LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 20, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 432 Committee on State Affairs By: Lucio Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB432 ( Relating to the regulation and operation of bingo.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB432-As Introduced Implementing the provisions of the bill would result in a net negative impact of $(37,748,278) 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 transfer charitable bingo regulation from the Texas Lottery Commission to the Texas Commission of Licensing and Regulation, effective September 1, 1997, and would apply to games played, sessions conducted, and prizes awarded on or after that date. In addition, the bill would place responsibility for collection of the Bingo Rental Fee and the Bingo Winner's Fee with the Comptroller of Public Accounts and would change the payment, collection and reporting schedules for these fees. The bill also modifies or places limitations on allowable prize amounts, bingo site rental amounts, license suspension authority and license fee amounts. The bill would exempt bingo prizes of $250 or less from the prize winner's fee collected by the state which would result in reduced revenues. The prize fee would be calculated at a rate of 5% of winnings above the $250 threshold. The bill would also reduce the authorized fee for a license amendment from $25 to $10 which would result in reduced revenues. Methodolgy The estimated fiscal impact of the bill is based on historical and projected data for bingo revenues as provided in the 1998-99 Biennial Revenue Estimate (BRE). The revenue loss due to exempting the first $250 of each bingo prize from the bingo prize fee is approximately $18,486,221 per year. Adjustments to the BRE were also made to account for the reduction in bingo sessions by licensed operators and for the $150 reduction in the maximum lessor rent charged per bingo session. Revenue effects from reporting period changes were also considered. The comptroller would also require additional staff, equipment, and contract programmers to handle the increased workload for processing activities and taxpayer services, and for automated system enhancements. 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 General Revenue from General Employees from Fund: State Fund: Local Revenue Fund: FY 1997 Share Government Share Administrative Cost 0001 0001 0001 1998 ($8,215,000) ($7,531,000) ($616,968) 3.0 1998 (11,037,000) (10,198,000) (150,310) 4.0 2000 (11,386,000) (10,453,000) (150,423) 4.0 2001 (11,638,000) (10,699,000) (146,943) 4.0 2002 (11,889,000) (10,946,000) (154,541) 4.0 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 ($16,362,968) 1999 (21,385,310) 2000 (21,989,423) 2001 (22,483,943) 2002 (22,989,541) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. The fiscal implication to units of local government is included in the table above. Source: Agencies: 103 Legislative Council 304 Comptroller of Public Accounts 362 Texas Lottery Commission 452 Department of Licensing and Regulation LBB Staff: JK ,JD ,PH