LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 2, 2001
TO: Honorable David Counts, Chair, House Committee on Natural
Resources
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB2 by Brown, J. E. "Buster" (Relating to the
development and management of the water resources of the
state, including the ratification of the creation of
certain groundwater conservation districts; providing
penalties.), As Engrossed
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB2, As Engrossed: negative impact of $(16,672,238) 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 $(8,179,619) *
* 2003 (8,492,619) *
* 2004 (8,642,619) *
* 2005 (8,642,619) *
* 2006 (8,642,619) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Savings/ Revenue Savings/ Number of *
* Gain/(Loss) (Cost) from Gain/(Loss) (Cost) from State *
* from General from New New General Employees *
* General Revenue General Revenue from FY 2001 *
* Revenue Fund Revenue Dedicated-- *
* Fund 0001 Dedicated-- Water *
* 0001 Water Infrastruc- *
* Infrastruc- ture *
* ture *
* 2002 $52,154,000 18.0 *
* $(4,297,000)$(3,882,619) $(52,154, *
* 000) *
* 2003 (4,688,000) (3,804,619) 55,036,000 24.0 *
* (55,036,000) *
* 2004 (4,688,000) (3,954,619) 58,397,000 31.0 *
* (58,397,000) *
* 2005 (4,688,000) (3,954,619) 61,550,000 31.0 *
* (61,550,000) *
* 2006 (4,688,000) (3,954,619) 65,223,000 31.0 *
* (65,223,000) *
***********************************************************************
**************************************************************************
*Fiscal Probable Revenue Probable Revenue Probable Revenue *
* Year Gain/(Loss) from Gain/(Loss) from Gain/(Loss) from New *
* Cities Transit Authorities General Revenue *
* Dedicated *
* 2002 $(706,000) $(273,000) $(83,000) *
* 2003 (847,000) (327,000) (100,000) *
* 2004 (847,000) (327,000) (100,000) *
* 2005 (847,000) (327,000) (100,000) *
* 2006 (847,000) (327,000) (100,000) *
**************************************************************************
Technology Impact
The bill would require computers and network enhancements to accommodate
additional FTEs at the Texas Water Development Board (TWDB) estimated at
$37,800 in fiscal year 2002, $12,600 in fiscal year 2003 and $14,700 in
fiscal year 2004.
The technology impact to the Texas Natural Resource Conservation
Commission (TNRCC) for the purchase of new computers for 5 additional
FTEs is expected to be $15,000 in fiscal year 2002 only.
Fiscal Analysis
The bill would create the Texas Water Policy Council. The Council would
conduct reviews of water districts and authorities as specified in the
bill on a five-year cycle and provide reports on the findings of those
reviews on a biennial basis. The Council would have a secretary. Other
necessary staff would be provided by the TNRCC, the TWDB, the Parks and
Wildlife Department and the Department of Agriculture. The bill would
create the Interagency Water Policy Account, a special account in the
General Revenue Fund.
The bill would create the Water Infrastructure Fund (WIF) as a General
Revenue account to provide financial assistance to local governments for
the implementation of water-related projects. The bill would create a
surcharge of $0.05 for each container of bottled water to be collected by
each manufacturer of water bottled for retail sale in Texas. Revenues to
the WIF could also include other funds, such as legislative
appropriations, loan repayments, interest and bond proceeds.
The TWDB could allocate funds in the Water Infrastructure Fund in the
form of grants and loans to water-related projects around the state. The
WIF also could be used to pay necessary and reasonable expenses of the
Board. The methodology for providing assistance would be determined by
the TWDB.
The bill would create the Rural Water Assistance Fund as a General
Revenue account to provide assistance for water and water-related
projects to rural political subdivisions and to finance an outreach and
technical assistance program to assist rural political subdivisions in
obtaining assistance through the fund.
The bill would exempt certain items from the sales and use tax including:
rainwater harvesting equipment; desalination equipment; brush control
equipment; precipitation enhancement; and certain water and wastewater
construction equipment.
The bill would also require the TWDB to develop groundwater availability
models for major and minor aquifers and require the TWDB and the TNRCC to
complete an initial designation of priority groundwater management areas
for all major and minor aquifers of the state by September 1, 2005.
The bill would require that the TWBD and the Parks and Wildlife
Department collect instream flow data and perform studies to determine
the flow conditions of the state's rivers and streams necessary to
maintain environmental and economic viability of bays and estuaries.
The bill would create the Water Trust Account as a General Revenue
Account to be used by the Parks and Wildlife Department for the
administration and operation of a Water Trust created by the bill, which
would function as a bank holding deposit of water rights.
Methodology
State agencies included as members of the Water Policy Council or
required to provide staff to the Council could incur some administrative
costs associated with attending meetings and preparing reports required
by the bill. However, these costs are not anticipated to be significant.
Reimbursement for actual and necessary expenses of the Water Policy
Council and the FTE provided by the bill would result in a cost of
$100,000 out of the General Revenue Fund in each fiscal year beginning in
2002.
It is estimated that there would be a loss of revenue to the General
Revenue Fund due to the bill's sales and use tax exemption provisions.
The Comptroller estimates that the loss would be $4.3 million in fiscal
year 2002 and $4.7 million in fiscal years 2003 through 2006.
It is estimated that revenues to the Water Infrastructure Fund would
total $52.1 million in fiscal year 2002, rising to $65.2 million by 2006.
This estimate is based on recent data for volumetric sales of water that
were converted to a number of containers and used as the basis for an
estimate of the revenues expected from the bottled water surcharge.
It is estimated that the TWDB would incur costs associated with
administering the WIF totaling $350,000 in fiscal year 2002 and costs of
$1,260,000 per year in subsequent fiscal years beginning in fiscal year
2003. It also is estimated that the agency would require five additional
FTEs in 2002, 11 additional FTEs in 2003 and 18 additional FTEs in fiscal
year 2004 and beyond. These amounts are based on current Water
Development Board Clean Water Revolving Fund and Drinking Water Revolving
Fund activity, funding levels and FTE levels. Since it is assumed that
such administrative costs would be paid from the WIF, it is estimated
that $51.8 million in fiscal year 2002, increasing to $64.0 million in
2006, would be available in the WIF for financial assistance.
Administrative costs to the TWDB and the number of FTE's required by the
agency could be higher, if the agency were to issue bonds to increase the
amount available in the WIF and, therefore, the overall size of the
financial assistance program. In such a scenario, it is assumed that the
TWDB would use the funds generated by the bottled water fee to subsidize
the interest rates for loans made using the bond proceeds.
The Texas Water Development Board also is expected to incur costs
associated with the groundwater availability modeling requirements of the
bill. These costs would total $378,000 in fiscal year 2002 for the
purchase and maintenance of 60 additional stream gauges and additional
network equipment, and $240,000 in each fiscal year from 2003 through
2006 to operate/maintain the gauges. This estimate assumes that these
costs could not be paid out of the Water Infrastructure Fund and
therefore would require additional general revenue. This estimate also
assumes that additional activity required to develop models for minor
aquifers, which is expected to begin in 2005, would use existing
appropriations and FTEs currently used to develop models for major
aquifers.
The Texas Water Development Board also would require additional funds and
FTEs to administer the Rural Water Assistance Fund (RWAF), depending on
the amount available in the RWAF to make loans and grants. The bill does
not specify an amount to be deposited to the RWAF.
This estimate assumes that the TWDB would issue approximately $16 million
in bonds and that $6 million out of the General Revenue Fund would be
appropriated to the RWAF to buy down interest rates for loan and for
outreach and administration in the 2002-03 biennium. It is estimated that
the TWDB would use $470,000 of this amount (including employee benefits)
and require 6 additional FTEs in each fiscal year 2002 and 2003 for
outreach and administration as provided in the bill. It is expected that
the remaining $2,530,000 in each year used to subsidize interest rates on
loans and grants to rural political subdivisions. Similar fiscal
implications are anticipated for fiscal years 2004 through 2006.
There would be no significant fiscal implications to the TWDB to
administer the RWAF, if no funds are appropriated to that Fund.
Some professional services contract costs could be incurred as a result
of the bill's requirement for the TWDB to coordinate with the Parks and
Wildlife Department to collect instream flow data and to perform studies
to determine flows of the state rivers and streams. This estimate assumes
that the TWDB would incur the costs, which would include one additional
FTE and $150,000 per year in each 2002 and 2003 and $300,000 annually
from 2004 through 2006 (including contractual service costs and
benefits), and that there would be no significant fiscal impact to the
Parks and Wildlife Department.
The bill's provision relating to the operation and administration of the
Water Trust by the Parks and Wildlife Department is not expected to
result in significant fiscal implications to the agency.
The bill's requirement relating to the designation of priority
groundwater management areas for all major and minor aquifers of the
state would result in additional costs to the TNRCC of $354,619 in
fiscal year 2002 and $314,619 in fiscal years 2003 through 2006 to
support an additional 5 FTEs. These estimates include benefits, and it
is assumed these costs would be paid out of the General Revenue Fund.
Local Government Impact
Revenue losses to local governments from the bill's tax exemption
provisions are shown in the table above. These losses are not expected to
be significant to any individual jurisdiction.
Local governments could experience cost savings if they were able to
obtain grants or lower interest rates through the WIF or the RWAF.
Savings would depend on the amount of funding in the WIF and RWAF and the
Water Development Board's determination of project priorities.
Local governments participating in the bill's economic development
program could incur administrative costs associated with making grants
and loans to other entities. However, a political subdivision would only
be expected to participate in the program if it could reasonably absorb
such costs.
Source Agencies: 580 Texas Water Development Board, 802 Texas
Parks and Wildlife Department, 582 Texas Natural
Resource Conservation Commission, 304 Comptroller
of Public Accounts
LBB Staff: JK, CL, TL