LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 29, 1997 TO: Honorable James E. "Pete" Laney IN RE: House Bill No. 99, As Passed 2nd House Speaker of the House Gray House of Representatives Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB99 ( relating to the funding and operation of certain emergency management and disaster relief programs) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB99-As Passed 2nd House Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would amend Chapter 418 of the Government Code to create the Disaster Management Fund (trust fund) as a trust fund in the Texas Treasury Safekeeping Trust Company. The new trust fund would be used to provide money for emergency management and disaster relief programs when the costs of such exceeded the funds regularly appropriated to state and local agencies. The definition of "disaster" would be expanded to include "terrorist activity." Methodolgy The trust fund would consist of the revenues collected through an assessment for disaster relief imposed on each electric utility and municipally owned utility serving the ultimate consumer within the Public Utility Commission's jurisdiction and any additional money appropriated to the trust fund. Money in the trust fund could only be used for emergency management and disaster relief programs. In addition, pursuant to authorization by the Governor, 10 percent of the fund could be used for the payment of administrative expenses of the Division of Emergency Management within the Office of the Governor; 15 percent could be used for the payment of emergency management training expenses incurred by state agencies or political subdivisions and emergency management training expenses incurred in implementation of mutual aid assistance authorized under Section 418.109 of the Government Code; and four percent for expenses incurred in the implementation of statewide notification systems or services. In addition to the assessment imposed on each public utility within the Public Utility Commission's jurisdiction under Section 1.351 of the Public Utility Regulatory Act of 1995, an annual assessment for disaster relief would be imposed on each electric utility and municipally owned utility. The additional assessment would be equal to one-thirtieth of one percent (0.00033 percent) of the gross receipts of the utility from rates charged to ultimate consumers within Texas. The assessment imposed and any fees, penalties, and interest related to that assessment would be collected by the Comptroller and deposited to the credit of the Disaster Management Fund. A regulatory authority would be required to allow for the adjustment of a public utility's or a municipally owned electric utility's rates to recover the assessment and any additional taxes and fees resulting from the assessment. The recovery would be passed through to the consumer in the rates charged by the utility and could not be separately stated. The rate adjustment would take effect on the date on which a tariff was filed with the regulatory authority and would not be subject to an appeal. The assessment imposed under the bill would not apply to any investor-owned electric utility under a plan of reorganization that had been confirmed by a federal bankruptcy court if such utility were not allowed to adjust its rates to recover the assessment. The assessment would be due on August 15 of each year. A utility could make quarterly payments. The assessment imposed by the bill would expire September 1, 2000. The bill would allow the Governor to use fund revenues for administrative expenses, training expenses incurred by state agencies or political subdivisions, and certain implementation expenses. The bill would become effective immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would become effective 90 days after adjournment. On the effective date, the existing Disaster Contingency GR-Account 0453 would be abolished, and the Comptroller would be required to transfer any unencumbered balance in that account to the newly created Disaster Management Fund. The fiscal impact was estimated based on the existing assessment on public electric utilities and an estimate of the impact of the assessment as it would be applied to municipally owned electric utilities. There is an adjustment to the 1997 and 1998 estimates for the effective date and the report due date. According to Comptroller rules for the Public Utility Gross Receipts Tax, the report due on August 15 of each year is for the reporting period of July 1 of the prior year through June 30 of the current year. The fiscal note assumes the bill would have an immediate effect, therefore, one-half of the 1998 assessment would be due August 15, 1997 and one-half on August 15, 1998. The fiscal note assumes the assessment would not apply to the El Paso Electric Company, because it is subject to a reorganization plan confirmed by a federal bankruptcy court. It is estimated that the Department of Public Safety would add 22 positions to implement the statewide mutual aid responsibilities of the bill. The fund would also be used to pay the administrative expenses of the Division of Emergency Management, expenses related to emergency management training for state agencies and political subdivisions, and expenses for implementation of statewide notification systems or services. There could be temporary staffing requirements for the Department of Human Services related to provision of financial aid to individuals or families qualifying for disaster relief, but the fiscal impact would not be significant. According to DPS, assuming the source of funding would cease, the programs associated with the provisions of the bill would cease as would the staffing requirements for the programs. NOTE: With an immediate effective date, the first assessment due date after that date would by August 15, 1998; however, under current law, one-half of the assessment due on August 15, 1998 must be paid by August 15, 1997. NOTE: The wording on line 15 of floor amendment 1 could be interpreted to include municipally owned utilities other than electric utilities such as gas, water, or wastewater. The fiscal note assumes the assessment would not apply to municipally owned gas, water, and wastewater utilities. The probable fiscal implications of implementing the provisions of the bill during each of the first six years following passage is estimated as follows: Six Year Impact: Fiscal Year Probable Revenue Probable Revenue Probable Change in Number Gain/(Loss) from Gain/(Loss) to Savings/(Cost) of State Disaster New - Disaster from New - Employees from Contingency Management Fund Disaster FY 1996 Account/ in the Texas Management Fund GR-Dedicated Treasury in the Texas Safekeeping Treasury Trust Company Safekeeping Trust Company 0453 NEW-OTH NEW-OTH 1997 ($1,304,000) $4,289,000 $0 0.0 1997 0 2,985,000 (920,686) 22.0 1999 0 6,081,000 (734,627) 22.0 2000 0 6,293,000 (734,267) 22.0 2001 0 0 0 0.0 2002 0 0 0 0.0 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1997 $0 1998 0 1999 0 2000 0 2001 0 2002 0 No significant fiscal implication to units of local government is anticipated. Source: Agencies: 304 Comptroller of Public Accounts 473 Public Utility Commission of Texas LBB Staff: JK ,RR ,MG