LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 20, 1997 TO: Honorable Fred M. Bosse, Chair IN RE: Senate Bill No. 313, As Engrossed Committee on Land and Resource Management By: Galloway, Michael House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB313 ( Relating to the disannexation of certain areas annexed on or after December 1, 1996 by certain municipalities.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB313-As Engrossed Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. No fiscal implication to the State is anticipated. FISCAL ANALYSIS This bill would require the City of Houston to hold an election on the disannexation of any tract of land annexed after December 1, 1996 in which an election approving the annexation has not been held, if a petition asking for an election is validated by the county clerk of the county in which the tract is located. It would also require that an arbitration panel be appointed to determine all expenses the city and each municipal utility district incurred as a result of the annexation. METHODOLOGY This estimate assumes that an election would be called to consider the disannexation of tracts annexed by the City of Houston since December 1, 1996. Election cost estimates were provided by the City of Houston, and are based on a population of 58,000 in the areas annexed since December 1, 1996. Estimates of fiscal impact associated with disannexation assume that voters will approve the disannexation in an election to be held in August 1997, with disannexation occurring 10 days later. Fiscal impacts as a result of disannexation are calculated as a factor of: revenues to the city of Houston including property tax, sales tax, franchise fees, and water and sewer revenues collected from the newly-annexed areas; expenditures associated with fire, police, solid waste, water/sewer and other services being provided in the newly annexed areas; and debt service obligations to be transferred to special districts . Estimates of impact to other districts are based on the assumption that water and sewer revenues and expenditures, along with debt service obligations, would be transferred from the city of Houston to those entities. Estimates are based on data provided by the City of Houston. FISCAL IMPACT No fiscal impact to counties is anticipated as a result of this bill's enactment. The cost of a disannexation election is estimated at $65,000 to the City of Houston in FY 1998, if a special election is held solely for the purpose of determining disannexation. No significant fiscal implication is anticipated to add this item to the ballot, if the election is held in conjunction with a regularly scheduled election. According to the City of Houston, the City could lose an average $2.3 million per fiscal year if the disannexation question were approved by voters. Costs to special districts vary depending on operating costs, revenues, and debt associated with a particular area's water and sewer system. Reimbursements to the City of Houston or special districts for costs incurred during the annexation or disannexation process would be determined by the arbitration panel that would be created by this bill. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,BB ,TL