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:HB2844 by Raney (Relating to the application of the sales and use tax to the lease or rental to a full service event business of certain tangible personal property.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2844, As Introduced: a negative impact of ($8,600,000) through the biennium ending August 31, 2017, if the bill takes effect immediate effect; or a negative impact of ($7,700,000) 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:HB2844 by Raney (Relating to the application of the sales and use tax to the lease or rental to a full service event business 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: HB2844 by Raney (Relating to the application of the sales and use tax to the lease or rental to a full service event business 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
HB2844 by Raney (Relating to the application of the sales and use tax to the lease or rental to a full service event business of certain tangible personal property.), As Introduced
HB2844 by Raney (Relating to the application of the sales and use tax to the lease or rental to a full service event business of certain tangible personal property.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2844, As Introduced: a negative impact of ($8,600,000) through the biennium ending August 31, 2017, if the bill takes effect immediate effect; or a negative impact of ($7,700,000) 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 HB2844, As Introduced: a negative impact of ($8,600,000) through the biennium ending August 31, 2017, if the bill takes effect immediate effect; or a negative impact of ($7,700,000) 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 ($3,900,000) 2017 ($4,100,000) 2018 ($4,300,000) 2019 ($4,500,000) 2020 ($4,700,000)
2015 ($600,000)
2016 ($3,900,000)
2017 ($4,100,000)
2018 ($4,300,000)
2019 ($4,500,000)
2020 ($4,700,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2016 ($3,600,000) 2017 ($4,100,000) 2018 ($4,300,000) 2019 ($4,500,000) 2020 ($4,700,000)
2016 ($3,600,000)
2017 ($4,100,000)
2018 ($4,300,000)
2019 ($4,500,000)
2020 ($4,700,000)
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 ($3,900,000) ($700,000) ($200,000) ($100,000) 2017 ($4,100,000) ($800,000) ($300,000) ($100,000) 2018 ($4,300,000) ($800,000) ($300,000) ($100,000) 2019 ($4,500,000) ($800,000) ($300,000) ($200,000) 2020 ($4,700,000) ($900,000) ($300,000) ($200,000) The above table assumes the bill takes immediate effect. The table below assumes the bill takes effect on September 1, 2015. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($3,600,000) ($700,000) ($200,000) ($100,000) 2017 ($4,100,000) ($800,000) ($300,000) ($100,000) 2018 ($4,300,000) ($800,000) ($300,000) ($100,000) 2019 ($4,500,000) ($800,000) ($300,000) ($200,000) 2020 ($4,700,000) ($900,000) ($300,000) ($200,000) 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 full service event business if that business uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The bill would define for purposes of this subsection "full service event business" as a person engaged in preparing and serving meals, drinks, or other food products for events held at locations designated by customers who also provides at least one of the following: staff, rentals of tangible personal property, design elements, or floral items. This bill would take effect immediately upon enactment, assuming 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 with provided staff, rentals of tangible personal property, design elements, or floral items. The result was further reduced to revenue associated with 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 the 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. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK
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 ($3,900,000) ($700,000) ($200,000) ($100,000) 2017 ($4,100,000) ($800,000) ($300,000) ($100,000) 2018 ($4,300,000) ($800,000) ($300,000) ($100,000) 2019 ($4,500,000) ($800,000) ($300,000) ($200,000) 2020 ($4,700,000) ($900,000) ($300,000) ($200,000)
2015 ($600,000) ($100,000) $0 $0
2016 ($3,900,000) ($700,000) ($200,000) ($100,000)
2017 ($4,100,000) ($800,000) ($300,000) ($100,000)
2018 ($4,300,000) ($800,000) ($300,000) ($100,000)
2019 ($4,500,000) ($800,000) ($300,000) ($200,000)
2020 ($4,700,000) ($900,000) ($300,000) ($200,000)
The above table assumes the bill takes immediate effect. The table below assumes the bill takes effect on September 1, 2015.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($3,600,000) ($700,000) ($200,000) ($100,000) 2017 ($4,100,000) ($800,000) ($300,000) ($100,000) 2018 ($4,300,000) ($800,000) ($300,000) ($100,000) 2019 ($4,500,000) ($800,000) ($300,000) ($200,000) 2020 ($4,700,000) ($900,000) ($300,000) ($200,000) 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 full service event business if that business uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The bill would define for purposes of this subsection "full service event business" as a person engaged in preparing and serving meals, drinks, or other food products for events held at locations designated by customers who also provides at least one of the following: staff, rentals of tangible personal property, design elements, or floral items. This bill would take effect immediately upon enactment, assuming 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 with provided staff, rentals of tangible personal property, design elements, or floral items. The result was further reduced to revenue associated with 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 the applicable sales tax. Fiscal implications for units of local government were estimated proportionally.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($3,600,000) ($700,000) ($200,000) ($100,000) 2017 ($4,100,000) ($800,000) ($300,000) ($100,000) 2018 ($4,300,000) ($800,000) ($300,000) ($100,000) 2019 ($4,500,000) ($800,000) ($300,000) ($200,000) 2020 ($4,700,000) ($900,000) ($300,000) ($200,000)
2016 ($3,600,000) ($700,000) ($200,000) ($100,000)
2017 ($4,100,000) ($800,000) ($300,000) ($100,000)
2018 ($4,300,000) ($800,000) ($300,000) ($100,000)
2019 ($4,500,000) ($800,000) ($300,000) ($200,000)
2020 ($4,700,000) ($900,000) ($300,000) ($200,000)
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 full service event business if that business uses the property in a sale of a taxable item. A sale for resale is exempt from tax. The bill would define for purposes of this subsection "full service event business" as a person engaged in preparing and serving meals, drinks, or other food products for events held at locations designated by customers who also provides at least one of the following: staff, rentals of tangible personal property, design elements, or floral items. This bill would take effect immediately upon enactment, assuming 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 with provided staff, rentals of tangible personal property, design elements, or floral items. The result was further reduced to revenue associated with 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 the 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.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK
UP, KK