LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 22, 2001 TO: Honorable James E. "Pete" Laney, Speaker of the House, House of Representatives 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 Passed 2nd House ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB820, As Passed 2nd House: 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