LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION March 30, 2025 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2962 by Barry (Relating to an exemption from taxes imposed on the gross receipts of electricity sold to political subdivisions.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2962, As Introduced: a negative impact of ($33,000,000) through the biennium ending August 31, 2027. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2026($16,300,000)2027($16,700,000)2028($17,100,000)2029($17,500,000)2030($17,900,000)All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromFoundation School Fund1932026($12,200,000)($4,100,000)2027($12,500,000)($4,200,000)2028($12,800,000)($4,300,000)2029($13,100,000)($4,400,000)2030($13,400,000)($4,500,000) Fiscal AnalysisThe bill would exempt gross receipts from the sale of electricity to all political subdivisions from the miscellaneous gross receipts tax (MGRT), also known as the Gas, Electric and Water Utility Tax. Currently, only gross receipts from the sale of electricity to public school districts are exempt.The bill includes provisions that would require adjustment of the billings of political subdivision customers by electric utilities and retail electric providers to reflect any decrease in tax liability attributable to the exemption.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
March 30, 2025
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB2962 by Barry (Relating to an exemption from taxes imposed on the gross receipts of electricity sold to political subdivisions.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB2962 by Barry (Relating to an exemption from taxes imposed on the gross receipts of electricity sold to political subdivisions.), As Introduced
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB2962 by Barry (Relating to an exemption from taxes imposed on the gross receipts of electricity sold to political subdivisions.), As Introduced
HB2962 by Barry (Relating to an exemption from taxes imposed on the gross receipts of electricity sold to political subdivisions.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2962, As Introduced: a negative impact of ($33,000,000) through the biennium ending August 31, 2027.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2962, As Introduced: a negative impact of ($33,000,000) through the biennium ending August 31, 2027.
General Revenue-Related Funds, Five- Year Impact:
2026 ($16,300,000)
2027 ($16,700,000)
2028 ($17,100,000)
2029 ($17,500,000)
2030 ($17,900,000)
All Funds, Five-Year Impact:
2026 ($12,200,000) ($4,100,000)
2027 ($12,500,000) ($4,200,000)
2028 ($12,800,000) ($4,300,000)
2029 ($13,100,000) ($4,400,000)
2030 ($13,400,000) ($4,500,000)
Fiscal Analysis
The bill would exempt gross receipts from the sale of electricity to all political subdivisions from the miscellaneous gross receipts tax (MGRT), also known as the Gas, Electric and Water Utility Tax. Currently, only gross receipts from the sale of electricity to public school districts are exempt.The bill includes provisions that would require adjustment of the billings of political subdivision customers by electric utilities and retail electric providers to reflect any decrease in tax liability attributable to the exemption.
Methodology
This analysis assumes political subdivision includes counties, municipalities, and any other kind of special district. School districts are excluded from the analysis, as sales of electricity to those customers are already exempted from the MGRT.Data from selected political subdivisions' budgets available online were used and extrapolated to estimate total political subdivision spending on electricity. The amount was reduced to account for sales of electricity by municipally-owned utilities and electric cooperatives, who are not subject to the MGRT; then multiplied by the appropriate MGRT rates (0.581 percent, 1.07 percent, or 1.997 percent), based on Comptroller and Census data regarding the distribution of those tax rates to yield the estimated total MGRT tax loss due to the provisions of the bill. This estimate was then apportioned between General Revenue Fund 0001 and GR Account 0193-Foundation School, according to the MGRT's allocation of revenue under Section 3, Article 7, of the Texas Constitution.
Local Government Impact
The bill would exempt gross receipts from the sale of electricity to all political subdivisions from the miscellaneous gross receipts tax. Currently, only gross receipts from the sale of electricity to public school districts are exempt. Implementing the provisions of the bill would result in savings to units of local government.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI