LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
 
April 19, 2009

TO:
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
 
FROM:
John S. O'Brien, Director, Legislative Budget Board
 
IN RE:
HB3895 by Oliveira (Relating to the sales tax on computer program services.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB3895, As Introduced: a positive impact of $289,630,000 through the biennium ending August 31, 2011, if the effective date of the bill is July 1, 2009; or a positive impact of $256,403,000 through the biennium ending August 31, 2011, if the effective date of the bill is October 1, 2009.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2009 $10,648,000
2010 $135,472,000
2011 $143,510,000
2012 $152,266,000
2013 $160,941,000
2014 $169,954,000




Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010 $112,893,000
2011 $143,510,000
2012 $152,266,000
2013 $160,941,000
2014 $169,954,000




Fiscal Year Probable Revenue Gain from
General Revenue Fund
1 		Probable Revenue Gain from
Cities		 Probable Revenue Gain from
Transit Authorities		 Probable Revenue Gain from
Counties
2009 $10,648,000 $0 $0 $0
2010 $135,472,000 $25,195,000 $8,714,000 $3,560,000
2011 $143,510,000 $26,690,000 $9,231,000 $3,771,000
2012 $152,266,000 $28,318,000 $9,794,000 $4,002,000
2013 $160,941,000 $29,932,000 $10,352,000 $4,230,000
2014 $169,954,000 $31,608,000 $10,931,000 $4,466,000

The above table assumes an effective date of July 1, 2009.  The table below assumes an effective date of October 1, 2009.



Fiscal Year Probable Revenue Gain from
General Revenue Fund
1 		Probable Revenue Gain from
Cities		 Probable Revenue Gain from
Transit Authorities		 Probable Revenue Gain from
Counties
2010 $112,893,000 $18,896,000 $6,535,000 $2,670,000
2011 $143,510,000 $26,960,000 $9,231,000 $3,771,000
2012 $152,266,000 $28,318,000 $9,794,000 $4,002,000
2013 $160,941,000 $29,932,000 $10,352,000 $4,230,000
2014 $169,954,000 $31,608,000 $10,931,000 $4,466,000

Fiscal Analysis

The bill would amend Chapter 151 of the Tax Code, regarding the sales tax.

The bill would eliminate the sales tax exception for the repair, maintenance, creation, and restoration of computer programs from the definition of "taxable services." Under this bill, these services would become subject to taxation.

The bill would take effect July 1, 2009, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect October 1, 2009.


Methodology

The fiscal impact was estimated based on data on the Texas sale of custom computer programming services gathered from the U.S. Bureau of the Census. Sales were multiplied by the state sales tax rate; adjusted for potential effective dates of July 1, 2009 and October 1, 2009; and extrapolated through fiscal 2014.

Local Government Impact

There would be a proportional gain of sales tax revenue to units of local government.


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JOB, MN, SD, KK