LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION March 20, 2013 TO: Honorable José Menéndez, Chair, House Committee On Defense & Veterans' Affairs FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB2387 by Menéndez (Relating to the taxation of certain tangible personal property located inside a defense base development authority.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2387, As Introduced: a negative impact of ($1,074,000) through the biennium ending August 31, 2015. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
March 20, 2013
TO: Honorable José Menéndez, Chair, House Committee On Defense & Veterans' Affairs FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB2387 by Menéndez (Relating to the taxation of certain tangible personal property located inside a defense base development authority.), As Introduced
TO: Honorable José Menéndez, Chair, House Committee On Defense & Veterans' Affairs
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB2387 by Menéndez (Relating to the taxation of certain tangible personal property located inside a defense base development authority.), As Introduced
Honorable José Menéndez, Chair, House Committee On Defense & Veterans' Affairs
Honorable José Menéndez, Chair, House Committee On Defense & Veterans' Affairs
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB2387 by Menéndez (Relating to the taxation of certain tangible personal property located inside a defense base development authority.), As Introduced
HB2387 by Menéndez (Relating to the taxation of certain tangible personal property located inside a defense base development authority.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2387, As Introduced: a negative impact of ($1,074,000) through the biennium ending August 31, 2015. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2387, As Introduced: a negative impact of ($1,074,000) through the biennium ending August 31, 2015.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2014 $0 2015 ($1,074,000) 2016 ($2,456,000) 2017 ($2,635,000) 2018 ($2,826,000)
2014 $0
2015 ($1,074,000)
2016 ($2,456,000)
2017 ($2,635,000)
2018 ($2,826,000)
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromFoundation School Fund193 Probable Revenue Gain/(Loss) fromSan Antonio ISD Probable Revenue Gain/(Loss) fromSouth San Antonio ISD Probable Revenue Gain/(Loss) fromEdgewood ISD 2014 $0 $0 $0 $0 2015 ($1,074,000) ($510,000) ($979,000) ($488,000) 2016 ($2,456,000) ($217,000) ($417,000) ($208,000) 2017 ($2,635,000) ($240,000) ($460,000) ($229,000) 2018 ($2,826,000) ($264,000) ($508,000) ($253,000) Fiscal Year Probable Revenue Gain/(Loss) fromBexar County Probable Revenue Gain/(Loss) fromCity of San Antonio 2014 $0 $0 2015 ($639,000) ($1,220,000) 2016 ($690,000) ($1,319,000) 2017 ($746,000) ($1,425,000) 2018 ($806,000) ($1,540,000)
Fiscal Year Probable Savings/(Cost) fromFoundation School Fund193 Probable Revenue Gain/(Loss) fromSan Antonio ISD Probable Revenue Gain/(Loss) fromSouth San Antonio ISD Probable Revenue Gain/(Loss) fromEdgewood ISD 2014 $0 $0 $0 $0 2015 ($1,074,000) ($510,000) ($979,000) ($488,000) 2016 ($2,456,000) ($217,000) ($417,000) ($208,000) 2017 ($2,635,000) ($240,000) ($460,000) ($229,000) 2018 ($2,826,000) ($264,000) ($508,000) ($253,000)
2014 $0 $0 $0 $0
2015 ($1,074,000) ($510,000) ($979,000) ($488,000)
2016 ($2,456,000) ($217,000) ($417,000) ($208,000)
2017 ($2,635,000) ($240,000) ($460,000) ($229,000)
2018 ($2,826,000) ($264,000) ($508,000) ($253,000)
Fiscal Year Probable Revenue Gain/(Loss) fromBexar County Probable Revenue Gain/(Loss) fromCity of San Antonio 2014 $0 $0 2015 ($639,000) ($1,220,000) 2016 ($690,000) ($1,319,000) 2017 ($746,000) ($1,425,000) 2018 ($806,000) ($1,540,000)
2014 $0 $0
2015 ($639,000) ($1,220,000)
2016 ($690,000) ($1,319,000)
2017 ($746,000) ($1,425,000)
2018 ($806,000) ($1,540,000)
Fiscal Analysis
This bill would amend Chapter 379B of the Local Government Code, regarding defense base development authorities. The bill would add new Subsections 379B.011(c) and (d) to require a presumption that a commercial product that is under construction inside a defense base development authority is in interstate, international, or foreign commerce and not located in this state for longer than a temporary period for purposes of Sections 11.01 (real and tangible personal property) and 21.02 (tangible personal property generally) of the Tax Code. This presumption also would be required for personal property located inside the authority if the owner demonstrates to the chief appraiser for the appraisal district in which the authority is located that the owner intends to incorporate the property into, or attach the property to, a commercial product. The bill would take effect on January 1, 2014.
Methodology
There are three Defense Base Development Authorities in Texas: The Port Authority of San Antonio, the Brooks Development Authority in San Antonio, and the Bee Development Authority in Beeville. The Port Authority of San Antonio and the Brooks Development Authority are the site of several commercial operations. Both of these sites are in Bexar County in the City of San Antonio. Currently no commercial products are made at the Bee Development Authority site. The bill's provision that would require a presumption that the commercial products and other personal property to be incorporated into the products is in interstate commerce and not located in this state for more than a temporary period would cause the property to lose taxable situs; the property would be exempt. This would cause a property tax revenue loss to local taxing units and to the state through the operation of the school funding formula. Note: There is no constitutional authorization for an exemption of commercial products as proposed by the bill. The 2012 taxable values of commercial products that would be exempted by the bill were provided by Bexar County Appraisal District. The applicable projected tax rates were applied to estimate the levy loss to the City of San Antonio and Bexar County, and to estimate the initial school district loss. Because of the operation of the hold harmless provisions of the Education Code, about 60 percent of the school district cost related to the compressed rate would be transferred to the state in the first year of a taxable property value loss and 100 percent in later years. Because lagged-year property values are used in the enrichment formula, school districts lose enrichment funding (state savings) in the first year of a taxable property value reduction. In the second and successive years the enrichment cost and a portion of the school district debt (facilities) cost are transferred to the state through the relevant funding formulas. All costs were estimated over the five year projection period. Note: The bill does not define "commercial product."
Local Government Impact
The fiscal impact to units of local government is estimated in the table above assuming constitutional authorization for an exemption of commercial products as proposed by the bill.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KJo, SD, SJS
UP, KJo, SD, SJS