LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 26, 2001 TO: Honorable Clyde Alexander, Chair, House Committee on Transportation FROM: John Keel, Director, Legislative Budget Board IN RE: HB1370 by Pickett (Relating to the authority of certain public entities to borrow from the state infrastructure bank.), As Introduced ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** The bill would amend Chapter 222 of the Transportation Code to allow a public entity to borrow directly from the State Infrastructure Bank to construct, maintain, or finance a qualified project. The bill would take effect immediately if it receives the requisite of two-thirds majority votes of each house of the Legislature. Otherwise, it would take effect September 1, 2001. The bill would allow public entities, including municipalities, counties, districts, authorities, agencies, departments, boards, or commissions to borrow directly from the Texas Department of Transportation's State Infrastructure Bank for qualified projects. Local Government Impact Local public entities spend time implementing the tax note approach and incur costs for bond counsel and financial advisors that would not be otherwise required. According to the Texas Bond Review Board, issuance costs primarily consist of underwriters fees, bond counsel fees, financial advisor fees, rating agency fees, and printing costs. These costs average $3.21 per $1,000 issued in 2000. Generally, the larger the bond issue, the greater the issuance costs. Local government entities that choose to utilize the State Infrastructure Bank because of direct borrowing would incur a cost savings from reduced issuance costs. The amount of savings would vary based on the amount of each loan and the number of projects for which money is borrowed. Source Agencies: 601 Texas Department of Transportation, 304 Comptroller of Public Accounts LBB Staff: JK, JO, MW