LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 9, 1999 TO: Honorable Robert Junell, Chair, House Committee on Appropriations FROM: John Keel, Director, Legislative Budget Board IN RE: HB1161 by Junell (relating to the duties of the comptroller and the Texas Department of Health with respect to the tobacco settlement permanent trust account), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1161, As Introduced: impact of $0 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 $0 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 0 * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) to * * Local Governments * * 2000 $100,020,000 * * 2001 61,923,000 * * 2002 31,761,000 * * 2003 52,838,000 * * 2004 66,030,000 * ***************************************************** Fiscal Analysis The bill would implement a plan to distribute funds under the state's tobacco settlement agreement. The funds would be used exclusively by political subdivisions of the state defined in the bill with legal responsibility for providing indigent health care services. A new dedicated account, part of the Tobacco Settlement Political Subdivision Trust Fund in the State Treasury, would be composed of funds received in accordance with the state's tobacco settlement agreement's provisions, assets purchased with that money, the earnings of the account, and other contributions. At the direction of the Texas Department of Health (TDH), the Comptroller would make annual distributions of the net earnings from the account eligible political subdivisions as defined in the bill. Two new advisory committees would be created by the bill: one would advise the Comptroller on managing the assets; the other would advise the Board of Health on implementing the bill's provisions. TDH would provide administrative support and resources to the Board of Health's advisory committee. Advisory committee members would not be compensated and would be not be reimbursed for travel expenses. Methodology Most of the revenue gain in fiscal years 2000-01 is comprised of lump sum distributions to counties and hospitals as outlined in the state's tobacco settlement agreement ($100,000,000 in fiscal year 2000; $50,000,000 in fiscal year 2001). Fiscal year 2000 includes $20,000 from interest earnings. The remaining amounts in fiscal year 2001 and subsequent years represent earnings of the Tobacco Settlement Permanent Trust Account for distribution to the local units of government, as estimated by the Comptroller of Public Accounts. Tobacco company settlement payments made after January 4, 1999 are subject to adjustment based upon the U.S. Consumer Price Index, the domestic consumption of cigarettes, and the tobacco companies' aggregate net operating profits for domestic cigarette sales. It is assumed that administrative costs for the Comptroller and the TDH to implement the provisions of the bill could be absorbed within existing resources. Local Government Impact The projected fiscal impact to certain local units of government is described in the table above. Source Agencies: LBB Staff: JK, BB, KF, AZ