LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION

February 27, 2017

TO:	Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	SB575 by Schwertner (Relating to the total revenue exemption for the franchise tax.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB575, As Introduced: an impact of $0 through the biennium ending August 31, 2019.

Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($542,158,000) for the 2018-19 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.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018	$0
2019	$0
2020	$0
2021	$0
2022	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue (Loss) from Property Tax Relief Fund 304
2018	($267,865,000)
2019	($274,293,000)
2020	($281,471,000)
2021	($288,360,000)
2022	($295,576,000)

Fiscal Analysis

The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by increasing the amount of total revenue below which a taxable entity would owe no tax. The current statutory level is $1.1 million after adjustments for inflation; the bill would raise that amount to $4 million.
 
The bill would take effect January 1, 2018.

Methodology

The estimated fiscal impact is based on franchise tax liability of taxable entities with total revenue between $1.1 million and $4 million.

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