by a student enrolled at an institution of higher education and the sales take place within a specified ten-day period each January and August.

A person could establish eligibility for the exemption by presenting a valid student identification card.

The bill would take effect July 1, 2005, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect October 1, 2005.


Methodology

Data on the sale of books in Texas were gathered from public and private sources, including Comptroller tax files. Estimated book sales were adjusted for the exemption period, multiplied by the sales tax rate, adjusted for potential effective dates of July 1, 2005 and October 1, 2005, and extrapolated through fiscal 2010. Fiscal implications on units of local government were estimated proportionally.


Local Government Impact

Local units of government would have a corresponding fiscal impact from sales tax revenues, as indicated in the above tables.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JOB, SD, WP, SM