Austin, Texas
                    FISCAL NOTE, 77th Regular Session
                              April 23, 2001
          TO:  Honorable Joe Driver, Chair, House Committee on
               Constitutional Revision, Select
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  HJR69  by Junell (Proposing a revision of the Texas
               Constitution.), As Introduced
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HJR69, As Introduced:  negative impact of $(986,200) through the      *
*  biennium ending August 31, 2003.                                      *
The resolution proposes a constitutional amendment which, if adopted,
would revise the Texas constitution.  The impact for the first two years
is for publication of the amendment and the loss of candidate filing
fees.  Various provisions of the proposed constitution would have impact
beginning in fiscal year 2004.
General Revenue-Related Funds, Five-Year Impact:
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                           $(986,200)  *
          *       2003                                    0  *
          *       2004                         (75,678,200)  *
          *       2005                         (75,000,000)  *
          *       2006                         (75,784,200)  *
All Funds, Five-Year Impact:
*Fiscal    Probable Savings/(Cost) from    Probable Revenue Gain/(Loss)   *
* Year         General Revenue Fund         from General Revenue Fund     *
*                      0001                            0001               *
*  2002                        $(240,000)                      $(746,200) *
*  2003                                 0                               0 *
*  2004                      (75,000,000)                       (678,200) *
*  2005                      (75,000,000)                               0 *
*  2006                      (75,000,000)                       (784,200) *
Fiscal Analysis
The following provisions of the proposed constitution would have fiscal

(1) The proposed constitution would appropriate $250 million per year to
the Higher Education Capital Fund (HECF) and eliminate the $175 million
constitutional appropriation to the Higher Education Fund (HEF).  The HEF
balance would be transferred to the HECF.  (In the absence of
legislation repealing the statute requiring an additional $50 million
appropriation to the HEF, the cost of the constitutional provision would
be $75 million per year beginning in fiscal year 2004.  The net cost of
this constitutional provision would be reduced to $25 million per year if
the statutory requirement for the additional $50 million annual
appropriation to the HEF were repealed.)

(2) The elimination of constitutional references to funds that are not
also mentioned in statute would have a fiscal impact.  Among those funds
are the Economic Stabilization Fund and the Water Development Fund.
These funds would become dormant and interest earned on the balances in
the funds would be deposited to the General Revenue Fund.  The amount of
the gain to the General Revenue Fund would depend on future
appropriations from and to the Economic Stabilization Fund.

(3) The proposed constitution would set the salary of the Speaker of the
House at no less than 90% of the Governor's salary.  This provision would
apply only to Speakers of the House first elected after Article III of
the revised constitution takes effect.  At the Governor's current salary,
the cost would be an additional $108,000 per year including benefits.

(4) The proposed constitution combines the functions of the Supreme Court
and the Court of Criminal Appeals, resulting in the eventual elimination
of three justice positions.  This provision would eventually result in
savings of an estimated $440,000 annually in judges' salaries and
benefits.   It is also possible that the loss of three justice positions
would allow the elimination of certain court support staff positions,
resulting in some savings. It is not possible to determine when these
saving would begin because current justices would continue in office
until they resign or fail to win a retention election.

(5) Elimination of contested judicial elections, four-year terms for
members of the House of Representatives, and six-year terms for Senators
would result in the loss of filing fee revenue.  The reduction in the
number of races on the ballot would not result in significant savings to
the Texas Ethics Commission, the Secretary of State, or counties.  Under
the proposed constitution, Land Commissioner and Agriculture Commissioner
would no longer be elected offices.  However, elections would continue
until the person in office when the revised constitution takes effect
leaves office or fails to win re-election.

(6) The Texas Salary Commission would be created which would set maximum
salaries for officers in the executive branch, judges and justices and
members of the legislature.  Operating expenses of the commission would
be an additional cost to the state.

(7) The proposed constitution includes a requirement that the Legislature
appropriate funds to the Governor-elect and provide reports to the

(8) The following items could have a fiscal impact, but the impact and
timing of any impact would depend on future actions of the Legislature:

(a) The proposed constitution would allow the state to impose a property
tax for public education.

(b) The proposed constitution creates a school funding equity standard
that would allow 15% of students to be enrolled in school districts not
in the equalized school funding system.

(c) The proposed constitution would allow, but not require, the
Legislature to allocate up to one-half of Permanent School Fund (PSF)
capital gains to the Available School Fund (ASF).  Another provision
would eliminate the requirement that the ASF apportionment to school
districts be on the basis of scholastic population.  It provides that the
ASF be used only for administration of the PSF and support of the
state's free public schools.  One-fourth of net motor fuel taxes are
deposited to the ASF under the current constitution.  The proposed
revision requires only that one-fourth of net motor fuel collections be
used for support of the state's free public schools.

(d) The proposed constitution would allow the legislature to grant
property tax exemptions or relief.  Under the current constitution, a
constitutional amendment is necessary to provide new property tax
exemptions or relief.

(e) The proposed constitution continues the requirement that any future
state personal income tax would be subject to voter approval, but removes
the dedication of two-thirds of any personal income tax for property tax
relief and one-third to education.

(f) The proposed constitution provides for additional legislative
sessions for the purpose of overriding gubernatorial vetoes.  It also
allows the legislature to hold organizational assemblies prior to each
regular session.  These provisions could result in some cost to the

The amendment would be submitted to the voters November 6, 2001.
Estimates are based on information provided by agencies listed below.
Local Government Impact
Local governments would be granted additional authority to combine
offices and consolidate government functions.  These provisions could
result in savings to units of local government.

Provisions related to the school funding equity standard and distribution
of Available School Fund revenue could affect school districts.  The
proposed constitution does not contain local-option percentage and
local-optional 65-and-older homestead exemptions. However, under a
transition provision of the resolution, existing property tax exemptions
would remain in effect until otherwise provided by law.
Source Agencies:   356   Texas Ethics Commission, 212   Office of Court
                   Administration, 601   Texas Department of
                   Transportation, 720   The University of Texas
                   System, 362   Texas Lottery Commission, 701   Texas
                   Education Agency, 304   Comptroller of Public
                   Accounts, 781   Texas Higher Education Coordinating
                   Board, 302   Office of the Attorney General, 307
                   Secretary of State
LBB Staff:         JK, TB, WP, RS