LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION

April 9, 2009

TO:	Honorable Steve Ogden, Chair, Senate Committee on Finance
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	SB19 by Patrick, Dan (Relating to the computation of the franchise tax.), As Introduced

The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $402,065,000 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.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010	$0
2011	$0
2012	$0
2013	$0
2014	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304
2010	($198,488,000)
2011	($203,577,000)
2012	($210,879,000)
2013	($219,516,000)
2014	($228,499,000)

Fiscal Analysis

The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax.

The bill would change the total revenue exemption amount for the tax from $300,000 or less to $1 million or less.

The bill would change the tax rate under the E-Z calculation of tax liability from 0.575 percent to 0.4 percent.

The bill would repeal Sections 171.0021 and 171.1016(d) of the Tax Code, which relate to discounts from tax owed available to taxable entities with total revenue of $900,000 or less. The change in the exemption amount proposed in the bill would render those sections without impact on the calculation of franchise tax liability.

The bill would take effect January 1, 2010, and apply to a report originally due on or after that date.

Methodology

The estimated fiscal impact of the bill is based on data reported on 2008 franchise tax reports.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JOB, MN, SD, SM