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