LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 10, 2001 TO: Honorable Warren Chisum, Chair, House Committee on Environmental Regulation FROM: John Keel, Director, Legislative Budget Board IN RE: HB2291 by Lewis, Glenn (Relating to beverage container redemption and recycling; providing penalties.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2291, As Introduced: positive impact of $0 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 $0 * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Revenue Probable Change in Number of * * Year Gain/(Loss) from New Savings/(Cost) from State Employees from * * General Revenue New General Revenue FY 2001 * * Dedicated Account - Dedicated Account - * * Texas Beverage Texas Beverage * * Redemption and Redemption and * * Recycling Recycling * * 2002 $192,232,500 $(192,232,500) 19.0 * * 2003 192,232,500 (192,232,500) 19.0 * * 2004 192,232,500 (192,232,500) 19.0 * * 2005 192,232,500 (192,232,500) 19.0 * * 2006 192,232,500 (192,232,500) 19.0 * ************************************************************************** Technology Impact The bill would require the purchase of personal computers and related equipment for fourteen new positions. The Comptroller anticipates one-time programming costs of $110,880 in fiscal year 2002 and minor expenditures for additional computer equipment in each fiscal year thereafter will be required to implement the provisions of this bill. Fiscal Analysis The bill would require the Texas Natural Resource Conservation Commission (TNRCC) to establish a beverage container redemption and recycling program. The bill would require beverage containers offered or sold in the state, generally glass, metal or plastic, to have a refund value of $0.05 or more and display a label indicating "return for refund," the refund value of the container, and a state abbreviation for Texas. Cans or cups made primarily of aluminum would not be included. The bill would exempt containers with a fluid capacity of more than one gallon, milk, 100 percent fruit or vegetable juice, medical food or infant formula, and beverages sold for use by a common carrier in conducting passenger transport. The bill would require a retail dealer to collect in the sales price a redemption fee of five cents for each beverage container from the consumer. The bill would create a new General Revenue-Dedicated Account, the Texas Beverage Redemption and Recycling Account. TNRCC would be required to ensure there is a reserve in the new account equal to five percent of the total amount paid to redemption centers from the preceding year and any interest earned on the reserve. The bill would require the retail dealer to remit $0.0475 of each five-cent redemption to the Comptroller; a retail dealer would be allowed to retain one quarter of one cent as administrative cost. A retail dealer could file annually, by February 1 of the year following the collection year, with the Comptroller if the projected remittance totaled less than $10,000. TNRCC would have the authority to allocate money from the account to finance the purchase of redemption center infrastructure. TNRCC could delegate to a Council of Government the establishment of certification of redemption centers. TNRCC would have to contract with a private entity, nonprofit entity, or a local government or combination thereof to operate a certified redemption center in each redemption zone. TNRCC would annually designate redemption zones and have at least one redemption center per redemption zone. TNRCC would have to adopt rules for the certification of redemption centers. The bill would require retail dealers to post a notice to purchasers of the refund value of a beverage container and the location of the nearest redemption center where a refund could be obtained. The redemption centers would have to pay the refund value of the container in cash to the person presenting the container provided that the container met specifications. The bill would establish guidelines for a redemption center to refuse the return of unsafe, unsanitary beverage containers, or the return of more than 240 containers presented by a single person in one day. The bill would establish the method for the redemption center to dispose of beverage containers. TNRCC would have to pay the redemption center upon submission of a completed invoice of refunds paid out an amount equal to the redemption value of five cents plus a handling fee of one-half of one cent for each beverage container redeemed by the redemption center. This bill would take effect September 1, 2001. Methodology The fee would be structured so that $0.0475 per beverage container would be remitted to the new account and $0.055 per beverage container would be paid out of the account. For purposes of this analysis, an 80 percent redemption rate is assumed. According to TNRCC, there are an estimated 4 billion glass and plastic beverage containers sold in Texas annually. Assuming an estimated $0.0475 per container, an estimated $192,232,500 would be deposited to the new account. Assuming an 80 percent redemption rate, $178.1 million would be paid out of the account in redemption and handling fees to retailers, leaving a balance of $14,164,500 for program administration and development of redemption facilities. To implement the provisions of the bill, TNRCC would require 14 additional FTEs. Estimated costs are $1,035,858 for fiscal year 2002 and $923,858 on a recurring basis. The Comptroller anticipates additional collection costs of $293,328 per fiscal year on a recurring basis, which includes 5 additional FTEs. Once administrative costs are reduced from the amounts available, and 5 percent of the total amount paid to redemption centers in the preceding year is set aside as a reserve, in future years, there would be an estimated $4,043,914 available for grants to local governments and Councils of Government. This analysis does not include interest earned on the reserve. Local Government Impact Local units of government and Councils of Government will be eligible to receive grants and contracts out of the newly created account of approximately $4.0 million per year. Source Agencies: 582 Texas Natural Resource Conservation Commission, 304 Comptroller of Public Accounts LBB Staff: JK, CL, ZS