LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 11, 1999 TO: Honorable J.E. "Buster" Brown, Chair, Senate Committee on Natural Resources FROM: John Keel, Director, Legislative Budget Board IN RE: HB 2816 by Junell (Relating to the fee on delivery of certain petroleum products and programs for corrective actions in response to releases from petroleum storage tanks.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2816, As Engrossed: positive 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 (47,250,582) * **************************************************** All Funds, Five-Year Impact: *********************************************************************** *Fiscal Probable Probable Probable Probable Change in * * Year Revenue Savings/ Revenue Savings/ Number of * * Gain/(Loss) (Cost) from Gain/(Loss) (Cost) from State * * from Petroleum from New - New - GR Employees * * Petroleum Storage GR Dedicated from FY 1999 * * Storage Tank Dedicated -Petroleum * * Tank Remediation -Petroleum Storage * * Remediation Account/ Storage Tank * * Account/ GR- Tank Removal * * GR- Dedicated Removal Loan * * Dedicated 0655 Loan Program * * 0655 Program Account * * Account * * 2000 $17,789,164 3.0 * * $(36,545, $(16,786, $(17,789, * * 494) 477) 164) * * 2001 17,764,264 3.0 * * (36,545,494)(14,907,611) (17,764,264) * * 2002 55,914,606 17,764,264 3.0 * * (59,687,702) (17,764,264) * * 2003 0 17,764,264 3.0 * * (57,833,735) (17,764,264) * * 2004 0 0 10,913,682 3.0 * * (58,164,264) * *********************************************************************** ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2000 $0 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 (47,250,582) * ***************************************************** Technology Impact The purchase of personal computers for 3 FTEs would be needed. Fiscal Analysis The bill would reduce by 25 percent the fees assessed and collected on bulk delivery of petroleum products, effective September 1, 1999. The bill would restrict administrative expenses to an amount specifically appropriated by the Legislature. The bill would reduce the amount of unobligated fund balance at which fee collection would cease to $100 million from $125 million. The bill would extend the expiration date of the Petroleum Storage Tank (PST) program from September 1, 2001 to September 1, 2003, allowing the continuation of reimbursements from the Petroleum Storage Tank Remediation Account-0655 (PSTR Account) to August 31, 2003. The bill would, however, prohibit fee collections as of March 1, 2002. The bill would establish an Underground Petroleum Storage Tank Loan (UPSTL) Program to provide loans to PST owners unable to obtain conventional financing for removal of leaking tanks and for environmental contamination remediation. The Texas Natural Resource Conservation Commission (TNRCC) would set the interest rate and terms for the loan program. The bill would establish a new General Revenue-Dedicated Petroleum Storage Tank Removal Loan Program Account (Loan Account). Money in the account would consist of legislative appropriations, interest earnings, payments of principal and interest on loans made under the UPSTL program, and any other money deposited in the account. Money in the account could be appropriated for administration of the Loan Account and the UPSTL program and for providing loans under the UPSTL program. Methodology The fees collected on bulk delivery of petroleum products are deposited in the TNRCC's PSTR Account. Annual revenue from these fees is estimated to be $146 million. Assuming a twenty-five percent reduction in revenue collections due to the twenty-five percent reduction in fees assessed and collected, it is estimated that annual revenues would be reduced by $36.5 million. The bill would prohibit fee collections as of March 1, 2002 allowing six months of collections in the amount of $55.9 million in fiscal year 2002. The extension of the expiration date of the PSTR program to August 31, 2003, is estimated to result in annual reimbursements out of the PSTR Account of $39.3 million in fiscal year 2002 and 2003. Funding for the administration of the PST program would be based on legislative appropriations. It is assumed that the TNRCC will receive appropriations in fiscal years 2000-01 at the current annual administration program costs of $7.3 million. The bill would extend the expiration date of the PST program by two years until the end of fiscal year 2003. Administrative program costs, to be appropriated by the Legislature, are assumed to continue at the same levels in fiscal years 2002-03 until the program expires. The bill would create the UPSTL program that would provide loans for tank removals and remediations. The TNRCC estimates adding three FTEs to oversee program administration which is expected to be outsourced. The TNRCC expects to fund PST remediations for leaking tanks under the PSTR Program until the program expires on September 1, 2003. The TNRCC also assumes that the Loan Account would have transfers from the PSTR Account to fund the Loan Account until funds from the PSTR Account are exhausted in fiscal year 2003. These transfer amounts would be $16.8 million, $14.9 million, $13.1 million and $11.2 million in fiscal years 2000, 2001, 2002 and 2003, respectively. In fiscal year 2003, the Loan Account is assumed to be funded from General Revenue in the amount of $47 million. The TNRCC estimates that 8,000 PST sites would meet eligibility criteria for loans under the UPSTL program and 2,000 of these 8,000 PST sites are expected to have leaking tanks. Of these 2,000 leaking tank sites, 1,600 are expected to be funded from the PST program with the remaining 400 sites to be funded through the UPSTL program. Tank removals are expected to average $10,000 per site for the 8,000 sites, expected to cost an estimated $80 million in loans over a period of five years, or $16 million a year. Remediation costs are expected to average $100,000 per site for the 400 remaining leaking tank sites expected to be funded from the loan program in fiscal year 2004, at an estimated cost of $40 million in loans. The TNRCC expects to set the interest rate for the loan program at 3 percent for ten year terms. At this rate, the Loan Account is expected to start receiving about a $1 million in fiscal year 2000 and $2.8 million in fiscal year 2001 in principal and interest on loans from the Loan Account. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 582 Natural Resource Conservation Commission, 304 Comptroller of Public Accounts LBB Staff: JK, DE, NS