LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 9, 1995



 TO:     Honorable Rene O. Oliveira, Chair      IN RE:  House Bill No. 1997
         Committee on Economic Development              By: Giddings
         House of Representatives
         Austin, Texas







FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
1997 (relating to the guarantee of certain loans by the Texas
Department of Commerce) this office has determined the following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill. 

The bill would provide that loan guarantees, up to 50% of total
project costs, shall be offered to lenders making loans under the
subchapter.  The bill further provides that the Commerce Policy
Board by rule shall adopt a guarantee-to-reserve ratio that
determines the amount of loan guarantees that may be made that
exceed the amount available in the fund.  The ratio of guarantees
to the amount of money available in the fund may not exceed five
to one.  The state auditor shall review the loan guarantee
program and payment activity and make a recommendation about the
level of the guarantee-to-reserve ratio.  Other sections have
been either amended or added to provide for legislative authority
regarding matters pertaining to making loan guarantees

The probable fiscal implication of implementing the provisions of
the bill would require a deposit of funds with an "eligible
lending institution" for which to guarantee the loans. 
Administrative costs to the Dept. of Commerce during each of the
first  five years following passage is estimated as follows:
         




        
            Fiscal   Probable Cost        Change in   
             Year        Out of        Number of State
                    General Revenue    Employees from 
                        Fund 001           FY 1995    
                                                      
          1996                $89,776              2.0
          1997                 72,884              2.0
                                                      
          1998                 26,543              1.0
                                                      
          1999                 14,249               .5
          2000                 14,249               .5
                                                      
                                                      
                                                      
       Similar fiscal implications would continue as long as the
provisions of the bill are in effect.

No fiscal implication to units of local government is
anticipated.


Source:   Department of Commerce
          LBB Staff: JK, VS, RR