LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 26, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB844 by Wilson (relating to the total amount of state
               lottery prizes that may be awarded in a fiscal year),
               Committee Report 2nd House, Substituted
  
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*  Estimated Two-Year Net Impact to General Revenue Related Fundsfor     *
*  HB844, Committee Report 2nd House, Substituted:  positive impact      *
*  of $38,008,000 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                         $(5,169,000)  *
          *       2001                           43,177,000  *
          *       2002                           43,749,000  *
          *       2003                           44,331,000  *
          *       2004                           44,922,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
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*Fiscal    Probable Revenue Gain/(Loss)    Probable Savings/(Cost) from   *
* Year     from Foundation School Fund        Foundation School Fund      *
*                      0193                            0193               *
*  2000                     $(10,169,000)                      $5,000,000 *
*  2001                        38,177,000                       5,000,000 *
*  2002                        38,749,000                       5,000,000 *
*  2003                        39,331,000                       5,000,000 *
*  2004                        39,922,000                       5,000,000 *
***************************************************************************
  
Fiscal Analysis
  
The bill would repeal Section 466.015(d) of the Government Code, which
limits the amount paid out in prizes each fiscal year to the gross sales
for that year times the percent paid in fiscal 1997, less 5 percent of
the gross sales in that fiscal year.  Further, the bill would require
the Texas Lottery Commission (commission) to reduce its advertising
budget by $1 million for each one percent increase in the average prize
payout over fiscal 1999 levels.  The bill would take effect Sepetmber 1,
1999.
  
  
Methodology
  
This estimate assumes that the commission would return to the prize
percentages paid in fiscal 1997.  This estimate also assumes that there
would be an increase in sales as a behavioral response by players.

The estimate assumes that there would be a modest loss to the state in
fiscal 2000 because the state's share of lottery sales would be reduced.
This would be offset in later years by the projected increase in total
sales.

The commission's advertising budget is estimated to decrease by $5
million per year as a result of an expected increase in the average
prize payout, from a commission estimate of 52.45 percent in fiscal 1999
to 57.45 percent in 2000 and each year thereafter.  The reduction in
expenditures would represent an unexpended balance to be transferred to
the Foundation School Fund.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   362   Texas Lottery Commission
LBB Staff:         JK, BB, WP