83(R) HB 1860 - Introduced version

TO:	Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means

FROM:	Ursula Parks, Director, Legislative Budget Board

IN RE:	HB1860 by Button (Relating to a deduction under the franchise tax for certain contracts with the federal government.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB1860, As Introduced: 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 ($40,513,000) or 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	($20,215,000)
2015	($20,298,000)
2016	($20,679,000)
2017	($20,312,000)
2018	($20,146,000)

The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to add a subtraction from total revenue for calculating taxable margin equal to all costs not already subtracted that are properly allocable under the Federal Acquisition Regulation to contracts for the sale of goods or services to the federal government. Under current law some allocable costs cannot be subtracted or are subject to a cap on the amount that can be subtracted from total revenue.

The bill would take effect on January 1, 2014, and apply to franchise tax reports due on or after that date.

The estimate for the fiscal impact of the bill is based on information on major defense contractors operating in Texas and on data in the Comptroller's franchise tax databases.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION


March 25, 2013