Honorable Greg Bonnen, Chair, House Committee on Appropriations
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HJR82 by Craddick (Proposing a constitutional amendment providing for the creation of and use of money in the Grow Texas fund and allocating certain general revenues to that fund, the economic stabilization fund, and the state highway fund.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HJR82, As Introduced : a negative impact of ($178,333) through the biennium ending August 31, 2023.
Additionally, the bill will have a positive impact to General Revenue Related Funds of $152,902,000 for the 2024-25 biennium.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2022
($178,333)
2023
$0
2024
$0
2025
$152,902,000
2026
$0
All Funds, Five-Year Impact:
Fiscal Year
Probable (Cost) from Economic Stabilization Fund 599
Probable Revenue (Loss) from Economic Stabilization Fund 599
Probable Savings from Grow Texas Fund
Probable Savings from General Revenue Fund 1
2022
$0
$0
$0
$0
2023
$0
$0
$0
$0
2024
($188,374,000)
($635,000)
$187,739,000
$0
2025
($216,740,000)
($1,577,000)
$62,261,000
$152,902,000
2026
($235,907,000)
($2,615,000)
$233,292,000
$0
Fiscal Year
Probable (Cost) from General Revenue Fund 1
2022
($178,333)
2023
$0
2024
$0
2025
$0
2026
$0
Fiscal Analysis
The joint resolution would amend Section 49-g(c) by adding Section (c-3) to Article III of the Texas Constitution to decrease the Economic Stabilization Fund's (ESF) oil and gas allocation by 12 percent and allocate an amount equal to the newly-created Grow Texas fund. The amount of any transfers to the newly created Grow Texas fund could not exceed $250 million in a state fiscal biennium.
The Grow Texas Fund would be established as a fund in the state treasury. The fund would consist of: (1) money transferred to the fund under Article III, Section 49-g of the Texas Constitution; (2) appropriations; (3) money that the Legislature by statute dedicates for deposit; (4) gifts or grants; and (5) investment earnings and interest. The Legislature could appropriate money from the Grow Texas Fund only for use in areas of the state from which oil and gas are produced and only to address infrastructure needs in areas significantly affected by oil and gas production.
The changes to the Texas Constitution proposed in this joint resolution would take effect September 1, 2023.
The proposed constitutional amendment would be submitted to the voters at an election to be held November 2, 2021.
Methodology
The following analysis is based on the 2022-23 Biennial Revenue Estimate. Under current law, an amount equal to 75 percent of oil and gas revenue - above 1987 collections - is equally allocated between the ESF and the State Highway Fund (SHF). The resolution would decrease the ESF's allocation by 12 percent and would at the same time, allocate an amount equal to the reduction in the ESF allocation to the Grow Texas Fund. Amounts allocated to the Grow Texas fund could not exceed $250 million in a state fiscal biennium; the share allocated to the SHF would remain unchanged at 50 percent of total.
Section (c-3) of the resolution states that the ESF's allocation of oil and gas taxes would be reduced. This analysis assumes that, if in a fiscal biennium transfers to the Grow Texas fund reach $250 million, money that would otherwise be transferred to the Grow Texas fund would remain in the General Revenue Fund.
Revenue losses to the ESF are the sum of decrease in associated interest on the ESF's cash balance. This analysis does not include associated interest gains to the GROW Texas Fund as future fund activity is unknown.
The resolution would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either in, with, or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
The cost to the state for publication of the resolution is $178,333.
Local Government Impact
No fiscal implication to units of local government is anticipated.