LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION April 6, 2015 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB2527 by Guillen (Relating to the application of the sales and use tax to the lease or rental to a caterer of certain tangible personal property.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2527, As Introduced: a negative impact of ($8,000,000) through the biennium ending August 31, 2017, if the bill takes immediate effect; or a negative impact of ($7,100,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
April 6, 2015
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB2527 by Guillen (Relating to the application of the sales and use tax to the lease or rental to a caterer of certain tangible personal property.), As Introduced
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB2527 by Guillen (Relating to the application of the sales and use tax to the lease or rental to a caterer of certain tangible personal property.), As Introduced
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB2527 by Guillen (Relating to the application of the sales and use tax to the lease or rental to a caterer of certain tangible personal property.), As Introduced
HB2527 by Guillen (Relating to the application of the sales and use tax to the lease or rental to a caterer of certain tangible personal property.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2527, As Introduced: a negative impact of ($8,000,000) through the biennium ending August 31, 2017, if the bill takes immediate effect; or a negative impact of ($7,100,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2527, As Introduced: a negative impact of ($8,000,000) through the biennium ending August 31, 2017, if the bill takes immediate effect; or a negative impact of ($7,100,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2015 ($600,000) 2016 ($3,600,000) 2017 ($3,800,000) 2018 ($4,000,000) 2019 ($4,200,000) 2020 ($4,400,000)
2015 ($600,000)
2016 ($3,600,000)
2017 ($3,800,000)
2018 ($4,000,000)
2019 ($4,200,000)
2020 ($4,400,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2016 ($3,300,000) 2017 ($3,800,000) 2018 ($4,000,000) 2019 ($4,200,000) 2020 ($4,400,000)
2016 ($3,300,000)
2017 ($3,800,000)
2018 ($4,000,000)
2019 ($4,200,000)
2020 ($4,400,000)
All Funds, Six-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2015 ($600,000) ($100,000) $0 $0 2016 ($3,600,000) ($700,000) ($200,000) ($100,000) 2017 ($3,800,000) ($700,000) ($200,000) ($100,000) 2018 ($4,000,000) ($700,000) ($300,000) ($100,000) 2019 ($4,200,000) ($800,000) ($300,000) ($100,000) 2020 ($4,400,000) ($800,000) ($300,000) ($100,000) The table above assumes the bill takes immediate effect. The table below assumes an effective date of September 1, 2015 Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromCities Probable Revenue Gain/(Loss) fromTransit Authorities Probable Revenue Gain/(Loss) fromCounties and Special Districts 2016 ($3,300,000) ($600,000) ($200,000) ($100,000) 2017 ($3,800,000) ($700,000) ($200,000) ($100,000) 2018 ($4,000,000) ($700,000) ($300,000) ($100,000) 2019 ($4,200,000) ($800,000) ($300,000) ($100,000) 2020 ($4,400,000) ($800,000) ($300,000) ($100,000) Fiscal Analysis The bill would amend Section 151.006 of the Tax Code to provide that, for purposes of sales and use tax, a sale for resale includes the lease or rental of reusable tangible personal property to a caterer if the caterer uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The 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, 2015. Methodology National data on annual revenue of the catering industry from the U.S. Census Bureau was apportioned to the state based on the number of catering establishments, reduced to reflect off-premise catering activity and revenues estimated to be dedicated for the lease or rental of tangible personal property used in the sale of taxable prepared foods and drinking products. The result was multiplied by the sales tax rate to yield an estimate of applicable sales tax. Fiscal implications for units of local government were estimated proportionally. Local Government Impact There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions as shown in the above tables. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK, SD
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2015 ($600,000) ($100,000) $0 $0 2016 ($3,600,000) ($700,000) ($200,000) ($100,000) 2017 ($3,800,000) ($700,000) ($200,000) ($100,000) 2018 ($4,000,000) ($700,000) ($300,000) ($100,000) 2019 ($4,200,000) ($800,000) ($300,000) ($100,000) 2020 ($4,400,000) ($800,000) ($300,000) ($100,000)
2015 ($600,000) ($100,000) $0 $0
2016 ($3,600,000) ($700,000) ($200,000) ($100,000)
2017 ($3,800,000) ($700,000) ($200,000) ($100,000)
2018 ($4,000,000) ($700,000) ($300,000) ($100,000)
2019 ($4,200,000) ($800,000) ($300,000) ($100,000)
2020 ($4,400,000) ($800,000) ($300,000) ($100,000)
The table above assumes the bill takes immediate effect. The table below assumes an effective date of September 1, 2015
Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromCities Probable Revenue Gain/(Loss) fromTransit Authorities Probable Revenue Gain/(Loss) fromCounties and Special Districts 2016 ($3,300,000) ($600,000) ($200,000) ($100,000) 2017 ($3,800,000) ($700,000) ($200,000) ($100,000) 2018 ($4,000,000) ($700,000) ($300,000) ($100,000) 2019 ($4,200,000) ($800,000) ($300,000) ($100,000) 2020 ($4,400,000) ($800,000) ($300,000) ($100,000) Fiscal Analysis The bill would amend Section 151.006 of the Tax Code to provide that, for purposes of sales and use tax, a sale for resale includes the lease or rental of reusable tangible personal property to a caterer if the caterer uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The 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, 2015. Methodology National data on annual revenue of the catering industry from the U.S. Census Bureau was apportioned to the state based on the number of catering establishments, reduced to reflect off-premise catering activity and revenues estimated to be dedicated for the lease or rental of tangible personal property used in the sale of taxable prepared foods and drinking products. The result was multiplied by the sales tax rate to yield an estimate of applicable sales tax. Fiscal implications for units of local government were estimated proportionally.
Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromCities Probable Revenue Gain/(Loss) fromTransit Authorities Probable Revenue Gain/(Loss) fromCounties and Special Districts 2016 ($3,300,000) ($600,000) ($200,000) ($100,000) 2017 ($3,800,000) ($700,000) ($200,000) ($100,000) 2018 ($4,000,000) ($700,000) ($300,000) ($100,000) 2019 ($4,200,000) ($800,000) ($300,000) ($100,000) 2020 ($4,400,000) ($800,000) ($300,000) ($100,000)
2016 ($3,300,000) ($600,000) ($200,000) ($100,000)
2017 ($3,800,000) ($700,000) ($200,000) ($100,000)
2018 ($4,000,000) ($700,000) ($300,000) ($100,000)
2019 ($4,200,000) ($800,000) ($300,000) ($100,000)
2020 ($4,400,000) ($800,000) ($300,000) ($100,000)
Fiscal Analysis
The bill would amend Section 151.006 of the Tax Code to provide that, for purposes of sales and use tax, a sale for resale includes the lease or rental of reusable tangible personal property to a caterer if the caterer uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The 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, 2015.
Methodology
National data on annual revenue of the catering industry from the U.S. Census Bureau was apportioned to the state based on the number of catering establishments, reduced to reflect off-premise catering activity and revenues estimated to be dedicated for the lease or rental of tangible personal property used in the sale of taxable prepared foods and drinking products. The result was multiplied by the sales tax rate to yield an estimate of applicable sales tax. Fiscal implications for units of local government were estimated proportionally.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions as shown in the above tables.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD