LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                                May 8, 2001
  
  
          TO:  Honorable Frank Madla, Chair, Senate Committee on
               Intergovernmental Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB820  by Giddings (Relating to the number of qualified
               businesses designated as enterprise projects in certain
               municipalities.), As Engrossed
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB820, As Engrossed:  negative impact of $(586,601) through the       *
*  biennium ending August 31, 2003.                                      *
*                                                                        *
*  The bill would make no appropriation but could provide the legal      *
*  basis for an appropriation of funds to implement the provisions of    *
*  the bill.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                            $(52,877)  *
          *       2003                            (533,724)  *
          *       2004                            (533,724)  *
          *       2005                            (533,724)  *
          *       2006                            (533,724)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal    Probable Savings/(Cost) from     Change in Number of State     *
* Year         General Revenue Fund           Employees from FY 2001      *
*                      0001                                               *
*  2002                         $(52,877)                             1.0 *
*  2003                         (533,724)                             1.0 *
*  2004                         (533,724)                             1.0 *
*  2005                         (533,724)                             1.0 *
*  2006                         (533,724)                             1.0 *
***************************************************************************
  
Technology Impact
  
None.
  
  
Fiscal Analysis
  
The bill would amend Section 2303.403, Government Code, by increasing
from 65 to 85 the number of businesses that could become enterprise
projects each biennium.

The bill would allow for the designation of four projects per enterprise
zone for governing bodies of less than 250,000 in population and six
projects per zone for governing bodies of 250,000 or more.  Currently,
program rule allows for up to four projects per governing body with the
ability to obtain two additional bonus projects through the scoring
process.

The Act  would take effect September 1, 2001.
  
  
Methodology
  
According to the Texas Department of Economic Development (TDED), it is
estimated that the cost for carrying out the responsibilities of the
program would come from the General Revenue Fund in an amount of $52,877
in FY 2002 and $533,724 in FY 2003 and for each fiscal year thereafter.
The agency also assumes one additional FTE would be required.

The structure of the Enterprise Zone Program provides for benefits to
flow to businesses that have received designation as an enterprise
project.  Based on the increase in the number of projects that could be
designated under the provisions of the bill, from 65 projects per year to
85 projects per year, TDED anticipates an increase in state benefits
dispensed under the program in the form of sales and use tax refunds and
franchise tax reductions.

According to TDED, the agency has experience in administering this
incentive program and thus has a history of costs involved with
implementation.  It is assumed that TDED  would be able to utilize
existing staffing currently administering the enterprise zone program to
defray the costs of credit underwriting. Additionally, it is also
assumed all marketing material costs would be absorbed through existing
programs.
  
  
Local Government Impact
  
No significant fiscal implication to units of local government is
anticipated.
  
  
Source Agencies:   480   Department of Economic Development
LBB Staff:         JK, DB, RT, ER