LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION
 
May 2, 2017

TO:
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB976 by Giddings (Relating to the exemption from the sales tax for certain school art supplies during limited periods.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB976, As Introduced: a negative impact of ($690,000) through the biennium ending August 31, 2019.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018 $0
2019 ($690,000)
2020 ($720,000)
2021 ($760,000)
2022 ($800,000)




Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018 $0
2019 ($690,000)
2020 ($720,000)
2021 ($760,000)
2022 ($800,000)




Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
1 		Probable Revenue (Loss) from
State Highway Fund
6 		Probable Revenue (Loss) from
Cities		 Probable Revenue (Loss) from
Transit Authorities
2018 $0 ($660,000) ($130,000) ($40,000)
2019 ($690,000) $0 ($130,000) ($50,000)
2020 ($720,000) $0 ($140,000) ($50,000)
2021 ($760,000) $0 ($150,000) ($50,000)
2022 ($800,000) $0 ($150,000) ($50,000)

Fiscal Year Probable Revenue (Loss) from
Counties & Special Districts
2018 ($20,000)
2019 ($20,000)
2020 ($30,000)
2021 ($30,000)
2022 ($30,000)

The above tables assume the bill takes immediate effect.  The tables below assume an effective date of September 1, 2017.



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 & Special Districts
2018 $0 $0 $0 $0
2019 ($690,000) ($130,000) ($50,000) ($20,000)
2020 ($720,000) ($140,000) ($50,000) ($30,000)
2021 ($760,000) ($150,000) ($50,000) ($30,000)
2022 ($800,000) ($150,000) ($50,000) ($30,000)

Fiscal Analysis

The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxes, to add certain school art supplies to the definition of school supplies eligible for exemption during a limited period.
 
The bill would amend Section 151.327(a)(2) to add a paintbrush used for artwork; watercolor; and acrylic, tempera, and oil paints to the items eligible for exemption.
 
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, 2017.

Methodology

U.S. Census Bureau data on annual sales of art supplies and Comptroller data on annual sales of retailers that sell art supplies were used to develop an estimate of school art supply purchases that would occur within the annual August tax holiday, to which the state sales tax rate was applied to estimate the revenue impact. 

If the bill were to take effect immediately, the additional items would be eligible for exemption during the August 2017 tax holiday. In the event the bill fails to take immediate effect, the first exemption period would be in August 2018.

Pursuant to Proposition 7 (2015), any sales tax collections in excess of $28 billion and less than
$30.5 billion will be deposited into the State Highway Fund. Because total 2018 collections are
projected to fall in that range, the 2018 revenue loss in the first Scenario is from the State Highway Fund instead of General Revenue.

Local Government Impact

There would be a proportional loss of sales and use tax revenue from units of local government.  The estimated losses are displayed in the above tables.


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