Austin, Texas
May 17, 2019

Honorable Charles Perry, Chair, Senate Committee on Water & Rural Affairs
John McGeady, Assistant Director     Sarah Keyton, Assistant Director
Legislative Budget Board
HB2463 by King, Tracy O. (Relating to the deposit and allocation of certain funds to the horse industry escrow account and to the maximum balance of that account.), As Engrossed

Estimated Two-year Net Impact to General Revenue Related Funds for HB2463, As Engrossed: a negative impact of ($50,000,000) through the biennium ending August 31, 2021.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020 ($25,000,000)
2021 ($25,000,000)
2022 ($25,000,000)
2023 ($25,000,000)
2024 ($25,000,000)

Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
Probable Revenue Gain from
Racing Commission Escrowed Purse Trust Account
Probable Revenue Gain from
Texas Racing Comm Acct
Probable (Cost) from
Texas Racing Comm Acct
2020 ($25,000,000) $25,000,000 $59,500 ($59,500)
2021 ($25,000,000) $25,000,000 $59,500 ($59,500)
2022 ($25,000,000) $25,000,000 $59,500 ($59,500)
2023 ($25,000,000) $25,000,000 $59,500 ($59,500)
2024 ($25,000,000) $25,000,000 $59,500 ($59,500)

Fiscal Year Change in Number of State Employees from FY 2019
2020 1.0
2021 1.0
2022 1.0
2023 1.0
2024 1.0

Fiscal Analysis

The bill would amend Section 151.801 of the Tax Code to require the deposit of state sales and use taxes collected on the sale, storage, or use of horse feed, horse supplements, and horse tack into Racing Commission Escrowed Purse Trust Account. The bill would require the Comptroller to determine the amount of taxes collected on these items according to the best available data. The Comptroller, in making the determination, could require taxpayers who make taxable sales or uses of these items to report as necessary.
This bill would instruct the Comptroller to deposit sales and use taxes collected from the sale of horse feed, horse supplements, and horse tack into Escrowed Purse Trust Account 0876, until the amount deposited into the account for a biennium equals the greater of $50 million or the legislative appropriation to the Racing Commission for the allocation of escrowed purses. After determining and depositing the amount into account 0876, the Comptroller would be required to deposit any additional amount into the General Revenue Fund 0001.
This bill would limit the balance in Escrowed Purse Trust Account to $50 million.
This bill would amend Section 2028.204 of the Occupations Code to authorize any of the five state horse breed registries designated in Section 2030.002, to apply for receipt of money in Escrowed Purse Trust Account 0876 for events promoting the horse industry. The Texas Racing Commission would be required to limit the allocation of money to horse racetrack associations for use as purses to no more than 70 percent of total deposits annually.
The bill would take effect September 1, 2019.


Data from a report by the Texas A&M Equine Initiative and the Texas A&M AgriLife Extension Service on the number of Texas horses not used for ranching and on expenditures per horse on tack was used to estimate pertinent taxable expenditures, and multiplied by the state sales tax rate to estimate revenue potentially subject to allocation under provisions of the bill.
As appropriations to the Racing Commission of amounts from the escrow account are unknown it is assumed for the purposes of this analysis that $50 million would be the pertinent limit in a biennium on the amount to be deposited into Escrowed Purse Trust Account. It is also assumed for the purposes of this analysis that $25 million would be deposited into the account each fiscal year, subject to sufficient expenditures each year to preclude reduction of the amounts deposited to the account due to the $50 million balance limit for the account.
Due to the projected increase in administrative duties, the Racing Commission estimates a need for 1.0 full-time equivalent to administer the program. This analysis assumes that any increased cost to the Racing Commission, which is statutorily required to generate sufficient revenue to cover its costs of operation, would be offset by an increase in fee generated revenue.
The legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either in, with, or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in the bill would be subject to funds consolidation review by the current Legislature.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:
304 Comptroller of Public Accounts, 476 Racing Commission
LBB Staff: