| TO: | Honorable Steve Ogden, Chair, Senate Committee on Finance |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3119 by Alvarado (Relating to the creation of a pilot program to provide certain taxable entities with a franchise tax credit for the acquisition and installation of certain air quality monitoring devices to monitor the emission of air contaminants.), As Engrossed |
Estimated Two-year Net Impact to General Revenue Related Funds for HB3119, As Engrossed: an impact of $0 through the biennium ending August 31, 2011.
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund beginning in the 2012 fiscal year. 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 | $0 |
| 2012 | ($175,000) |
| 2013 | ($525,000) |
| 2014 | ($400,000) |
The bill would add a new Subchapter U to Chapter 171 of the Tax Code, regarding the franchise tax.
The new subchapter would establish a pilot program for a tax credit for the acquisition and installation of air quality monitoring devices, as defined in the bill.
The bill would define "air quality monitoring device." The bill would define "major source" and "nonattainment area" by reference to the federal Clean Air Act.
The bill would direct the Comptroller to develop and implement a pilot program to provide a qualified taxable entity a franchise tax credit for the acquisition and installation of air quality monitoring devices. The Comptroller would evaluate the feasibility of extending the program and expanding it to apply statewide.Under the bill, a taxable entity would be entitled to the tax credit if it (1) maintains monitoring of the emission of air contaminants from a major source in the nonattainment area; (2) maintains records of the measuring and monitoring; and (3) provides the Texas Commission on Environmental Quality (commission) a copy of the records as required by the commission. The taxable entity would be required to maintain records of air pollutants specified in the bill for on-site review by the commission.
The amount of credit would be based on the total cost of acquiring and installing the air quality monitoring devices. After acquiring and installing the devices, the credit would be equal to 35 percent of that cost on each of the next two reports and 10 percent of that cost on each of the following three reports. The credit would have to be claimed on consecutive reports. The credit on any report would be limited to the amount of franchise tax due after any other credits. The credits would not be transferable.
A taxable entity claiming the credit would be required to provide along with its report a certification from the commission confirming that the taxable entity provided the records on emissions as required by the bill.
The Comptroller would adopt rules to implement the bill's provisions. The Comptroller would report on the effectiveness of the pilot program no later than February 1, 2013, and include information in the report as specified in the bill.
The subchapter added by this bill would expire on December 31, 2012. The expiration would not affect credits established before the expiration.
The bill would take effect on January 1, 2010, and apply to reports due on or after that date.
Under the bill, a taxable entity would qualify for the franchise tax credits if the entity meets the requirements for monitoring, record keeping, and reporting of air quality data as specified in the bill. The estimated fiscal impact assumes the pilot program identifies one qualified entity in 2010 and that the entity completes the acquisition and installation of the monitoring devices and fulfills the monitoring, record keeping, and reporting requirements in 2011. The first credit resulting from the costs of acquisition and installation of the monitoring devices would be reported in 2012. The estimate assumes two additional entities meet the requirements for the credit before the provisions expire on December 31, 2012.
The estimated fiscal impact of the bill is based on information from the commission on the range of costs of air quality monitoring systems.
| Source Agencies: | 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, MN, SM
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