LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 23, 1999
  
  
          TO:  Honorable Gary Walker, Chair, House Committee on Land &
               Resource Management
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB 89 by Madla (relating to municipal annexation;
               providing penalties), Committee Report 2nd House,
               Substituted
  
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*  No significant fiscal implication to the State is anticipated.        *
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Local Government Impact
  
A municipality could incur costs associated with the preparation of a
three-year annexation plan, depending on whether the municipality would
intend to annex territory in the future, the number of areas a
municipality intends to annex, and the frequency with which the plan
would be amended. Such planning costs would be incurred almost
immediately upon enactment of the bill, since the bill requires that an
annexation plan be adopted by December 31, 1999.

Municipalities could incur costs associated with providing notice to each
person owning property in an area that has been included or removed from
a municipality's annexation plan. The cost would depend on the number of
persons living in the area, the method of notification, and the
frequency with which a plan would be amended.

There could be some costs to districts or other public entities providing
services in areas proposed for annexation. These costs would result from
the requirement that such entities provide information to municipalities
including: an engineer's report, expenditure data and service delivery
information. The cost would depend on the amount of existing data could
be used to submit to the municipality.

The bill's provision requiring municipalities to provide full municipal
services no later than two and one-half years after annexation, instead
of the current requirement of four and one-half years, could result in
increased costs to a municipality in the initial years of annexation. In
some cases, this could make certain annexations less feasible, thereby
reducing a municipality's ability to expand its tax base through
annexation.

Municipalities and districts could incur administrative costs associated
with the negotiations requirements of the bill. These costs are not
expected to be significant.

In cases where arbitration would be required under proposed Section
43.0546, Local Government Code, a municipality could incur costs of
arbitration and the refund of money collected for services not provided,
depending on an arbitrator's decision. In cases where arbitration of
strategic partnership agreements would occur under proposed Section
43.0752, Local Government Code, a municipality and a district would
equally share the costs of arbitration.

In some cases, upon disannexation, a municipality could incur costs
associated with refunding property taxes and fees previously collected
from the landowners of a disannexed area. If the amount of taxes and fees
collected was more than the amount the municipality had spent in such
areas, the municipality would be required to refund the difference to the
land owners.

In a municipality with a population over 1.6 million, the bill could
increase the cost of annexing areas with levels of service or
infrastructure superior to the level provided within the municipality
prior to annexation. Such costs could result because the municipality
would have to maintain higher levels of services or infrastructure within
the annexed area, but could not impose additional taxes or fees to the
residents of the annexed area to cover the cost of the higher levels of
services or infrastructure. A municipality's cost would depend on the
type of services and infrastructure existing in an area the municipality
would annex.

No significant fiscal implication to counties is expected.
  
  
Source Agencies:   
LBB Staff:         JK, DE, TL