LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 26, 1997
TO: Honorable Bob Bullock IN RE: Senate Bill No. 55, As Passed 2nd House
Lieutenant Governor Zaffirini et al.
Senate
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
following:
Biennial Net Impact to General Revenue Funds by SB55-As Passed 2nd House
Implementing the provisions of the bill would result in a net
positive impact of $20,874 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 bill would require the Department of Health to
develop and implement a public awareness campaign to reduce
tobacco use by minors, and to prepare a report each biennium
on the status of smoking and the use of tobacco products in
Texas. The Department would also establish a grant program to
support youth groups that encourage the reduction of tobacco
use by minors.
The 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.
The 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 to the Department of Health for the development
of a tobacco use public awareness campaign.
Implementation
of the various programs would be contingent on the Comptroller
determining that sufficient funds would be available from the
retail permit fee and the 10 percent fee on outdoor advertising
of tobacco products.
The bill could also generate additional
revenue through criminal and civil fines and administrative
penalties.
Methodolgy
The bill would require a fee of $125 in the 1998-99 biennium
and $180 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.
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 Tobacco Education and
Enforcement Fund, 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
Tobacco Tobacco
Education and Education and
Enforcement Fund Enforcement Fund
0001 NEW-DED NEW-DED
1998 $3,594,000 $900,000 ($900,000) 32.0
1998 (1,806,000) 1,103,000 (1,103,000) 32.0
2000 3,500,000 1,144,000 (1,144,000) 32.0
2001 (2,676,000) 1,185,000 (1,185,000) 32.0
2002 2,251,000 1,232,000 (1,232,000) 32.0
Fiscal Year Probable
Savings/(Cost)
from General
Revenue Fund
0001
1998
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
Funds
1998 $2,258,128
1999 (2,237,254)
2000 3,089,775
2001 (3,025,254)
2002 1,928,775
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
501 Department of Health
LBB Staff: JK ,JD ,BB ,KF