LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 21, 1999 TO: Honorable Paul Sadler, Chair, House Committee on Public Education FROM: John Keel, Director, Legislative Budget Board IN RE: SB1320 by Ratliff (Relating to the amount retained in the lottery pooled bond fund.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1320, As Engrossed: positive impact of $15,000,000 through the * * biennium ending August 31, 2001. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $15,000,000 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from * * Year General Revenue Fund Lottery Account/ GR-Dedicated * * 0001 5025 * * 2000 $15,000,000 $(15,000,000) * * 2001 0 0 * * 2002 0 0 * * 2003 0 0 * * 2004 0 0 * *************************************************************************** Fiscal Analysis The bill would amend the Government Code to reduce the amount of the Texas lottery s reserve fund for retailer defaults; the fund would be capped at $5 million. It would partially implement recommendation GG8 from the Comptroller's report "Challenging the Status Quo: Toward Smaller, Smarter Government." Methodology Under current law, the Texas Lottery Commission maintains $20 million to cover retailers defaults. When the fund exceeds its cap, the remainder is swept into the Foundation School Account monthly. Excess funds in the reserve account represent a loss that the Legislature would otherwise have to make up out of general revenue. The commission calculates the amount of the reserve by assuming a worst-case scenario resulting from being unable to collect from the five largest retailer accounts for two consecutive weeks. Historically, defaults have ranged from $10,642 in 1995 to $742,012 in 1996; defaults have averaged less than $350,000 a year since 1992. This estimate assumes that the Texas Lottery Commission would continue to collect the retailers on-line service fees at current levels. The $5 million cap on the reserve fund would produce a one-time savings of $15 million to the General Revenue Fund. The transfer of excess lottery reserve funds to the General Revenue Foundation School account would occur on September 1, 1999, the effective date of the bill. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts, 362 Texas Lottery Commission LBB Staff: JK, SD, BB, BR, WP