LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 26, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: Senate Bill No. 432, Committee Report 1st House, Substituted 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-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net negative impact of $(52,071,722) 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 (commission), 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 repeal the remittance of bingo fees or taxes, reducing revenues collected by the state. However, reports detailing bingo fee receipts would be filed quarterly with the Comptroller of Public Accounts and the commission would be required to adopt rules for the payment of bingo fees or taxes. The bill also modifies or places limitations on allowable prize amounts, bingo site rental amounts, license suspension authority and disposition of a license in the case of licensee death. The bill also reduces the fee that would be charged for a license amendment from $25 to $10, resulting in reduced revenues to the state. 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). While the bill would provide for the development of new commission rules to govern the payment of fees and taxes in the future, a general revenue loss of approximately $26.2 million per year is estimated due to the elimination of existing statutory language that would make fees and taxes reported rather than due and payable. 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. The comptroller would also require additional staff, equipment, and contract programmers to handle the increased workload for processing activities, 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: 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 Share Fund: Local Share Revenue Fund: FY 1997 Administrative Cost 0001 0001 0001 1998 ($13,668,000) ($12,437,000) $616,968 3.0 1998 (13,986,000) (12,748,000) 150,310 4.0 2000 (14,311,000) (13,066,000) 150,423 4.0 2001 (14,625,000) (13,374,000) 146,943 4.0 2002 (14,940,000) (13,682,000) 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 ($25,488,032) 1999 (26,583,690) 2000 (27,226,577) 2001 (27,852,057) 2002 (28,467,459) 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: 304 Comptroller of Public Accounts LBB Staff: JK ,JD ,PH