LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
April 20, 2015

TO:
Honorable Jane Nelson, Chair, Senate Committee on Finance
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
SB1850 by Nichols (Relating to a sales tax exemption for the rental of equipment used in the construction or improvement of a road or highway for a governmental entity.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for SB1850, As Introduced: a negative impact of ($39,180,000) through the biennium ending August 31, 2017, if the bill takes immediate effect; or a negative impact of ($34,270,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2015 ($3,460,000)
2016 ($17,430,000)
2017 ($18,290,000)
2018 ($19,190,000)
2019 ($20,140,000)
2020 ($21,130,000)




Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016 ($15,980,000)
2017 ($18,290,000)
2018 ($19,190,000)
2019 ($20,140,000)
2020 ($21,130,000)




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
2015 ($3,460,000) ($640,000) ($220,000) ($120,000)
2016 ($17,430,000) ($3,210,000) ($1,100,000) ($590,000)
2017 ($18,290,000) ($3,370,000) ($1,150,000) ($620,000)
2018 ($19,190,000) ($3,540,000) ($1,210,000) ($650,000)
2019 ($20,140,000) ($3,710,000) ($1,270,000) ($680,000)
2020 ($21,130,000) ($3,890,000) ($1,330,000) ($720,000)

The above table assumes the bill takes immediate effect.  The table below assumes the bill takes effect September 1, 2015.



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 ($15,980,000) ($2,950,000) ($1,010,000) ($540,000)
2017 ($18,290,000) ($3,370,000) ($1,150,000) ($620,000)
2018 ($19,190,000) ($3,540,000) ($1,210,000) ($650,000)
2019 ($20,140,000) ($3,710,000) ($1,270,000) ($680,000)
2020 ($21,130,000) ($3,890,000) ($1,330,000) ($720,000)

Fiscal Analysis

The bill would amend Section 151.311, Tax Code, to provide an exemption of certain rental equipment from the limited sales and use tax.
 
New Subsection (e) would be added to provide that the rental of equipment is exempt if it is for use in the performance of a contract for construction or improvement of a road or highway by an organization that is a governmental entity exempt under Section 151.309.
 
The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature.  Otherwise, it would take effect September 1, 2015.

Methodology

The estimates are based on Texas Department of Transportation budget data combined with Census data on Texas local governmental transportation budgets, and Census data on expenditures for rental and lease of machinery and equipment by firms primarily engaged in highway, street, and bridge construction.

Local Government Impact

There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
UP, KK, SD