LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  March 7, 1997
         
         
      TO: Honorable Fred M. Bosse, Chair            IN RE:  House Bill No. 751
          Committee on Land and Resource Management                              By: Crabb
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB751 ( Relating 
to the disannexation of certain areas annexed on or after December 
1, 1996, by certain municipalities.) this office has detemined 
the following:
         
         Biennial Net Impact to General Revenue Funds by HB751-As Introduced
         

No fiscal implication to the State is anticipated.
         

         
 
          

FISCAL ANALYSIS

This bill would require the City of Houston 
to hold an election on the disannexation of any tract of land 
annexed after December 1, 1996 in which an election approving 
the annexation has not been held, and if a petition asking for 
an election is validated by the county clerk of the county in 
which the tract is located.  It would also require that an arbitration 
panel be appointed to determine all expenses the city and each 
municipal utility district incurred as a result of the annexation.

METHODOLOGY

This 
fiscal note assumes that an election would be called to consider 
the disannexation of tracts annexed by the City of Houston since 
December 1, 1996.  Election cost estimates were provided by 
the City of Houston, and are based on a population of 58,000 
in the areas annexed since December 1, 1996.

Estimates of 
fiscal impact associated with disannexation assume that voters 
will approve the disannexation in an election to be held in 
August 1997, with disannexation occurring 10 days later.  Fiscal 
impacts as a result of disannexation are calculated as a factor 
of:  revenues to the city of Houston including property tax, 
sales tax, franchise fees, and water and sewer revenues collected 
from the newly-annexed areas; expenditures associated with fire, 
police, solid waste, water/sewer and other services being provided 
in the newly annexed areas; and debt service obligations to 
be transferred to special districts .  Estimates of impact to 
other districts are based on the assumption that water and sewer 
revenues and expenditures, along with debt service obligations, 
would be transferred from the city of Houston to those entities. 
Estimates are based on data provided by the City of Houston.

FISCAL 
IMPACT

No fiscal impact to counties is anticipated as a result 
of this bill's enactment.

The cost of a disannexation election 
is estimated at $65,000 by the City of Houston (in FY 1998), 
if a special election is held solely for the purpose of determining 
disannexation.  If the election is held in conjunction with 
a regularly scheduled election, no significant fiscal implication 
is anticipated to add this item to the ballot.

According 
to the City of Houston, the City could lose an average $2.3 
million per fiscal year if the disannexation question were approved 
by voters.  Costs to special districts vary depending on operating 
costs, revenues, and debt associated with a particular area's 
water and sewer system.  Reimbursements to the City of Houston 
or special districts for costs incurred during the annexation 
or disannexation process would be determined by the arbitration 
panel that would be created by this bill.
 
          
   Source:            Agencies:   
                                         304   Comptroller of Public Accounts
                                         City of Houston
                      LBB Staff:   JK ,BB ,TL