LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 15, 2025 TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB2774 by Hinojosa, Adam (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB2774, As Introduced: an impact of $0 through the biennium ending August 31, 2027. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 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 toGeneral Revenue Related Funds2026$02027$02028$02029$02030$0All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund3042026$02027($2,860,000)2028($3,000,000)2029($3,130,000)2030($3,270,000) Fiscal AnalysisThe bill would redefine activities involving the rental of industrial uniforms, garments, and linen supplies-classified as Industry 7213 (Linen Supply) or 7218 (Industrial Launderers) of the 1987 Standard Industrial Classification Manual; published by the federal Office of Management and Budget-as retail trade, for franchise tax purposes.The bill would take effect January 1, 2027.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 15, 2025
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB2774 by Hinojosa, Adam (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB2774 by Hinojosa, Adam (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), 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
SB2774 by Hinojosa, Adam (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
SB2774 by Hinojosa, Adam (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB2774, As Introduced: an impact of $0 through the biennium ending August 31, 2027. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 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 SB2774, As Introduced: an impact of $0 through the biennium ending August 31, 2027. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 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.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,860,000) for the 2026-27 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:
2026 $0
2027 $0
2028 $0
2029 $0
2030 $0
All Funds, Five-Year Impact:
2026 $0
2027 ($2,860,000)
2028 ($3,000,000)
2029 ($3,130,000)
2030 ($3,270,000)
Fiscal Analysis
The bill would redefine activities involving the rental of industrial uniforms, garments, and linen supplies-classified as Industry 7213 (Linen Supply) or 7218 (Industrial Launderers) of the 1987 Standard Industrial Classification Manual; published by the federal Office of Management and Budget-as retail trade, for franchise tax purposes.The bill would take effect January 1, 2027.
Methodology
This estimate is based on franchise tax liabilities of entities currently classified as SIC Industry 7213 or 7218 (NAICS 812331 or 812332), adjusted for the lower tax rate applicable for retail trade, and extrapolated to subsequent years based on rate of franchise tax growth the 2026-2027 Biennial Revenue Estimate.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD
JMc, KK, SD