LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 11, 2001 TO: Honorable David Sibley, Chair, Senate Committee on Business & Commerce FROM: John Keel, Director, Legislative Budget Board IN RE: HB3452 by Gallego (Relating to the abolition and transfer of functions of the Texas Department of Economic Development, the operation, funding, and administration of the smart jobs fund program, and the creation of the Office of Strategic Business Development.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3452, Committee Report 2nd House, Substituted: positive impact * * of $27,070 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 $13,535 * * 2003 13,535 * * 2004 13,535 * * 2005 13,535 * * 2006 13,535 * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2002 $13,535 * * 2003 13,535 * * 2004 13,535 * * 2005 13,535 * * 2006 13,535 * ***************************************************** Fiscal Analysis The bill would repeal the statutory authority for the Texas Department of Economic Development (TDED) and the Texas Economic Development Corporation. The bill transfers the capital access fund, the industrial revenue bond program, the leverage fund, the linked deposit program, the Texas enterprise zone program, the defense economic readjustment zone program, the Texas small business industrial development corporation, the Texas empowerment zone and the Texas business and commerce economic development clearinghouse to the Comptroller's Office. According to the Comptroller's Office, the transfers could result in additional administrative costs. The bill would also transfer the international trade functions and foreign offices to the Office of the Secretary of State and the tourism functions to the Texas Department of Transportation. The bill would transfer the Smart Jobs Program from TDED to Texas Council on Workforce and Economic Competitiveness (TCWEC) and continue the Smart Jobs Fund Program as Subchapter I, Title 10, Chapter 2308 of the Government Code. The bill adds Chapter 468 to the Government Code creating the Office of Strategic Business Development and transfers the business marketing functions, corporate expansion and recruitment functions, the office of small business assistance and the office of defense affairs to the new agency. The Governor would appoint a nine member board as well as the Executive Director. It is assumed that the funds currently used by the Texas Department of Economic Development for central administration would transfer to the newly-created agency, thus there would not be a fiscal impact to create the Office of Strategic Business Development. The bill would take effect September 1, 2001. Methodology It is assumed with the abolishment of the Texas Department of Economic Development, the Texas Economic Development Corporation (a statutory non profit entity established to support the Department s activities) would dissolve since the members of the governing board of the Department serve ex officio as the board of directors of the Corporation. Abolishment of the Corporation would result in administrative savings of approximately $13,535 in fiscal year 2002 and $13,535 in fiscal year 2003. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 116 Sunset Advisory Commission, 480 Department of Economic Development, 304 Comptroller of Public Accounts LBB Staff: JK, JO, ER