LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION

April 30, 2013

TO:	Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB1722 by Gonzalez, Naomi (relating to the amount of indirect or administrative overhead costs that a taxable entity may subtract as a cost of goods sold under the franchise tax.), Committee Report 1st House, Substituted

Estimated Two-year Net Impact to General Revenue Related Funds for HB1722, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2015.

Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($19,839,000) for the 2014-15 biennium.  Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2014	$0
2015	$0
2016	$0
2017	$0
2018	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue (Loss) from Property Tax Relief Fund 304
2014	($9,899,000)
2015	($9,940,000)
2016	($10,126,000)
2017	($9,747,000)
2018	($9,865,000)

Fiscal Analysis

The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to increase the percentage of indirect or administrative overhead costs a taxable entity may subtract as a cost of goods sold to 5.5 percent from 4 percent.
 
The bill would take effect on January 1, 2014, and apply to reports due on or after that date.

Methodology

The estimated fiscal impact is based on the Comptroller's franchise tax data files.           

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

UP, KK, SD