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 ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** 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