LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION April 9, 2013 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3111 by Hilderbran (Relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3111, As Introduced: a negative impact of ($3,251,000) through the biennium ending August 31, 2015, if the bill takes immediate effect; or a negative impact of ($2,000,000) through the biennium ending August 31, 2015, if the effective date of the bill is September 1, 2013. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($13,000,000) for the 2014-15 biennium if the bill takes immediate effect, or a revenue loss to the Property Tax Relief Fund of (8,000,000) if the effective date of the bill is September 1, 2013. 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.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
April 9, 2013
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3111 by Hilderbran (Relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:), As Introduced
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB3111 by Hilderbran (Relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:), As Introduced
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB3111 by Hilderbran (Relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:), As Introduced
HB3111 by Hilderbran (Relating to a tax credit for eligible costs and expenses incurred during the rehabilitation of a historic structure located in a severely damaged or flooded census tract:), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3111, As Introduced: a negative impact of ($3,251,000) through the biennium ending August 31, 2015, if the bill takes immediate effect; or a negative impact of ($2,000,000) through the biennium ending August 31, 2015, if the effective date of the bill is September 1, 2013. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($13,000,000) for the 2014-15 biennium if the bill takes immediate effect, or a revenue loss to the Property Tax Relief Fund of (8,000,000) if the effective date of the bill is September 1, 2013. 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.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3111, As Introduced: a negative impact of ($3,251,000) through the biennium ending August 31, 2015, if the bill takes immediate effect; or a negative impact of ($2,000,000) through the biennium ending August 31, 2015, if the effective date of the bill is September 1, 2013.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($13,000,000) for the 2014-15 biennium if the bill takes immediate effect, or a revenue loss to the Property Tax Relief Fund of (8,000,000) if the effective date of the bill is September 1, 2013. 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 2014 ($500,000) 2015 ($2,751,000) 2016 ($2,813,000) 2017 ($3,516,000) 2018 ($4,395,000)
2014 ($500,000)
2015 ($2,751,000)
2016 ($2,813,000)
2017 ($3,516,000)
2018 ($4,395,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2014 $0 2015 ($2,000,000) 2016 ($2,125,000) 2017 ($2,657,000) 2018 ($3,907,000)
2014 $0
2015 ($2,000,000)
2016 ($2,125,000)
2017 ($2,657,000)
2018 ($3,907,000)
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromFoundation School Fund193 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($375,000) ($125,000) ($2,000,000) 2015 ($2,063,000) ($688,000) ($11,000,000) 2016 ($2,110,000) ($703,000) ($11,252,000) 2017 ($2,637,000) ($879,000) ($14,064,000) 2018 ($3,296,000) ($1,099,000) ($17,576,000) The above table assumes the bill receives enough votes to take immediate effect. The table below assumes the bill takes effect September 1, 2013. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromFoundation School Fund193 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 $0 $0 $0 2015 ($1,500,000) ($500,000) ($8,000,000) 2016 ($1,500,000) ($625,000) ($10,000,000) 2017 ($1,875,000) ($782,000) ($12,504,000) 2018 ($2,930,000) ($977,000) ($15,624,000) Fiscal Analysis The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, and Subtitle B, Title 3, of the Insurance Code, to add new provisions for tax credits for the rehabilitation of an historic structure. The bill would define "eligible costs and expenses" by reference to federal law for a similar federal tax credit. The bill would define "substantially rehabilitated" to mean that the qualified rehabilitation expenditures must exceed $5,000. The credit would equal 25 percent of the eligible costs and expenses incurred during the rehabilitation of an historic structure. The credit would be earned by the entity that owns the historic structure in year in which the property attributable to the eligible costs and expenses is placed in service. To qualify for the credit the historic structure must be listed on the National Register of Historic Places or be certified by Texas Historical Commission as contributing to the historical significance of the state. Prior to the credit being claimed or assigned the commission would be required to issue a tax credit certificate following receipt of an audited report and evidence that the structure has been placed in service. The total amount of credit claimed for a report including any carryforward credit could not exceed the franchise tax or insurance premium tax due after any other applicable credits. If the credit earned exceeded the limit the excess credit could be carried forward for not more than five consecutive reports. The bill would provide than an entity earning a credit could sell or assign the credit to one or more transferees on one or more dates. The credits could be sold or assigned three times. The sale or assignment does not extend the carryforward period of the credit. Assignors and assignees would be required to submit to the commission written notification of any sale or assignment within thirty days after the transaction and include information about the assignor and each assignee. For the insurance premium tax, the bill would provide that any entity claiming a credit would not be required to pay any additional retaliatory tax. This bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2013. Methodology The estimated fiscal impact is based on information on recent activity in Texas that qualified under the Federal Historic Rehabilitation Tax Credit. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK, SD
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromFoundation School Fund193 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($375,000) ($125,000) ($2,000,000) 2015 ($2,063,000) ($688,000) ($11,000,000) 2016 ($2,110,000) ($703,000) ($11,252,000) 2017 ($2,637,000) ($879,000) ($14,064,000) 2018 ($3,296,000) ($1,099,000) ($17,576,000)
2014 ($375,000) ($125,000) ($2,000,000)
2015 ($2,063,000) ($688,000) ($11,000,000)
2016 ($2,110,000) ($703,000) ($11,252,000)
2017 ($2,637,000) ($879,000) ($14,064,000)
2018 ($3,296,000) ($1,099,000) ($17,576,000)
The above table assumes the bill receives enough votes to take immediate effect. The table below assumes the bill takes effect September 1, 2013.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromFoundation School Fund193 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 $0 $0 $0 2015 ($1,500,000) ($500,000) ($8,000,000) 2016 ($1,500,000) ($625,000) ($10,000,000) 2017 ($1,875,000) ($782,000) ($12,504,000) 2018 ($2,930,000) ($977,000) ($15,624,000) Fiscal Analysis The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, and Subtitle B, Title 3, of the Insurance Code, to add new provisions for tax credits for the rehabilitation of an historic structure. The bill would define "eligible costs and expenses" by reference to federal law for a similar federal tax credit. The bill would define "substantially rehabilitated" to mean that the qualified rehabilitation expenditures must exceed $5,000. The credit would equal 25 percent of the eligible costs and expenses incurred during the rehabilitation of an historic structure. The credit would be earned by the entity that owns the historic structure in year in which the property attributable to the eligible costs and expenses is placed in service. To qualify for the credit the historic structure must be listed on the National Register of Historic Places or be certified by Texas Historical Commission as contributing to the historical significance of the state. Prior to the credit being claimed or assigned the commission would be required to issue a tax credit certificate following receipt of an audited report and evidence that the structure has been placed in service. The total amount of credit claimed for a report including any carryforward credit could not exceed the franchise tax or insurance premium tax due after any other applicable credits. If the credit earned exceeded the limit the excess credit could be carried forward for not more than five consecutive reports. The bill would provide than an entity earning a credit could sell or assign the credit to one or more transferees on one or more dates. The credits could be sold or assigned three times. The sale or assignment does not extend the carryforward period of the credit. Assignors and assignees would be required to submit to the commission written notification of any sale or assignment within thirty days after the transaction and include information about the assignor and each assignee. For the insurance premium tax, the bill would provide that any entity claiming a credit would not be required to pay any additional retaliatory tax. This bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2013. Methodology The estimated fiscal impact is based on information on recent activity in Texas that qualified under the Federal Historic Rehabilitation Tax Credit.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromFoundation School Fund193 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 $0 $0 $0 2015 ($1,500,000) ($500,000) ($8,000,000) 2016 ($1,500,000) ($625,000) ($10,000,000) 2017 ($1,875,000) ($782,000) ($12,504,000) 2018 ($2,930,000) ($977,000) ($15,624,000)
2014 $0 $0 $0
2015 ($1,500,000) ($500,000) ($8,000,000)
2016 ($1,500,000) ($625,000) ($10,000,000)
2017 ($1,875,000) ($782,000) ($12,504,000)
2018 ($2,930,000) ($977,000) ($15,624,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, and Subtitle B, Title 3, of the Insurance Code, to add new provisions for tax credits for the rehabilitation of an historic structure. The bill would define "eligible costs and expenses" by reference to federal law for a similar federal tax credit. The bill would define "substantially rehabilitated" to mean that the qualified rehabilitation expenditures must exceed $5,000. The credit would equal 25 percent of the eligible costs and expenses incurred during the rehabilitation of an historic structure. The credit would be earned by the entity that owns the historic structure in year in which the property attributable to the eligible costs and expenses is placed in service. To qualify for the credit the historic structure must be listed on the National Register of Historic Places or be certified by Texas Historical Commission as contributing to the historical significance of the state. Prior to the credit being claimed or assigned the commission would be required to issue a tax credit certificate following receipt of an audited report and evidence that the structure has been placed in service. The total amount of credit claimed for a report including any carryforward credit could not exceed the franchise tax or insurance premium tax due after any other applicable credits. If the credit earned exceeded the limit the excess credit could be carried forward for not more than five consecutive reports. The bill would provide than an entity earning a credit could sell or assign the credit to one or more transferees on one or more dates. The credits could be sold or assigned three times. The sale or assignment does not extend the carryforward period of the credit. Assignors and assignees would be required to submit to the commission written notification of any sale or assignment within thirty days after the transaction and include information about the assignor and each assignee. For the insurance premium tax, the bill would provide that any entity claiming a credit would not be required to pay any additional retaliatory tax. This bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2013.
Methodology
The estimated fiscal impact is based on information on recent activity in Texas that qualified under the Federal Historic Rehabilitation Tax Credit.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD