LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                                May 4, 1999
  
  
          TO:  Honorable Eddie Lucio, Chair, Senate Committee on Border
               Affairs
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB 64 by Greenberg (Relating to a Texas community
               investment program to assist certain businesses in
               distressed areas of the state.), As Engrossed
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB64, As Engrossed:  negative impact of $(5,000,000) through the      *
*  biennium ending August 31, 2001.                                      *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                         $(2,500,000)  *
          *       2001                          (2,500,000)  *
          *       2002                          (2,500,000)  *
          *       2003                          (2,500,000)  *
          *       2004                          (2,500,000)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
         *****************************************************
         * Fiscal Year      Probable Savings/(Cost) from      *
         *                      General Revenue Fund          *
         *                              0001                  *
         *      2000                             $(2,500,000) *
         *      2001                              (2,500,000) *
         *      2002                              (2,500,000) *
         *      2003                              (2,500,000) *
         *      2004                              (2,500,000) *
         *****************************************************
  
Fiscal Analysis
  
The bill amends Chapter 481 of the Government Code by adding Subchapter Q
which would require the Department of Economic Development to establish
a community investment program in which the department makes grants or
interest-free loans to or purchases stock of community development
investors.  These community development investors would make loans to or
invest in businesses located in distressed areas of the state that could
not otherwise qualify for conventional bank loans.  The bill establishes
guidelines for the program and rule-making authority for the department.
The bill also requires community development investors 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
investors.

The bill would take effect September 1, 1999.
  
  
Methodology
  
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 investments in
community development investors in distressed areas of the state.
  
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.  As businesses in distressed areas become established and
multiply, local governments may experience increased property and sales
tax revenue related to the corresponding growth.
  
  
Source Agencies:   480   Department of Economic Development
LBB Staff:         JK, DE, TH, RT, MW