LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION May 2, 2017 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1164 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 HB1164, As Introduced: a negative impact of ($5,070,000) through the biennium ending August 31, 2019, if the bill takes immediate effect; or a negative impact of ($4,400,000) through the biennium ending August 31, 2019, if the effective date of the bill is September 1, 2017.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION
May 2, 2017
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1164 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: HB1164 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
HB1164 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
HB1164 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 HB1164, As Introduced: a negative impact of ($5,070,000) through the biennium ending August 31, 2019, if the bill takes immediate effect; or a negative impact of ($4,400,000) through the biennium ending August 31, 2019, if the effective date of the bill is September 1, 2017.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1164, As Introduced: a negative impact of ($5,070,000) through the biennium ending August 31, 2019, if the bill takes immediate effect; or a negative impact of ($4,400,000) through the biennium ending August 31, 2019, if the effective date of the bill is September 1, 2017.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2017 ($670,000) 2018 $0 2019 ($4,400,000) 2020 ($4,600,000) 2021 ($4,800,000) 2022 ($5,000,000)
2017 ($670,000)
2018 $0
2019 ($4,400,000)
2020 ($4,600,000)
2021 ($4,800,000)
2022 ($5,000,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2018 $0 2019 ($4,400,000) 2020 ($4,600,000) 2021 ($4,800,000) 2022 ($5,000,000)
2018 $0
2019 ($4,400,000)
2020 ($4,600,000)
2021 ($4,800,000)
2022 ($5,000,000)
All Funds, Six-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromState Highway Fund6 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities 2017 ($670,000) $0 ($130,000) ($40,000) 2018 $0 ($4,200,000) ($810,000) ($280,000) 2019 ($4,400,000) $0 ($840,000) ($290,000) 2020 ($4,600,000) $0 ($880,000) ($300,000) 2021 ($4,800,000) $0 ($920,000) ($320,000) 2022 ($5,000,000) $0 ($960,000) ($330,000) Fiscal Year Probable Revenue (Loss) fromCounties & Special Districts 2017 ($20,000) 2018 ($150,000) 2019 ($150,000) 2020 ($160,000) 2021 ($170,000) 2022 ($170,000) The above tables assume the bill takes immediate effect. The tables below assume the bill takes effect on September 1, 2017. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromState Highway Fund6 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities 2018 $0 ($3,900,000) ($750,000) ($260,000) 2019 ($4,400,000) $0 ($840,000) ($290,000) 2020 ($4,600,000) $0 ($880,000) ($300,000) 2021 ($4,800,000) $0 ($920,000) ($320,000) 2022 ($5,000,000) $0 ($960,000) ($330,000) Fiscal Year Probable Revenue (Loss) fromCounties & Special Districts 2018 ($140,000) 2019 ($150,000) 2020 ($160,000) 2021 ($170,000) 2022 ($170,000) Fiscal Analysis The bill would amend Section 151.006 of the Tax Code, regarding sales and use tax, by adding a new Subsection (e) to provide that 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, 2017. 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.Pursuant to Proposition 7 (2015), any sales tax collections in excess of $28 billion and less than$30.5 billion will be deposited into the State Highway Fund. Because total 2018 collections areprojected to fall in that range, the 2018 revenue loss is from the State Highway Fund instead ofGeneral Revenue. Local Government Impact There would be a proportional loss of sales and use tax revenue from units of local government. The estimated losses are displayed 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) fromState Highway Fund6 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities 2017 ($670,000) $0 ($130,000) ($40,000) 2018 $0 ($4,200,000) ($810,000) ($280,000) 2019 ($4,400,000) $0 ($840,000) ($290,000) 2020 ($4,600,000) $0 ($880,000) ($300,000) 2021 ($4,800,000) $0 ($920,000) ($320,000) 2022 ($5,000,000) $0 ($960,000) ($330,000)
2017 ($670,000) $0 ($130,000) ($40,000)
2018 $0 ($4,200,000) ($810,000) ($280,000)
2019 ($4,400,000) $0 ($840,000) ($290,000)
2020 ($4,600,000) $0 ($880,000) ($300,000)
2021 ($4,800,000) $0 ($920,000) ($320,000)
2022 ($5,000,000) $0 ($960,000) ($330,000)
Fiscal Year Probable Revenue (Loss) fromCounties & Special Districts 2017 ($20,000) 2018 ($150,000) 2019 ($150,000) 2020 ($160,000) 2021 ($170,000) 2022 ($170,000)
2017 ($20,000)
2018 ($150,000)
2019 ($150,000)
2020 ($160,000)
2021 ($170,000)
2022 ($170,000)
The above tables assume the bill takes immediate effect. The tables below assume the bill takes effect on September 1, 2017.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromState Highway Fund6 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities 2018 $0 ($3,900,000) ($750,000) ($260,000) 2019 ($4,400,000) $0 ($840,000) ($290,000) 2020 ($4,600,000) $0 ($880,000) ($300,000) 2021 ($4,800,000) $0 ($920,000) ($320,000) 2022 ($5,000,000) $0 ($960,000) ($330,000) Fiscal Year Probable Revenue (Loss) fromCounties & Special Districts 2018 ($140,000) 2019 ($150,000) 2020 ($160,000) 2021 ($170,000) 2022 ($170,000) Fiscal Analysis The bill would amend Section 151.006 of the Tax Code, regarding sales and use tax, by adding a new Subsection (e) to provide that 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, 2017. 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.Pursuant to Proposition 7 (2015), any sales tax collections in excess of $28 billion and less than$30.5 billion will be deposited into the State Highway Fund. Because total 2018 collections areprojected to fall in that range, the 2018 revenue loss is from the State Highway Fund instead ofGeneral Revenue.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromState Highway Fund6 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities 2018 $0 ($3,900,000) ($750,000) ($260,000) 2019 ($4,400,000) $0 ($840,000) ($290,000) 2020 ($4,600,000) $0 ($880,000) ($300,000) 2021 ($4,800,000) $0 ($920,000) ($320,000) 2022 ($5,000,000) $0 ($960,000) ($330,000)
2018 $0 ($3,900,000) ($750,000) ($260,000)
2019 ($4,400,000) $0 ($840,000) ($290,000)
2020 ($4,600,000) $0 ($880,000) ($300,000)
2021 ($4,800,000) $0 ($920,000) ($320,000)
2022 ($5,000,000) $0 ($960,000) ($330,000)
Fiscal Year Probable Revenue (Loss) fromCounties & Special Districts 2018 ($140,000) 2019 ($150,000) 2020 ($160,000) 2021 ($170,000) 2022 ($170,000)
2018 ($140,000)
2019 ($150,000)
2020 ($160,000)
2021 ($170,000)
2022 ($170,000)
Fiscal Analysis
The bill would amend Section 151.006 of the Tax Code, regarding sales and use tax, by adding a new Subsection (e) to provide that 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, 2017.
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.Pursuant to Proposition 7 (2015), any sales tax collections in excess of $28 billion and less than$30.5 billion will be deposited into the State Highway Fund. Because total 2018 collections areprojected to fall in that range, the 2018 revenue loss is from the State Highway Fund instead ofGeneral Revenue.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from units of local government. The estimated losses are displayed in the above tables.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD