Honorable Dan Patrick, Lieutenant Governor, Senate
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB1356 by Hinojosa (Relating to exemption from the sales tax for certain water-efficient products for a limited period.), As Passed 2nd House
Estimated Two-year Net Impact to General Revenue Related Funds for SB1356, As Passed 2nd House: a negative impact of ($7,730,000) through the biennium ending August 31, 2017.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
($3,700,000)
2017
($4,030,000)
2018
($4,200,000)
2019
($4,370,000)
2020
($4,540,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue (Loss) from Cities
Probable Revenue (Loss) from Transit Authorities
Probable Revenue (Loss) from Counties and Special Districts
2016
($3,700,000)
($710,000)
($230,000)
($150,000)
2017
($4,030,000)
($720,000)
($230,000)
($150,000)
2018
($4,200,000)
($740,000)
($240,000)
($160,000)
2019
($4,370,000)
($840,000)
($260,000)
($160,000)
2020
($4,540,000)
($850,000)
($260,000)
($160,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code, to provide for an exemption from sales and use tax of certain water-efficient products for a limited period.
The bill would add Section 151.3335 to provide that a water-conserving product or WaterSense product would be exempt from the sales and use tax during the period beginning at 12:01 a.m. on the Saturday preceding the last Monday in May (Memorial Day) and ending at 11:59 p.m. on the last Monday in May.
"Water-conserving product" would be defined as tangible personal property used outdoors on private residential property and not in a business or trade that may result in water conservation or groundwater retention, water table recharge, or a decrease in evaporation. The term would include a soaker or drip irrigation hose, a moisture control for sprinkler or irrigation systems, mulch, a rain barrel or alternative moisture control system, and a permeable ground cover surface.
A "WaterSense product" would be as certified under the U.S. Environmental Protection Agency WaterSense program.
This bill would take effect July 1, 2015, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect October 1, 2015.
Methodology
National data on annual household expenditures on lawns and gardens from the National Gardening Association were apportioned to the state based on population and reduced to reflect expenditures on water-conserving items. To estimate expenditures on WaterSense products, data were gathered from Comptroller tax files regarding the amount of taxable sales made by certain retailers selling the products subject to the provisions of the bill. The result was reduced to estimate sales that would occur during the tax exempt period, and multiplied by the sales tax rate to yield the applicable sales tax. Fiscal implications for units of local government were estimated proportionally.
The fiscal impacts would be the same whether the bill takes effect July 1, 2015 or October 1, 2015.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions as shown in the above table.