LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session February 28, 2001 TO: Honorable Florence Shapiro, Chair, Senate Committee on State Affairs FROM: John Keel, Director, Legislative Budget Board IN RE: SB4 by Shapiro (Relating to the administration and use of the Texas Mobility Fund and the issuance of obligations for financing the construction, reconstruction, acquisition, and expansion of state highways and other mobility projects.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB4, Committee Report 1st House, Substituted: negative impact of * * $(160,442,701) 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 $(26,646,736) * * 2003 (133,795,965) * * 2004 (131,423,563) * * 2005 (129,051,161) * * 2006 (126,678,759) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Revenue Revenue Savings/(Cost) Savings/(Cost) * * Gain/(Loss) Gain/(Loss) from New Texas from General * * from New Texas from New Texas MobilityFund Revenue Fund * * MobilityFund - MobilityFund 0001 * * Bond Proceeds -Debt Svc * * Reserve * * 2002 $1,353,279,280 $132,609,764 $(270,655,856) $(26,646,736) * * 2003 0 0 (270,655,856) (133,795,965) * * 2004 0 0 (270,655,856) (131,423,563) * * 2005 0 0 (270,655,856) (129,051,161) * * 2006 0 0 (270,655,856) (126,678,759) * *************************************************************************** Fiscal Analysis The bill would amend the Transportation Code to authorize the Texas Transportation Commission (TTC) to issue and enter into credit agreements related to, obligations in the name and on behalf of the state for financing the construction, reconstruction, acquisition, and expansion of state highways and other mobility projects through the Texas Department of Transportation (TxDOT) and the Texas Mobility Fund. The bill would pledge the full faith and credit of the state to the payment of obligations and credit agreements in the event that revenue and money for and on deposit in the fund would be insufficient to cover debt obligations. The bill would establish authorizations, requirements, and limitations for issuing and aggregating obligations, investing, using, and administering the fund. The bill would not dedicate a specific amount to the Texas Mobility Fund, but would provide for annual appropriations determined by the General Appropriations Act to be made to the fund out of miscellaneous and general revenue. The bill would also require the Comptroller to hold and certify amounts within the fund. The bill would take effect on the date on which the constitutional amendment proposed by the 77th Legislature, Regular Session, creating the Texas Mobility Fund and authorizing the issuance of obligations for financing the construction and acquisition of extensions, improvements, and expansions of the state's highways, roads, and other mobility projects would take effect. If that amendment does not receive approval by the voters, this bill would have no effect. Methodology It is assumed that an annual transfer would be made from the General Revenue Fund to the Texas Mobility Fund for the purposes of making required debt payments for the bonds. It is assumed bonds totaling $1.49 billion would be issued for 20 years at an interest rate of 4.6 percent with semi-annual payments. Other assumptions include fees of $700,000 for the cost of issuance, underwriting fees of $5 per $1,000 of bonds, a debt service reserve, and that interest earnings during construction would be used towards the project cost base on an 83 month draw. It is estimated that TxDOT would issue bonds in February 2002, and that the debt service required for the bonds would cost $26.6 million in general revenue in fiscal year 2002 with the cost increasing to $133.7 million in fiscal year 2003 and $131.4 million in fiscal year 2004. It is estimated that annual debt service costs would decrease by approximately $2.4 million in each subsequent year for the remaining life of the bonds. It is assumed that the issuance of these obligations would impact the constitutional debt limit under Article III, Section 49-j of the Texas Constitution. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, RB, MW