Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB3487 by Turner (Relating to certain expenditures by public institutions of higher education and university systems that are eligible for certain tax credits.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3487, As Introduced : a negative impact of ($3,380,000) through the biennium ending August 31, 2025.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($620,000) for the 2024-25 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
2024
($1,690,000)
2025
($1,690,000)
2026
($1,690,000)
2027
($1,690,000)
2028
($1,690,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue (Loss) from Foundation School Fund 193
Probable Revenue (Loss) from Property Tax Relief Fund 304
2024
($1,270,000)
($420,000)
($310,000)
2025
($1,270,000)
($420,000)
($310,000)
2026
($1,270,000)
($420,000)
($310,000)
2027
($1,270,000)
($420,000)
($310,000)
2028
($1,270,000)
($420,000)
($310,000)
Fiscal Analysis
The bill would amend the historical structure credit in Subchapter S of Chapter 171 of the Tax Code (Franchise Tax) to allow certain institutions of higher education or university systems to receive the credit. This would be effective until January 1, 2031.
The bill would take effect on September 1, 2023.
Methodology
Institutions of higher education and university systems were allowed to take historical structure credits until January 1, 2022. This estimate assumes the number of qualifying projects would be similar to those allowed prior to January 1, 2022.
There would be effects on the Economic Stabilization Fund (ESF) balance limit and consequent effects for GR reserves and transfers to ESF. Because franchise and insurance taxes revenue is initially deposited to the general revenue fund, the reduction in tax revenue in the 2024-25 biennium would reduce the 2026-27 ESF balance limit by ten percent of the reduction in tax, reducing 2025 severance tax reserves for transfer to the ESF by the amount of the balance limit reduction, and increasing available GR in 2025 by the amount of reduction of the reserves, however these amounts are not expected to be significant.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.