LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 1, 1997
TO: Honorable J.E. "Buster" Brown, Chair IN RE: Senate Bill No. 1, Committee Report 1st House, Substituted
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-Committee Report 1st House, Substituted FN Revision 1
Implementing the provisions of the bill would result in a
net negative impact of $(50,441,293) 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 and technical assistance and data collection.
Article
I of the 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. The deadline for initial submission of regional water
plans to TWDB would be September 1, 2000, with updated regional
water plans required every five years. TWDB and Texas Parks
and Wildlife Department (TPWD) would provide financial and technical
assistance in the development of regional water plans.
In
addition, Article I of the bill would designate the Governor's
Office--Division of Emergency Management (DEM) as the lead state
agency responsible for coordinating the drought response component
of the State Water Plan. DEM would be required to provide administrative
support for drought response activities. The Texas Natural
Resource Conservation Commission (TNRCC) would be responsible
for enforcement during drought conditions. The bill would also
create a Drought Response and Monitoring Committee, consisting
of DEM as chair, TNRCC, TWDB, TPWD, Texas Department of Agriculture
(TDA), Texas Agricultural Extension Service (TAES) and any other
entity designated by the governor.
Article II of 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.
The bill also would establish the Texas Water Trust within
the Texas Water Bank, to be administered by TWDB. TWDB would
be authorized to act as a clearinghouse for water marketing
information and to prepare and publish a manual on structuring
water transactions.
Article III of the bill would establish
an administrative penalty for violation of a water right. It
would also specify conditions for granting emergency authorizations
for the use of water. In addition, TNRCC would be required
to make and enforce rules to provide for the safe construction,
maintenance, repair and removal of levees; the bill would establish
an administrative penalty for violating levee requirements.
Article
IV of 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 TAES 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.
This article would create a Groundwater District Loan Assistance
Fund to provide loans to newly-created districts for start-up
operations; TWDB would administer the fund. The bill would
also provide a tax exemption for capital equipment used for
water conservation or water/wastewater recycling in the manufacturing
process.
Article V of the bill would authorize TWDB to use
the principal in the Agricultural Trust Fund for loans to agricultural
water conservation districts. 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.
Article
VI of 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 (SDWASRF) to
investor-owned utilities. The bill would authorize loan subsidies
to disadvantaged communities through the SDWASRF.
Article
VII of 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.
Article VIII of the bill would establish the effective
dates for the provisions in the bill. Most provisions would
take effect on September 1, 1997, with the following exceptions:
sections addressing TNRCC oversight of water rights would take
effect immediately; the sales, excise and use tax exemption
for water conservation equipment would take effect October 1,
1997; and provisions 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. Section 11.028, Texas Water Code, which
addresses the further appropriation of non-domestic, non-municipal
water, would be repealed effective September 1, 1997.
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 generally 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; financial assistance for regional
water planning and groundwater management plans; administration
of financial assistance to investor-owned utilities and disadvantaged
communities through the SDWASRF (state funds satisfy match requirements
for loan subsidy provisions of the federal Safe Drinking Water
Act); coordinate/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 ratio--and
local and private funds; completion in four years). TWDB estimates
deadlines for 16 regional management plans will require expenditure
of $18 million in grant money (General Revenue funding) in fiscal
year 1998.
ESTIMATED COST to General Revenue, 1998-99 biennium:
$(40,778,960) and 18.5 FTEs
TEXAS NATURAL RESOURCE CONSERVATION
COMMISSION: Drought planning and monitoring; water conservation;
enforcement; water management through water rights permitting,
enforcement and marketing; review and approval of interbasin
water transfers; data collection.
ESTIMATED NET COST to General
Revenue, 1998-99 biennium: $(5,983,333) and 24 FTEs
TEXAS
PARKS AND WILDLIFE DEPARTMENT: Drought Planning and Monitoring
Committee; assess impact of regional water plans and groundwater
management plans on fish and wildlife; assist groundwater districts
and directly fund (grants) assessments of impacts to fish and
wildlife; data collection.
ESTIMATED COST to General Revenue,
1998-99 biennium: $(700,000) and 3 FTEs.
COMPTROLLER:
Tax exemption for water conservation and wastewater recycling
equipment.
ESTIMATED LOSS to General Revenue, 1998-99 biennium:
$(1,479,000)
TEXAS AGRICULTURAL EXTENSION SERVICE: Administer
an education program to inform district residents of water issues.
ESTIMATED COST to General Revenue, 1998-99 biennium $(1,500,000)
OTHER AGENCIES:
The Texas Department of Agriculture
(TDA) estimated that the linked deposit program would result
in a loss of interest earnings of $200,000 per year. The State
Office of Administrative Hearings and the Attorney General's
Office would adjudicate cases referred to them by TNRCC. These
offices estimated no fiscal impact. The Governor's Office Division
of Emergency Management estimated that drought-management oversight
duties could be absorbed at current staffing levels.
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 ($37,006,517) ($493,000) $5,776,796 ($5,776,796) 45.5
1998 (11,955,776) (986,000) 5,763,297 (5,763,297) 45.5
2000 (12,556,776) (1,478,000) 5,833,934 (5,833,934) 45.5
2001 (17,556,776) (1,523,000) 5,833,934 (5,833,934) 45.5
2002 (14,023,119) (1,563,000) 91,712 (91,712) 45.5
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 ($37,499,517)
1999 (12,941,776)
2000 (14,034,776)
2001 (19,079,776)
2002 (15,586,119)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Local governments would be affected by several provisions in
this bill. The bill would impose additional requirements on
units of local government that function as water utilities to
develop both drought contingency and management plans. State
grant funding (from General Revenue) would provide a 50 percent
match for these costs. Newly-created groundwater districts
could apply for loans to pay for start-up costs.
Water planning
regions would be required to hold at least one public hearing
on a proposed regional water plan. Groundwater districts would
be authorized to assess user and standby fees to fund maintenance
and operating expenses, as well as to repay bond debt service.
The Comptroller estimated no significant loss of revenue to
local governments due to the tax exemption on capital equipment
used for water conservation.
Source: Agencies: 304 Comptroller of Public Accounts
551 Department of Agriculture
555 Texas Agricultural Extension Service
580 Water Development Board
582 Natural Resources Conservation Commission
592 Soil and Water Conservation Board
802 Parks and Wildlife Department
Governor's Office Division of Emergency Management
LBB Staff: JK ,BB ,DM