Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1003 by Davis, Yvonne (relating to the periodic evaluation of certain exemptions from property taxes and state taxes.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB1003, Committee Report 1st House, Substituted: a negative impact of ($686,000) through the biennium ending August 31, 2017.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
($343,000)
2017
($343,000)
2018
($343,000)
2019
($343,000)
2020
($343,000)
Fiscal Year
Probable (Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2015
2016
($343,000)
4.0
2017
($343,000)
4.0
2018
($343,000)
4.0
2019
($343,000)
4.0
2020
($343,000)
4.0
Fiscal Analysis
The bill would amend Chapter 403 of the Government to provide for the periodic evaluation of certain exemptions from property taxes and state taxes.
The bill would add Section 403.0143 to require the Comptroller to periodically evaluate the tax exemptions provided by Chapters 11 (property tax), 151 (sales and use tax), 152 (motor vehicle taxes), 162 (motor fuel taxes), 171 (franchise tax), 201 (natural gas production tax) and 202 (oil production tax) of the Tax Code. The Comptroller would be required to make the exemption evaluations according to a schedule that provides each exemption is evaluated at least once every six years. The evaluation would include the effect of the exemptions on tax revenues received; the exempt entities; sales of property, goods and services; and economic investment and growth. The evaluation would include recommendations for retaining, repealing or amending each exemption. The Comptroller would present to the Legislature and the Governor at each legislative session a report containing the evaluation and recommendations. Exemptions explicitly provided in the U.S. or Texas Constitutions or by federal law would be excluded from evaluation.
The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015.
Methodology
The bill does not provide for expiration of the provisions subject to evaluation or otherwise amend the Tax Code; consequently there would be no revenue implications.
The administrative cost estimate reflects the funds that would be necessary to hire four economists and analysts to conduct reviews and produce a biennial study on the impact of exemptions provided by Tax Code Chapters 11, 151, 152, 162, 171, 201, and 202. The evaluation of each tax exemption must include an evaluation of the exemption's effect on revenue received from taxes imposed, the entities receiving the exemption, sales of property, goods, and services made in this state, economic investment and growth in this state, and whether retaining the exemption is in the public's best interest.
Local Government Impact
No fiscal implication to units of local government is anticipated.