LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 13, 1997
TO: Honorable J.E. "Buster" Brown, Chair IN RE: Senate Bill No. 1
Committee on Natural Resources By: Brown
Senate
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
following:
Biennial Net Impact to General Revenue Funds by SB1-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(37,770,990) 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 provide a framework for the management of water
resources, including drought planning, water rights regulation,
financial assistance and data collection.
Article I of the
bill would designate the Texas Water Development Board as the
lead state agency responsible for preparation, coordination
and oversight of a comprehensive state drought plan; the Texas
Natural Resource Conservation Commission would be responsible
for enforcement during drought conditions. The bill would also
create a Drought Planning and Monitoring Committee, which would
consist of: Texas Natural Resource Conservation Commission,
Texas Parks and Wildlife Department, Governor's Office--Division
of Emergency Management, Texas Department of Agriculture and
any other entity designated by the governor.
Article II of
the bill would amend statutory provisions relating to the Texas
Natural Resource Conservation Commission's responsibilities
in water rights permitting. In addition, the bill would provide
a regulatory process and requirements for considering interbasin
water transfers. The Texas Parks and Wildlife Department and
Texas Water Development Board would assist the Texas Natural
Resource Conservation Commission by providing habitat analyses
and water planning data, respectively.
Article III of the
bill would provide the infrastructure and financial assistance
to encourage political subdivisions to develop regional water
management plans. The article would also provide a process
and procedures for the Texas Natural Resource Conservation Commission
to identify priority groundwater management areas. The article
would establish procedures for the Texas Natural Resource Conservation
Commission to create new groundwater districts and would provide
districts with specific enforcement powers. The article would
create a Groundwater District Loan Assistance Fund to provide
loans to newly-created districts for start-up operations. The
Texas Water Development Board would administer the fund. Article
III of the bill also would require the Railroad Commission to
adhere to the groundwater management plan when issuing permits
for enhanced recovery. This article also would provide groundwater
districts with the authority to assess administrative penalties.
Section 3.54 provides a tax exemption for capital equipment
used for water conservation or water/wastewater recycling in
the manufacturing process.
Article IV of the bill also would
authorize the Water Development Board to use the principal in
the Agricultural Trust Fund for loans to agricultural water
conservation districts. The bill would establish the Texas
Water Development Fund II (Fund II), a special fund in the state
treasury, contingent on 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.
Article
V of the bill addresses the Texas Natural Resource Conservation
Commission'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 article
would require entities that merge or purchase water utilities
to develop business plans and includes other requirements to
ensure a continuous and safe drinking water supply. The article
also would allow the Texas Water Development Board to provide
loans through the Safe Drinking Water Act State Revolving Fund
(SDWA SRF) to investor-owned utilities, which are for-profit
entities. The article would authorize loan subsidies to disadvantaged
communities through the SDWA SRF; the Texas Water Development
Board estimated a cost to general revenue based on a twenty
percent match requirement for providing these loan subsidies.
Article
VI of the bill would merge TNRIS and the existing Texas Geographic
Information Systems Planning Council to form a new Texas Geographic
Information Council. The Geographic Information Council would
provide oversight and direction to data collection statewide,
and would serve as the centralized clearinghouse for natural
resources data. The article also would require the Executive
Administrator of the Texas Water Development Board to coordinate,
conduct, and facilitate the development and use of statewide
digital base maps. The Texas Water Development Board cost estimate
indicates that the digital base map effort will be completed
within four years. In addition, the Texas Natural Resource
Conservation Commission provided estimates for enhanced data
collection activities to support the provisions of Article VI.
Article
VII of the bill establishes the effective dates for provisions
in the bill. A majority of the provisions would take effect
on September 1, 1997, with the following exceptions: sections
addressing TNRCC oversight of water rights would take effect
immediately; Section 3.54, which would provide for a sales,
excise and use tax exemption for water conservation equipment
would take effect October 1, 1997; and several sections in Article
IV relating to the consolidation of existing bond authorizations
would take effect upon passage of a constitutional amendment
by the voters and certification of the results by the Secretary
of State.
Methodolgy
The fiscal impact of this bill was assessed by all the state
agencies mentioned in the bill. In estimating the costs of
the bill, the agencies relied on historical data and past experience
for similar programs or requirements. The following agencies
estimated costs to their respective agencies based on additional
responsibilities. The estimated fiscal impact and FTEs required
are shown for the 1998-99 biennium.
TEXAS WATER DEVELOPMENT
BOARD:
-- Lead agency for drought planning and monitoring;
water conservation
ESTIMATED NET COST to General Revenue,
1998-99 biennium: ($2,227,829) and 3 FTEs
-- Financial assistance
for regional water planning and groundwater management plans
ESTIMATED NET COST to General Revenue, 1998-99 biennium:
($7,856,010) and 7 FTEs
-- Administer Agricultural Trust
Fund and the Texas Water Development Fund II
No additional
costs associated with this responsibility.
-- Administer
financial assistance to investor-owned utilities and disadvantaged
communities through the Safe Drinking Water State Revolving
Fund (state funds satisfy match requirements for loan subsidy
provisions of the federal Safe Drinking Water Act)
ESTIMATED
NET COST to General Revenue, 1998-99 biennium: ($12,400,000)
and 0 FTEs
-- Coordinate and manage data collection and dissemination,
including development of digital base maps (state funds would
be supplemented by federal matching funds--at about a 2-1 federal
to state funds ratio--and local and private funds)
ESTIMATED
NET COST to General Revenue, 1998-99 biennium: ($5,825,462)
and 4 FTEs; estimated gain to federal, local and private funds
for the biennium: $13,995,852
TEXAS NATURAL RESOURCE CONSERVATION
COMMISSION:
-- Drought planning and monitoring; water conservation;
enforcement
ESTIMATED NET COST to General Revenue, 1998-99
biennium: ($1,443,012) and 3 FTEs
-- Water management through
water rights permitting, enforcement, and marketing; review
and approval of interbasin water transfers; public participation
ESTIMATED NET COST to General Revenue, 1998-99 biennium:
($2,169,035) and 9 FTEs
-- Groundwater management, planning
and technical assistance; identification of priority groundwater
management areas
ESTIMATED NET COST to General Revenue,
1998-99 biennium: ($484,015) and 2 FTEs
-- Regulate water
and wastewater services, rates, and service areas; capacity
development
ESTIMATED NET COST to General Revenue, 1998-99
biennium: ($1,305,697) and 9 FTEs; estimated gain in federal
funds for the biennium: $193,846 and 2 FTEs
-- Enhanced
data collection and data management
ESTIMATED NET COST
to General Revenue, 1998-99 biennium: ($2,031,512) and 5 FTEs
TEXAS
PARKS AND WILDLIFE DEPARTMENT:
-- Drought Planning and Monitoring
Committee
ESTIMATED NET COST to General Revenue, 1998-99
biennium: ($30,000) and 0 FTEs
-- Assess impact of regional
water plans and groundwater management plans on fish and wildlife
ESTIMATED NET COST to General Revenue, 1998-99 biennium:
($450,000) and 2 FTEs
-- Data collection
ESTIMATED
NET COST to General Revenue, 1998-99 biennium: ($20,000) and
0 FTEs
RAILROAD COMMISSION:
-- Consider groundwater impacts
for injection well permits (enhanced recovery)
ESTIMATED
NET COST to General Revenue, 1998-99 biennium: ($49,418) and
0.4 FTEs
COMPTROLLER:
-- Tax exemption for water conservation
and wastewater recycling equipment
ESTIMATED LOSS to
General Revenue, 1998-99 biennium: ($1,479,000)
The State
Office of Administrative Hearings and the Attorney General s
Office would adjudicate cases referred to them by the Texas
Natural Resource Conservation Commission. These offices estimated
no fiscal impact. Representatives from the Governor's Office--Division
of Emergency Management and the Department of Agriculture would
sit on the Drought Planning and Monitoring Committee; both agencies
estimated no fiscal impact. No estimates were received from
state agencies regarding the assessment of administrative penalties.
Local
governments will be affected by several provisions in this bill.
The Comptroller estimated no significant loss of revenue to
local governments due to the tax exemption on capital equipment
used for water conservation. No information was received from
the Texas Association of Counties. Several river authorities
indicated that the bill would have no significant fiscal impact
or the impact could not be estimated. The bill would impose
additional requirements on units of local government that function
as water utilities to develop drought contingency plans and
management plans. State grant funding would provide a 50 percent
match for these costs. In addition, newly created groundwater
districts would be able to apply for loans to pay for initial
start-up costs.
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 Water Assistance Federal Funds General Revenue Employees from
Revenue Fund Fund Fund FY 1997
0001 0480 0555 0001
1998 ($21,002,532) $1,321,842 $5,742,007 ($493,000) 46.4
1998 (15,289,458) 1,326,842 5,763,007 (986,000) 46.4
2000 (13,846,591) 1,125,327 5,789,139 (1,478,000) 46.4
2001 (10,846,591) 1,125,327 5,789,139 (1,523,000) 46.4
2002 (8,155,557) 0 89,423 (1,563,000) 46.4
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 ($21,495,532)
1999 (16,275,458)
2000 (15,324,591)
2001 (12,369,591)
2002 (9,718,557)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Source: Agencies: 802 Parks and Wildlife Department
551 Department of Agriculture
455 Railroad Commission
360 State Office of Administrative Hearings
582 Natural Resources Conservation Commission
352 Bond Review Board
580 Water Development Board
302 Office of the Attorney General
304 Comptroller of Public Accounts
592 Soil and Water Conservation Board
Governor's Office--Division of Emergency Management
LBB Staff: JK ,BB ,DM ,NT