LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION April 12, 2023 TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB1000, As Introduced : an impact of $0 through the biennium ending August 31, 2025. Additionally, the bill will have a direct impact of a revenue loss to the Tax Reduction and Excellence in Education Fund of ($230,457,075) for the 2024-25 biennium. Any loss to the Tax Reduction and Excellence in Education 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 toGeneral Revenue Related Funds2024($2,995,454,929)2025($3,598,560,214)2026($3,793,993,217)2027($3,998,837,735)2028($4,199,456,674)All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromState Highway Fund6 Probable Revenue (Loss) fromState Parks Acct64 Probable Revenue (Loss) fromTax Reduc. & Excell. Edu. Fund3052024($2,995,454,929)($2,519,109)($11,582,180)($104,689,444)2025($3,598,560,214)($3,026,306)($13,914,138)($125,767,631)2026($3,793,993,217)($3,190,661)($14,669,796)($132,597,903)2027($3,998,837,735)($3,362,930)($15,461,845)($139,757,102)2028($4,199,456,674)($3,531,646)($16,237,555)($146,768,620)Fiscal Year Probable Revenue (Loss) fromLocal Parks Account467 Probable Revenue (Loss) fromParks/Wildlife Cap Acct5004 Probable Revenue (Loss) fromHistoric Sites5139 Probable Revenue (Loss) fromLrg County & Municipal Rec & Parks51502024($954,955)($2,371,258)($1,150,557)($377,568)2025($1,147,226)($2,848,687)($1,382,210)($453,588)2026($1,209,530)($3,003,396)($1,457,276)($478,222)2027($1,274,835)($3,165,554)($1,535,957)($504,042)2028($1,338,793)($3,324,368)($1,613,015)($529,329) Fiscal AnalysisThe bill would lower the state sales and use tax rate from 6.25 percent to 5.75 percent.The bill would take effect October 1, 2023.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
April 12, 2023
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced
Honorable Joan Huffman, Chair, Senate Committee on Finance
Honorable Joan Huffman, Chair, Senate Committee on Finance
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced
SB1000 by West (Relating to decreasing the state sales and use tax rate.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1000, As Introduced : an impact of $0 through the biennium ending August 31, 2025. Additionally, the bill will have a direct impact of a revenue loss to the Tax Reduction and Excellence in Education Fund of ($230,457,075) for the 2024-25 biennium. Any loss to the Tax Reduction and Excellence in Education 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 SB1000, As Introduced : an impact of $0 through the biennium ending August 31, 2025. Additionally, the bill will have a direct impact of a revenue loss to the Tax Reduction and Excellence in Education Fund of ($230,457,075) for the 2024-25 biennium. Any loss to the Tax Reduction and Excellence in Education must be made up with an equal amount of General Revenue to fund the Foundation School Program.
Additionally, the bill will have a direct impact of a revenue loss to the Tax Reduction and Excellence in Education Fund of ($230,457,075) for the 2024-25 biennium. Any loss to the Tax Reduction and Excellence in Education must be made up with an equal amount of General Revenue to fund the Foundation School Program.
General Revenue-Related Funds, Five- Year Impact:
2024 ($2,995,454,929)
2025 ($3,598,560,214)
2026 ($3,793,993,217)
2027 ($3,998,837,735)
2028 ($4,199,456,674)
All Funds, Five-Year Impact:
2024 ($2,995,454,929) ($2,519,109) ($11,582,180) ($104,689,444)
2025 ($3,598,560,214) ($3,026,306) ($13,914,138) ($125,767,631)
2026 ($3,793,993,217) ($3,190,661) ($14,669,796) ($132,597,903)
2027 ($3,998,837,735) ($3,362,930) ($15,461,845) ($139,757,102)
2028 ($4,199,456,674) ($3,531,646) ($16,237,555) ($146,768,620)
2024 ($954,955) ($2,371,258) ($1,150,557) ($377,568)
2025 ($1,147,226) ($2,848,687) ($1,382,210) ($453,588)
2026 ($1,209,530) ($3,003,396) ($1,457,276) ($478,222)
2027 ($1,274,835) ($3,165,554) ($1,535,957) ($504,042)
2028 ($1,338,793) ($3,324,368) ($1,613,015) ($529,329)
Fiscal Analysis
The bill would lower the state sales and use tax rate from 6.25 percent to 5.75 percent.The bill would take effect October 1, 2023.
The bill would take effect October 1, 2023.
Methodology
The estimates in the table above reflect the loss of sales and use tax expected from the lower tax rate, allocated among the accounts that receive deposits of sales and use tax revenue.By reducing deposits to General Revenue, the bill would lower the maximum balance of the Economic Stabilization Fund. There would be a corresponding gain to General Revenue and loss to the Economic Stabilization Fund, as less severance tax revenue would be transferred between the funds.Note, the Comptroller's estimates of the lost revenue could potentially differ from the estimates displayed above, however, those estimates are not available at this time.
By reducing deposits to General Revenue, the bill would lower the maximum balance of the Economic Stabilization Fund. There would be a corresponding gain to General Revenue and loss to the Economic Stabilization Fund, as less severance tax revenue would be transferred between the funds.Note, the Comptroller's estimates of the lost revenue could potentially differ from the estimates displayed above, however, those estimates are not available at this time.
Note, the Comptroller's estimates of the lost revenue could potentially differ from the estimates displayed above, however, those estimates are not available at this time.
Local Government Impact
There could be a potential gain of sales and use tax revenue to local taxing jurisdictions attributable to higher spending on taxable goods and services induced by a lower sales tax rate, however those amounts are not expected to be significant.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 802 Parks and Wildlife Department
304 Comptroller of Public Accounts, 802 Parks and Wildlife Department
LBB Staff: b > td > JMc, KK, SD
JMc, KK, SD