LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 7, 1997
         
         
      TO: Honorable John T. Smithee, Chair            IN RE:  House Bill No. 99, Committee Report 1st House, Substituted
          Committee on Insurance                              By: Gray
          House
          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-Committee Report 1st House, Substituted   FN Revision 1
         
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
 
This bill would amend Chapter 418 of the Government Code to 
create the Disaster Management Fund (fund) as a dedicated fund 
in the State Treasury.  The new 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 fund would consist of the revenues collected through an 
assessment for disaster relief imposed on each public utility 
within the Public Utility Commission's jurisdiction and any 
additional money appropriated to the fund.

Money in the 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 
4 percent for expenses incurred in the implementation of statewide 
notification systems or services.  

An annual assessment 
for disaster relief would be imposed on each public utility 
serving the ultimate consumer, including interexchange telecommunications 
carriers and each municipally owned electric 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 
on eligible public utilities 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.  

The assessment would be due on August 
15 of each year.  A utility could make quarterly payments.  
 

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.

This bill would take effect on September 1, 1997. 
 On September 1, 1997, 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.  This bill would only 
apply to an assessment imposed on or after January 1, 1998. 
 


The fiscal impact was estimated based on the existing 
assessment on public utilities and an estimate of the impact 
of the assessment as it would be applied to municipally owned 
electric utilities.  The first year is adjusted 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.  Because 
the effective date would be September 1,1997, the first-year 
report period would be reduced to only 10 months.

Since it 
would transfer any unencumbered balances in the existing Emergency 
Contingency Account 0453 to the newly created fund, there would 
be a one-time loss to the General Revenue Fund because the account 
that would be abolished is a dedicated account in the General 
Revenue Fund, while the newly-created fund would exist outside 
of the General Revenue Fund.  Since the unencumbered amount 
existing in the Disaster Contingency Account on September 1, 
1997 would depend on agency spending and the legislative appropriation, 
it is not possible to predict the amount that would be transferred 
to the new fund on that date.  Pursuant to the 1998-1999 Biennial 
Revenue Estimate, the end-of-year balance in GR-Account 0453 
is expected to be $1,304,000.  


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.

NOTE: 
 The wording on line 22 of page 8 could be subject to misinterpretation 
as to whether it refers to a public utility or to a public electric 
utility, thereby excluding telecommunications utilities from 
rate adjustment.

NOTE:  With an effective date of September 
1, 1997, the first assessment due date after that date would 
be August 15, 1998.  However, under current law, one-half of 
the assessment due on August 15, 1998 must be paid by August 
15, 1997.  Because that date is before the effective date, it 
is assumed that the entire first-year assessment would not be 
paid until August 15, 1998.  
The probable fiscal implications of implementing the provisions 
of the bill during each of the first five years following passage 
is estimated as follows:
 
Five Year Impact:
 
Fiscal Year Probable Revenue   Probable Revenue   Probable           Change in Number   
            Gain/(Loss) from   Gain/(Loss) from   Savings/(Cost)     of State                             
            Disaster           New - Disaster     from New -         Employees from                       
            Contingency        Management Fund    Disaster           FY 1997                              
            Account/                              Management Fund                                         
            GR-Dedicated                                                                                  
            0453               NEW-OTH            NEW-OTH                                                  
       1998      ($1,304,000)       $10,540,000        ($920,686)              22.0                  
       1998                          11,083,000         (734,627)              22.0                  
       2000                          11,679,000         (734,627)              22.0                  
       2001                          12,071,000         (776,549)              22.0                  
       2002                          12,483,000         (776,549)              22.0                  
 
 
         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
               1998                   $0
               1999                    0
               2000                    0
               2001                    0
               2002                    0
 
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
          
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 ,TH ,RS