LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION May 2, 2017 TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB1031 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for SB1031, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($26,517,000) for the 2020-21 biennium. 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, 85TH LEGISLATIVE REGULAR SESSION
May 2, 2017
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB1031 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: SB1031 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted
Honorable Jane Nelson, Chair, Senate Committee on Finance
Honorable Jane Nelson, Chair, Senate Committee on Finance
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
SB1031 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted
SB1031 by Taylor, Larry (relating to a deduction under the franchise tax for certain contracts with the federal government.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB1031, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($26,517,000) for the 2020-21 biennium. 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 SB1031, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($26,517,000) for the 2020-21 biennium. 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 2018 $0 2019 $0 2020 $0 2021 $0 2022 $0
2018 $0
2019 $0
2020 $0
2021 $0
2022 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2018 $0 2019 $0 2020 ($13,098,000) 2021 ($13,419,000) 2022 ($13,754,000)
Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2018 $0 2019 $0 2020 ($13,098,000) 2021 ($13,419,000) 2022 ($13,754,000)
2018 $0
2019 $0
2020 ($13,098,000)
2021 ($13,419,000)
2022 ($13,754,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to add a subtraction from total revenue for calculating taxable margin equal to all costs not already subtracted that are properly allowable under the Federal Acquisition Regulation (48 C.F.R. Chapter 1) to contracts for the sale of goods or services to the federal government by a taxable entity that is a party to a contract subject to the requirements of Defense Acquisition Regulations (48 C.F.R. Chapter 2). Under current law some allowable costs cannot be subtracted or are subject to a cap on the amount that can be subtracted from total revenue. The bill would take effect January 1, 2020, and apply to franchise tax reports due on or after that date.
Methodology
The estimate for the fiscal impact of the bill is based on information on major defense contractors operating in Texas and on data in the Comptroller's franchise tax data bases.
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