LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
 
April 12, 2023

TO:
Honorable Joan Huffman, Chair, Senate Committee on Finance
 
FROM:
Jerry McGinty, Director, Legislative Budget Board
 
IN RE:
SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced


Estimated Two-year Net Impact to General Revenue Related Funds for SB1000, As Introduced : an impact of $0 through the biennium ending August 31, 2025.

Additionally, the bill will have a direct impact of a revenue loss to the Tax Reduction and Excellence in Education Fund of ($230,457,075) for the 2024-25 biennium.  Any loss to the Tax Reduction and Excellence in Education 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($2,995,454,929)
2025($3,598,560,214)
2026($3,793,993,217)
2027($3,998,837,735)
2028($4,199,456,674)

All Funds, Five-Year Impact:

Fiscal Year Probable Revenue (Loss) from
General Revenue Fund
1		 Probable Revenue (Loss) from
State Highway Fund
6		 Probable Revenue (Loss) from
State Parks Acct
64		 Probable Revenue (Loss) from
Tax Reduc. & Excell. Edu. Fund
305
2024($2,995,454,929)($2,519,109)($11,582,180)($104,689,444)
2025($3,598,560,214)($3,026,306)($13,914,138)($125,767,631)
2026($3,793,993,217)($3,190,661)($14,669,796)($132,597,903)
2027($3,998,837,735)($3,362,930)($15,461,845)($139,757,102)
2028($4,199,456,674)($3,531,646)($16,237,555)($146,768,620)



Fiscal Year Probable Revenue (Loss) from
Local Parks Account
467		 Probable Revenue (Loss) from
Parks/Wildlife Cap Acct
5004		 Probable Revenue (Loss) from
Historic Sites
5139		 Probable Revenue (Loss) from
Lrg County & Municipal Rec & Parks
5150
2024($954,955)($2,371,258)($1,150,557)($377,568)
2025($1,147,226)($2,848,687)($1,382,210)($453,588)
2026($1,209,530)($3,003,396)($1,457,276)($478,222)
2027($1,274,835)($3,165,554)($1,535,957)($504,042)
2028($1,338,793)($3,324,368)($1,613,015)($529,329)


Fiscal Analysis

The bill would lower the state sales and use tax rate from 6.25 percent to 5.75 percent.

The bill would take effect October 1, 2023.

Methodology

The estimates in the table above reflect the loss of sales and use tax expected from the lower tax rate, allocated among the accounts that receive deposits of sales and use tax revenue.

By reducing deposits to General Revenue, the bill would lower the maximum balance of the Economic Stabilization Fund.  There would be a corresponding gain to General Revenue and loss to the Economic Stabilization Fund, as less severance tax revenue would be transferred between the funds.

Note, the Comptroller's estimates of the lost revenue could potentially differ from the estimates displayed above, however, those estimates are not available at this time.


Local Government Impact

There could be a potential gain of sales and use tax revenue to local taxing jurisdictions attributable to higher spending on taxable goods and services induced by a lower sales tax rate, however those amounts are not expected to be significant.


Source Agencies:
304 Comptroller of Public Accounts, 802 Parks and Wildlife Department
LBB Staff:
JMc, KK, SD