LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 26, 2001
TO: Honorable Bill Ratliff, Lieutenant Governor
Honorable James E. "Pete" Laney, Speaker of the House
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.), Conference Committee Report
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB2, Conference Committee Report: negative impact of *
* $(10,872,238) 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 $(5,279,619) *
* 2003 (5,592,619) *
* 2004 (5,742,619) *
* 2005 (5,742,619) *
* 2006 (5,742,619) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Savings/ Revenue Revenue Number of *
* Gain/(Loss) (Cost) from Gain/(Loss) Gain/(Loss) State *
* from General from Cities from Employees *
* General Revenue Transit from FY 2001 *
* Revenue Fund Authorities *
* Fund 0001 *
* 0001 *
* 2002 $(982,619) $(706,000) $(273,000) 1.0 *
* $(4,297,000) *
* 2003 (4,688,000) (904,619) (847,000) (327,000) 1.0 *
* 2004 (4,688,000) (1,054,619) (847,000) (327,000) 1.0 *
* 2005 (4,688,000) (1,054,619) (847,000) (327,000) 1.0 *
* 2006 (4,688,000) (1,054,619) (847,000) (327,000) 1.0 *
***********************************************************************
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* Counties and Other Special *
* Districts *
* 2002 $(83,000) *
* 2003 (100,000) *
* 2004 (100,000) *
* 2005 (100,000) *
* 2006 (100,000) *
*****************************************************
Technology Impact
The technology impact to the Water Development Board (TWDB) is
anticipated to be $6,600 in 2002, $15,510 in 2003 and $15,600 in 2004 for
the purchase of computers, data collection equipment and network
enhancements.
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 Advisory 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 Advisory 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. Revenues to the WIF could
include 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 TWDB 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.
Methodology
State agencies included as members of the Water Advisory 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 Advisory
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.
Since the bill does not provide a funding source for the Water
Infrastructure Fund, costs to the Water Development Board to administer
the program are not anticipated to be significant. If the legislature
were to appropriate funds to the Water Infrastructure Fund to subsidize
interest rates on bonds that could be issued for deposit to the WIF,
there could be some administrative costs to the TWDB. The cost would
depend on the amount of funds appropriated and the overall size of the
program.
The Texas Water Development Board 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.
Since the bill does not specify an amount to be deposited to the Rural
Water Assistance Fund (RWAF), administration of the RWAF is not expected
to result in a significant fiscal impact to the Water Development Board.
The Board could require additional funds and FTEs to administer the RWAF
if the legislature were to appropriate funds to the RWAF to subsidize
interest rates on bonds that could be issued for deposit to the Fund.
Administrative costs would depend on the amount appropriated and the
overall size of the program.
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 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: 582 Texas Natural Resource Conservation Commission,
802 Texas Parks and Wildlife Department, 304
Comptroller of Public Accounts, 580 Texas Water
Development Board
LBB Staff: JK, CL, TL