LEGISLATIVE FISCAL OFFICE
                                                              Fiscal Note
                                                                                          Fiscal Note On:   HB   203              HLS      21RS   562
                                                                                        Bill Text Version: ORIGINAL
                                                                                    Opp. Chamb. Action:
                                                                                          Proposed Amd.:
                                                                                            Sub. Bill For.:
         Date: April 18, 2021               9:42 AM                                                        Author: CARTER, ROBBY
Dept./Agy.: Revenue / Local Ad Valorem Tax Collectors
     Subject: Income Tax and State Property Tax                                                            Analyst: Greg Albrecht
TAX/STATE                                     OR DECREASE GF RV See Note                                      Page 1 of 1
(Constitutional Amendment) Prohibits the levy of tax on net incomes and provides for state taxes on the assessed value of
property
Current law authorizes graduated taxation of net incomes, as well as state property tax up to 5.75 mills on the dollar of
assessed valuation of property.
Proposed law prohibits the taxation of net incomes, and authorizes state property taxation as provided by law. Effective
January 1, 2023, and applicable for tax years beginning on or after January 1, 2023.
To be submitted to the electors at the statewide election to be held on November 8, 2022.
EXPENDITURES            2021-22                2022-23               2023-24              2024-25                 2025-26            5 -YEAR TOTAL
State Gen. Fd.                 $0                     $0                    $0                      $0                    $0                       $0
Agy. Self-Gen.                 $0                     $0                    $0                      $0                    $0                       $0
Ded./Other                     $0                     $0                    $0                      $0                    $0                       $0
Federal Funds                  $0                     $0                    $0                      $0                    $0                       $0
Local Funds                    $0                     $0                    $0                      $0                    $0                       $0
Annual Total                   $0                     $0                    $0                      $0                    $0                       $0
REVENUES                2021-22               2022-23               2023-24               2024-25                 2025-26           5 -YEAR TOTAL
State Gen. Fd.                 $0              DECREASE              DECREASE             DECREASE                DECREASE                         $0
Agy. Self-Gen.                 $0                     $0                    $0                      $0                    $0                       $0
Ded./Other                     $0                     $0                    $0                      $0                    $0                       $0
Federal Funds                  $0                     $0                    $0                      $0                    $0                       $0
Local Funds                    $0                     $0                    $0                      $0                    $0                       $0
Annual Total                     $0                                                                                                                $0
EXPENDITURE EXPLANATION
Administrative expenses to transition out of the individual and corporate income taxes have not been determined.
REVENUE EXPLANATION
The bill provides no transition provisions for the elimination of the state income tax, both individual and corporate, effective
with the 2023 tax year. Presumably, statutory provisions to make that transition would be enacted prior to this bill’s
effectiveness. A rough guide of the fiscal consequences of the bill, with regard to income taxation, can be obtained from
current official forecasts of income tax in future fiscal years. Individual income tax that would ultimately be foregone is
forecast at $3.977 billion in FY23, $4.079 billon in FY24, and $4.069 billion in FY25. Foregone corporate income tax would
approximate $350 million in FY23, $375 million in FY24, and $400 million in FY25. These forecasts are net of credits, and
understate losses to the extent certain credits can migrate to the franchise tax. In addition, receipts in a fiscal year are
attributable to multiple tax years of filings. Thus, actual revenue losses would accumulate to these magnitudes primarily
over about a three-year period. However, losses from the elimination of individual income tax withholdings would begin in
the second half of FY23 (the first half of tax year 2023).
The bill seems to contemplate a statewide property tax to offset some or all of the income tax loss, but provides no guidance
as to that taxation other than to remove the current maximum statewide millage of 5.75 mills (not currently levied), and
authorizes state property taxation as provided by law.
Senate           Dual Referral Rules                  House
     13.5.1 >= $100,000 Annual Fiscal Cost {S & H}         6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
                                                                                                              Christopher A. Keaton
 x   13.5.2 >= $500,000 Annual Tax or Fee                  6.8(G) >= $500,000 Tax or Fee Increase
               Change {S & H}                                                                                 Legislative Fiscal Officer
                                                                     or a Net Fee Decrease {S}