Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  May 30, 1997
      TO: Honorable Bob Bullock            Honorable James E. "Pete" Laney
          Lieutenant Governor                Speaker of the House
          Austin, Texas
         FROM:  John Keel, Director    
In response to your request for a Fiscal Note on SB1 ( relating 
to the development and management of the water resources of 
the state; providing penalties.) this office has detemined the 
         Biennial Net Impact to General Revenue Funds by SB1-Conference Committee Report

Implementing the provisions of the bill would result in a 
net negative impact of ($35,922,295) 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.  Contingent upon final passage of 
this bill, a total of $34,043,295 in General Revenue funding 
would be appropriated by H.B. 1 to provide agencies with the 
resources to implement the provisions of this bill.  

Fiscal Analysis
The bill would provide a framework for the management of water 
resources, including drought planning, water rights regulation, 
financial and technical assistance and data collection.

bill would require the Texas Water Development Board (TWDB) 
to adopt a State Water Plan, incorporating regional water plans 
and including drought response planning.  TWDB would be required 
to designate water planning regions by September 1, 1998.  It 
would create a Drought Response and Monitoring Committee, with 
the Governor's Division of Emergency Management as chair, the 
Texas Natural Resource Conservation Commission (TNRCC), TWDB, 
the Texas Parks and Wildlife Department (TPWD), Texas Department 
of Agriculture (TDA), Texas Agricultural Extension Service (TAEX) 
and the Soil and Water Conservation Board (SWCB).

The bill 
would amend statutory provisions relating to TNRCC's responsibilities 
in water rights permitting and would provide a regulatory process 
and requirements for considering interbasin water transfers. 
 It would specify conditions for granting emergency authorizations 
for the use of water.

The bill would provide a process and 
procedures for TNRCC to identify priority groundwater management 
areas and would establish procedures for TNRCC to create new 
groundwater districts.  TNRCC, TWDB and TAEX would administer 
an education program to inform district residents of water issues 
relevant to the area.  The bill would require TNRCC to provide 
technical assistance to districts to develop comprehensive management 
plans that are consistent with approved regional water plans, 
while TWDB would be required to review and certify the comprehensive 
plans.  TWDB, TNRCC, TPWD and TAEX would be allowed to allocate 
funds to districts for groundwater management planning.  The 
bill would create the Texas Groundwater Management Council to 
determine whether districts are operational.  The bill also 
would provide a tax exemption for capital equipment used for 
water conservation or water/wastewater recycling in the manufacturing 

The Texas Water Development Fund (Fund II), a special 
fund in the state treasury, would be established contingent 
on the passage of a constitutional amendment (SJR 17).  Fund 
II would be created by consolidating existing bond authorizations 
for water supply, water quality and flood control into a single 
financial assistance account within the fund; Fund II also would 
include a state participation account and an economically distressed 
areas program account.  Also, contingent upon voter approval 
of a constitutional amendment (SJR 45), up to $10 million of 
the amount deposited in the Linked Deposit Program could be 
used to finance water conservation projects.

The bill addresses 
TNRCC's regulation of water and wastewater services, rates, 
service areas and implementation of certain provisions of the 
federal Safe Drinking Water Act Amendments of 1996.  The bill 
would require entities that merge or purchase water utilities 
to demonstrate financial, managerial and technical capabilities 
to ensure a continuous and safe drinking water supply.  The 
bill also would allow TWDB to provide loans through the Safe 
Drinking Water Act State Revolving Fund (SDWA SRF) to investor-owned 
utilities.  The bill would authorize loan subsidies to disadvantaged 
communities through the SDWA SRF.

The bill would merge the 
Texas Natural Resources Information System and the existing 
Texas Geographic Information Systems Planning Council to form 
a new Texas Geographic Information Council.  The council would 
provide oversight and direction for data collection statewide 
and serve as the centralized clearinghouse for natural resources 
data.  The bill also would require the Executive Administrator 
of TWDB to coordinate, conduct, and facilitate the development 
and use of statewide digital base maps.  TNRCC would be required 
to update water availability models by December 1999.
Estimates of the bill s cost are based on historical data and 
past experience for similar programs or requirements.  The estimated 
fiscal impact to the General Revenue Fund and total FTEs (All 
Funds) required for each agency are shown for the 1998-99 biennium.

WATER DEVELOPMENT BOARD: Financial and technical assistance 
for regional water planning and ground water management plans; 
coordinate and manage data collection and dissemination, including 
developing digital base maps.
ESTIMATED COST to General Revenue, 
1998-99 biennium:   $(27,578,542).
ESTIMATED FTEs (All Funds), 
FY1998:  11.5; FY1999:  14.5.

COMMISSION: Enforcement; water rights management; water service 
regulation; interbasin water transfers; data collection.
NET COST to General Revenue, 1998-99 biennium: $(5,386,753).
FTEs (All Funds) 1998-99 biennium:   22.

WILDLIFE DEPARTMENT: Assess impact of plans on fish and wildlife; 
technical assistance; data collection.
General Revenue, 1998-99 biennium: $(478,000).
(All Funds) 1998-99 biennium:   3.

COMPTROLLER: Tax exemption 
for water conservation and wastewater recycling equipment.
NET LOSS to General Revenue, 1998-99 biennium:  $(1,479,000)

AGRICULTURAL EXTENSION SERVICE: Administer education program 
to inform district residents of water issues.
COST to General Revenue, 1998-99 biennium: $(600,000)


TDA estimates that the bill's provisions for the 
linked deposit program would result in a loss of interest earnings 
of $200,000 per year.

The State Auditor's Office estimated 
no fiscal impact for the biennium since the agency's audit responsibilities 
would not begin until fiscal year 2000.  
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           Probable Revenue   Probable Revenue   Probable Revenue   Change in Number   
            Savings/(Cost)     Gain/(Loss) from   Gain/(Loss) from   Gain/(Loss) from   of State          
            from General       General Revenue    Federal Funds      Federal Funds      Employees from    
            Revenue Fund       Fund                                                     FY 1997           
            0001               0001               0555               0555                                  
       1998     ($23,072,000)        ($693,000)        $5,777,096      ($5,777,096)              36.5
       1998      (10,971,295)       (1,186,000)         5,763,748       (5,763,748)              39.5
       2000      (16,255,441)       (1,678,000)         5,834,234       (5,834,234)              39.5
       2001      (16,215,440)       (1,723,000)         5,834,234       (5,834,234)              39.5
       2002      (12,681,785)       (1,763,000)            92,012          (92,012)              39.5
         Net Impact on General Revenue Related Funds: