LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 17, 1997
TO: Honorable Judith Zaffirini, Chair IN RE: Senate Bill No. 55, Committee Report 1st House, Substituted
Committee on Health & Human Services By: Harris
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-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $1,684,874 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 a new fund, the Tobacco Education
and Enforcement 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. A new
permit would be required for retailers. 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.
The bill could also generate additional revenue
through criminal and civil fines and administrative penalties.
Methodolgy
The bill would require a fee of $260 every two years 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 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 below.
The costs shown in
the tables below would reflect increased staff and equipment
for the Criminal Investigations Division and the Legal Division's
Hearings section at the Comptroller.
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 General Employees from
Fund Education and Revenue Fund FY 1997
Enforcement Fund
(Dedicated)
0001 NEW-OTH 0001
1998 $7,887,000 $900,000 ($2,435,872) 36.0
1998 (2,032,000) 1,103,000 (1,734,254) 36.0
2000 5,415,000 1,144,000 (1,754,225) 36.0
2001 (3,153,000) 1,185,000 (1,734,254) 36.0
2002 3,805,000 1,232,000 (1,754,225) 36.0
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 $5,451,128
1999 (3,766,254)
2000 3,660,775
2001 (4,887,254)
2002 2,050,775
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 ,BB ,KF