| TO: | Honorable Rene Oliveira, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB237 by Rodriguez (Relating to a deduction under the franchise tax for certain renewable energy devices.), As Introduced |
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $250,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2010 | $0 |
| 2011 | $0 |
| 2012 | $0 |
| 2013 | $0 |
| 2014 | $0 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2010 | $0 |
| 2011 | ($250,000) |
| 2012 | ($250,000) |
| 2013 | ($250,000) |
| 2014 | ($250,000) |
The bill would amend Chapter 171 of the Tax Code by adding a new section titled "Deduction of Cost of Certain Renewable Energy Devices from Margin Apportioned to this State."
The bill would provide certain taxable entities deductions from apportioned taxable margin related to the cost of renewable energy devices. The bill would define "renewable energy device" and provide that the term would not include a solar energy device defined by Section 171.107(a). The bill would adopt the definitions of "renewable energy technology" and "retail customer" from the Utilities Code.
The bill would allow a taxable entity that meets the bill's provisions to deduct from apportioned taxable margin 10 percent of the amortized cost of a renewable energy device, under certain conditions. The conditions are (1) the device is for heating and cooling or for the production of power for the entity; (2) the device is used in this state; and (3) the cost of the device is amortized in accordance with procedures specified in the bill. The cost would be amortized over a period of at least 60 months in equal monthly amounts beginning on the month in which the device is placed in service in this state and cover only a period in which the device is in use in this state. The taxable entity would be required to file an amortization schedule with the Comptroller's Office. The Comptroller could request that the taxable entity file proof of cost of the device or proof of operation in this state.
The bill would take effect on January 1, 2010, and apply to reports originally due on or after that date.
Provisions similar to those in this bill exist in current law for solar energy devices (Section 171.107) and equipment used in a clean coal project (Section 171.108). Data from the franchise tax files for these deductions were used to estimate the fiscal impact of this bill.
There would be no fiscal impact in 2010 since amortization costs incurred after the effective date of the bill could first be reported on a return due in fiscal 2011.
| Source Agencies: | 304 Comptroller of Public Accounts
|
| LBB Staff: | JOB, MN, SD, SM
|