LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 21, 1997
TO: Honorable Steven Wolens, Chair IN RE: Senate Bill No. 55, Committee Report 2nd House, Substituted
Committee on State Affairs By: Zaffirini
House
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-Committee Report 2nd House, Substituted FN Revision 1
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 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.
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
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 Tobacco from New Tobacco Employees from
Fund Education and Education and FY 1997
Enforcement Fund Enforcement Fund
0001 NEW-OTH NEW-OTH
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
LBB Staff: JK ,JD ,BB ,KF