LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
May 7, 2015

TO:
Honorable Jane Nelson, Chair, Senate Committee on Finance
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
SB514 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted



Estimated Two-year Net Impact to General Revenue Related Funds for SB514, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2017.

Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($32,705,000) for the 2016-17 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.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016 $0
2017 $0
2018 $0
2019 $0
2020 $0




Fiscal Year Probable Revenue (Loss) from
Property Tax Relief Fund
304
2016 ($16,206,000)
2017 ($16,499,000)
2018 ($16,434,000)
2019 ($16,740,000)
2020 ($16,976,000)

Fiscal Analysis

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 allowable under the Federal Acquisition Regulation (48 C.F.R. Chapter 1) to contracts for the sale of goods or services to the federal government by a taxable entity that is a party to at least one contract subject to the requirements of Defense Acquisition Regulations (48 C.F.R. Chapter 2).  Under current law some allowable costs cannot be subtracted or are subject to a cap on the amount that can be subtracted from total revenue.
 
This bill would take effect January 1, 2016, and apply to franchise tax reports due on or after that date.

Methodology

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.  

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