LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              March 29, 1999
  
  
          TO:  Honorable Frank Madla, Chair, Senate Committee on
               Intergovernmental Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB 507  by Duncan (Relating to purchases by
               municipalities through a competitive procedure.), As
               Introduced
  
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*  No significant fiscal implication to the State is anticipated.        *
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Local Government Impact
  
Current law requires municipalities to comply with competitive bidding
procedures on expenditures of more than $15,000. The bill would lower the
threshold to $5,000 and would allow municipalities with populations
under 100,000 to use sealed proposals for the purchase of insurance.

In some cities, the bill could result in increased costs, since
additional purchases would be subject to competitive bidding procedures.
Such costs would be attributed to the need for additional staff and
additional operating expenses and supplies. Advertising costs would
likely increase as well.

Four municipalities provided estimates of increased costs that could
result from the bill. The City of Cedar Park projects a $2,000 annual
increase in advertising costs. The City of Galveston anticipates a $5,000
annual increase in advertising costs. The City of Brownsville
anticipates staff and advertising costs increasing $110,000 annually. The
City of Schulenburg expects no significant fiscal impact, because the
city already uses $5,000 as the competitive bidding threshold.

The provision to allow sealed proposals to be used by cities under
100,000 for the purchase of insurance is not expected to result in
significant fiscal implications to municipalities.
  
  
Source Agencies:   
LBB Staff:         JK, TL