LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 17, 1997 TO: Honorable Bill Ratliff, Chair IN RE: House Bill No. 99, Committee Report 2nd House, as amended Committee on Finance By: Gray Senate 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 2nd House, as amended 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 would 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 (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 in addition to the assessment imposed on each electric public utility 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 4 percent for expenses incurred in the implementation of statewide notification systems or services. In addition to the assessment imposed on each electric public utility within the Public Utility's jurisdiction under Section 1.351 and Title II of the Public Utility Regulatory Act of 1995, an annual assessment for disaster relief would be imposed. 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. 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 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 September 1, 1997. The fiscal impact was estimated based on 1/30 of 1 percent of FY 1995 gross receipts for electric public utilities. The current amendment refers only to an assessment in addition to the assessment imposed on electric public utilities. It does not reference assessments on telecommunications utilities and interexchange carriers or municipally owned electric utilities. Since the bill would transfer any unencumbered balances in the existing Emergency Contingency Account 0453 to the newly created trust 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: 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) $5,010,000 ($920,686) 22.0 1998 0 5,010,000 (734,627) 22.0 2000 0 5,010,000 (734,627) 22.0 2001 0 5,010,000 (776,549) 22.0 2002 0 5,010,000 (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. Source: Agencies: 304 Comptroller of Public Accounts 473 Public Utility Commission of Texas LBB Staff: JK ,RR ,MG