LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 9, 1997
TO: Honorable Eddie Lucio, Jr., Chair IN RE: Senate Bill No. 1877
Committee on Intergovernmental Relations By: Wentworth
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB1877 ( Relating
to creating a Texas community investment program to assist certain
businesses in distressed areas of the state.) this office has
detemined the following:
Biennial Net Impact to General Revenue Funds by SB1877-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(5,000,000) 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
This bill amends Chapter 2306 of the Government Code by adding
Subchapter AA which would require the Department of Housing
and Community Affairs to establish a community investment program
in which the department awards grants to or makes stock purchases
in community development corporations. These community development
corporations would make loans to or invest in businesses located
in distressed areas and which would not otherwise qualify for
a conventional bank loan. The bill establishes guidelines for
the program and rule-making authority for the department. The
bill also requires the community development corporation to
submit a report to the director which details the status of
each investment or loan made under the program. In addition,
the bill provides for an annual audit of all amounts awarded
to the community development corporation.
Methodolgy
This analysis assumes that administrative costs relating to
the development, implementation, and monitoring of this program
would be absorbed by the department. In order to implement
the program on a statewide basis, the department estimates that
$2.5 million per year in general revenue would be required to
make loans to and investment in community development corporations
in distressed areas of the state.
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
Savings/(Cost)
from General
Revenue Fund
0001
1998 ($2,500,000)
1998 (2,500,000)
2000 (2,500,000)
2001 (2,500,000)
2002 (2,500,000)
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 ($2,500,000)
1999 (2,500,000)
2000 (2,500,000)
2001 (2,500,000)
2002 (2,500,000)
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. As businesses in distressed areas become established
and multiply, local governments would experience increased property
and sales tax revenue related to the economic growth.
Source: Agencies: 332 Department of Housing and Community Affairs
LBB Staff: JK ,TL ,RA