LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 28, 1999
TO: Honorable Bill Ratliff, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1320 by Ratliff (relating to the amount retained in the
lottery pooled bond fund), As Introduced
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* Estimated Two-Year Net Impact to General Revenue Related Fundsfor *
* SB1320, As Introduced: positive impact of $15,000,000 through the *
* biennium ending August 31, 2001. *
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General Revenue-Related Funds, Five-Year Impact:
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* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $15,000,000 *
* 2001 0 *
* 2002 0 *
* 2003 0 *
* 2004 0 *
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All Funds, Five-Year Impact:
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*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 *
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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:
LBB Staff: JK, BB, BR, WP