Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB1879 by Simmons (Relating to a franchise tax credit for entities that establish a grocery store or healthy corner store in a food desert.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1879, As Introduced: an impact of $0 through the biennium ending August 31, 2027.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,000,000) for the 2026-27 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
2026
$0
2027
$0
2028
$0
2029
$0
2030
$0
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue (Loss) from Property Tax Relief Fund 304
2026
$0
2027
($2,000,000)
2028
($2,000,000)
2029
($2,000,000)
2030
($2,000,000)
Fiscal Analysis
The bill would add a franchise tax credit for entities that establish a grocery or healthy corner store in a food desert.
A taxable entity would qualify for a credit if, on or after January 1, 2026, the taxable entity opens a grocery or healthy corner store, as defined in the bill, in a food desert in a low- or moderate-income area; accepts WIC and supplemental nutrition assistance benefits within 90 days of opening; and is open year-round.
The bill would require a taxable entity to request a certificate of eligibility from the Texas Department of Housing and Community Affairs (TDHCA) and would require TDHCA to issue a certificate of eligibility to a taxable entity that qualifies for a credit. The bill would require the taxable entity to forward the certificate, along with documentation outlined in the bill, to the Comptroller to claim the credit. The bill would allow TDHCA to adopt rules regarding requirements to qualify for the credit.
The amount of the credit would equal five percent of the amount the taxable entity spends to establish the store during the 12-month period that includes the date the store opens for business. Expenditures qualified for the credit would include: the purchase or lease of the land or building, construction, and store equipment. The amount of credit may not exceed 50 percent of the amount of franchise tax due on a report after applying all other applicable credits. A credit that could not be claimed due to the limitation could be carried forward for up to five consecutive reports. A taxable entity could not transfer the credit to another entity unless all the assets of the taxable entity are conveyed, assigned, or transferred in the same transaction.
The bill would take effect on January 1, 2026.
Methodology
The bill imposes on TDHCA the responsibility to make subjective assessments of what may constitute a food desert: “an area that: (A) has limited access to healthy food retailers and is located in a low-income or high-poverty area; or (B) otherwise has serious healthy food access limitations.” On the assumption that TDHCA would act to give the provision practical effect, it is expected that at least three stores annually could plausibly meet standards for certification of eligibility for the tax credit. Allowing for time for TDHCA to adopt rules and make the necessary assessments of eligibility, fiscal implications would be expected to occur beginning with franchise tax reports due in fiscal year 2027.
Local Government Impact
No fiscal implication to units of local government is anticipated.