LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 10, 1999 TO: Honorable Robert Junell, Chair, House Committee on Appropriations FROM: John Keel, Director, Legislative Budget Board IN RE: HB1676 by Junell (relating to permanent funds for certain public health purposes), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1676, 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. * * * * The bill would transfer $500 million in tobacco settlement * * receipts, anticipated to be deposited into the General Revenue * * Fund, to four new permanent funds. * ************************************************************************** General Revenue-Related Funds, Six-Year Net Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 1999 $0 * * 2000 0 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 0 * **************************************************** All Funds, Six-Year Impact: *********************************************************************** *Fiscal Probable Probable Probable Probable Change in * * Year Revenue Revenue Savings/ Revenue Number of * * Gain/(Loss) Gain/(Loss) (Cost) from Gain/(Loss) State * * from GR from Permanent from Employees * * Dedicated Permanent Fund for Permanent from FY 1998 * * Account 5040 Fund for Tobacco Fund for * * Tobacco Education Children * * Education and and Public * * and Enforcement Health - * * Enforcement - Other Other * * - Other * * 1999 $200,000,000 $0$150,000,000 0.0 * * $(500,000, * * 000) * * 2000 0 11,200,000 8,400,000 13.0 * * (11,200,000) * * 2001 0 11,200,000 8,400,000 19.5 * * (11,200,000) * * 2002 0 11,200,000 8,400,000 19.5 * * (11,200,000) * * 2003 0 11,200,000 8,400,000 19.5 * * (11,200,000) * * 2004 0 11,200,000 8,400,000 19.5 * * (11,200,000) * *********************************************************************** *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Revenue Savings/(Cost) Revenue * * from Permanent Gain/(Loss) from Emergency Gain/(Loss) * * Fund for from Emergency Medical from Permanent * * Children and Medical Services and Fund for Rural * * Health - Other Services and Trauma Care - Health Facility * * Trauma Care - Other Capital * * Other Improvement - * * Other * * 1999 $0 $100,000,000 $0 $50,000,000 * * 2000 (8,400,000) 5,600,000 (5,600,000) 2,800,000 * * 2001 (8,400,000) 5,600,000 (5,600,000) 2,800,000 * * 2002 (8,400,000) 5,600,000 (5,600,000) 2,800,000 * * 2003 (8,400,000) 5,600,000 (5,600,000) 2,800,000 * * 2004 (8,400,000) 5,600,000 (5,600,000) 2,800,000 * *************************************************************************** ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * Permanent Fund for Rural Health * * Facility Capital Improvement - * * Other * * 1999 $0 * * 2000 (2,800,000) * * 2001 (2,800,000) * * 2002 (2,800,000) * * 2003 (2,800,000) * * 2004 (2,800,000) * ***************************************************** Fiscal Analysis Each new fund created by the bill would be a special fund in the State Treasury outside the General Revenue Fund. Each fund would consist of money transferred to the fund at the direction of the Legislature, gifts and grants contributed to the fund, and the interest received from investment of money in the fund. The bill would transfer $200 million to a new fund, the Permanent Fund for Tobacco Education and Enforcement; interest received from investments could be appropriated to the Department of Health for programs to reduce the use of tobacco products. The new Permanent Fund for Children and Public Health would consist of a transfer of $150 million; interest received from investment of the fund could be appropriated to the Department of Health for children's health care and grants to local communities to address public health priorities. The Permanent Fund for Emergency Medical Services and Trauma Care would receive a transfer $100 million; interest received from investment of this fund could be appropriated to the Department of Health for programs to provide emergency medical services and trauma care. The bill would transfer $50 million from the General Revenue Fund to the new Permanent Fund for Rural Health Facility Capital Improvement; interest received from investment of the fund could be appropriated to the Center for Rural Health Initiatives. The bill would also expand the duties of the Center for Rural Health Initiatives to allow the center to use money appropriated from the fund to make grants or low interest loans to certain local units of government and entities to make capital improvements to existing public health facilities, construct new public health facilities, or purchase capital equipment for public health facilities. Methodology Analysis by the Comptroller of Public Accounts assumes that money to be transferred to the new funds would come from General Revenue Account 5040-Tobacco Settlement Temporary Hold, which holds payments to the state from the tobacco companies resulting from the January 1998 court settlement. The $500 million in transfers would occur in fiscal year 1999. No further transfers of state money, no gifts or grants from other sources were assumed. The analysis assumes that the bill would take effect 90 days following adjournment (close to the end of the fiscal year) and therefore an insignificant amount of interest gains and losses to the various funds would accrue. It is assumed there would no significant loss in General Revenue Fund interest earnings in fiscal year 2000 and no interest earning loss in 2001 and beyond because the Comptroller of Public Accounts 2000-2001 Biennial Revenue Estimate assumes that the transfer or expenditure of the tobacco settlement funds would take place September 1, 1999. If the bill were to receive immediate effect, the new funds would receive additional interest in fiscal year 1999 and there would be a corresponding loss of interest to the General Revenue Fund. It is assumed that the Department of Health would develop programs to fully expend the interest earnings in the Permanent Fund for Tobacco Education and Enforcement (the addition of 12 Full-Time Equivalent (FTE) positions is assumed), the Permanent Fund for Children and Public Health (the addition of three FTEs is assumed), and the Permanent Fund for Emergency Medical Services and Trauma Care (the addition of three FTEs is assumed). It is assumed that the Center for Rural Health Initiatives would develop programs to fully expend the interest earnings from the Permanent Fund for Rural Health Facility Capital Improvement (the addition of 1.5 FTEs is assumed). First year full-time equivalents are reduced for a phase-in period. Local Government Impact This bill would have a positive impact to local units of government. Estimates above assume that local units of government could receive grants through the Department of Health from several of the new funds noted above. In addition, the Permanent Fund for Rural Health Facility Capital Improvements would have as a primary beneficiary of grants or loans from the fund a municipality, county, municipality and county, hospital district, or hospital authority that owns or operates a public hospital located in a rural county. Source Agencies: LBB Staff: JK, BB, AZ, KF