Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  May 6, 1997
      TO: Honorable Steven Wolens, Chair            IN RE:  Senate Bill No. 55, As Engrossed
          Committee on State Affairs                              By: Zaffirini
          Austin, Texas
         FROM:  John Keel, Director    
In response to your request for a Fiscal Note on SB55 ( Relating 
to the regulation of the sale, distribution, and use of tobacco 
products; providing penalties.) this office has detemined the 
         Biennial Net Impact to General Revenue Funds by SB55-As Engrossed   FN Revision 1
Implementing the provisions of the bill would result in a net 
positive impact of $519,874 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 affect the regulation of the sale of tobacco 
products, particularly with regard to limiting access to and 
consumption of tobacco products by minors.

The bill would 
assign responsibility for enforcement to the Comptroller, in 
cooperation with county sheriffs and municipal chiefs of police. 
 The Comptroller would be authorized to make grants to counties 
and municipalities to enforce the provisions of the bill, including 
conducting random unannounced inspections to ensure compliance. 
Comptroller staff and peace officers would be empowered to seize, 
seal, or disable tobacco vending machines in violation of the 
bill.  The Comptroller would develop and implement a public 
awareness campaign to reduce tobacco use by minors.  The Comptroller 
would prepare an annual report on minors' access to tobacco 
for submission to the U.S. Department of Health and Human Services.

bill would levy a fee on advertisers, equal to 10 percent of 
the gross purchase price of any outdoor advertising of cigarettes 
and tobacco products in Texas.  Fee revenue would be deposited 
into an un-named dedicated account in the General Revenue Fund. 
 Revenues deposited into this fund may only be appropriated 
for enforcement and an education advertising campaign.

bill would modify provisions in the Tax Code, raising fees for 
businesses in the tobacco industry, and require a fee would 
for retailer permits.  Revenue from the sale of retailer's permits 
would be deposited into the General Revenue Fund.  Revenue collected 
from the sale of retailer's permits may only be appropriated 
to the Comptroller, first for administration of licensing of 
retailers, then for administration and enforcement, and finally 
for the development of a tobacco use public awareness campaign.

bill could also generate additional revenue through criminal 
and civil fines and administrative penalties.  
The bill would require a fee of $130 in the 1998-99 biennium 
and $230 for the 2000-01 biennium for the Retailer's permit. 
There are approximately 44,000 Retailer's permits currently 
active, including one for each of the approximately 12,000 cigarette 
vending machines in the state.  

The Comptroller estimated 
the tobacco advertising fee based on an estimated $150.8 million 
in national outdoor advertising expenditures for tobacco products 
in 1995, adjusted for Texas' share of the expenditures.

potential fiscal impact of the bill was estimated by the Comptroller 
by first projecting the potential reduction in teen tobacco 
use and calculating the resulting loss in tax revenues.  Expected 
new revenue was added to result in the net revenue figures noted 

The Comptroller would incur administrative costs for 
increased staff and equipment for the Criminal Investigations 
Division and the Legal Division's Hearings sections. It is assumed 
that these costs would first be paid from the new, un-named 
General Revenue Dedicated Account, with the remainder being 
paid from the General Revenue Fund.
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                             
            General Revenue    New - GR           from New - GR      Employees from                       
            Fund               Dedicated          Dedicated          FY 1997                              
                               Un-Named Account   Un-Named Account                                        
            0001               NEW-DED            NEW-DED                                                  
       1998        $4,485,000          $900,000        ($900,000)              32.0                  
       1998       (2,198,000)         1,103,000       (1,103,000)              32.0                  
       2000         4,472,000         1,144,000       (1,144,000)              32.0                  
       2001       (3,199,000)         1,185,000       (1,185,000)              32.0                  
       2002         2,941,000         1,232,000       (1,232,000)              32.0                  
Fiscal Year Probable           
            from General                                                                                  
            Revenue Fund                                                                                  
       1999         (431,254)                                                                        
       2000         (410,225)                                                                        
       2001         (349,254)                                                                        
       2002         (322,225)                                                                        
         Net Impact on General Revenue Related Funds:

              Fiscal Year      Probable Net Postive/(Negative)
                               General Revenue Related Funds
               1998           $3,149,128
               1999          (2,629,254)
               2000            4,061,775
               2001          (3,548,254)
               2002            2,618,775
Similar annual fiscal implications would continue as long as 
the provisions of the bill are in effect.
No significant fiscal implication to units of local government 
is anticipated.
   Source:            Agencies:   304   Comptroller of Public Accounts
                      LBB Staff:   JK ,JD ,BB ,KF