LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 1, 2001
TO: Honorable Warren Chisum, Chair, House Committee on
Environmental Regulation
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB5 by Brown, J. E. "Buster" (Relating to the Texas
emissions reduction plan; providing a penalty.), As
Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB5, As Engrossed: negative impact of $(4,194,000) 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 $(1,843,000) *
* 2003 (2,351,000) *
* 2004 (5,168,000) *
* 2005 (7,125,000) *
* 2006 (8,844,000) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Revenue Revenue Savings/ Number of *
* Gain/(Loss) Gain/(Loss) Gain/(Loss) (Cost) from State *
* from from State from New New General Employees *
* General Highway General Revenue from FY 2001 *
* Revenue Fund Revenue Dedicated-- *
* Fund 0006 Dedicated-- TERP Fund *
* 0001 TERP Fund *
* 2002 $(37,000)$136,873,000 58.0 *
* $(1,843,000) $(137,873, *
* 000) *
* 2003 (2,351,000) (82,000) 143,887,000 59.0 *
* (142,887, *
* 000) *
* 2004 (5,168,000) (226,000) 150,845,000 59.0 *
* (149,345, *
* 000) *
* 2005 (7,125,000) (284,000) 158,345,000 59.0 *
* (156,345, *
* 000) *
* 2006 (8,844,000) (336,000) 166,429,000 59.0 *
* (163,929, *
* 000) *
***********************************************************************
***************************************************************************
*Fiscal Probable Revenue Gain/(Loss) Probable Savings/(Cost) from *
* Year from Appropriated Receipts Appropriated Receipts *
* 0666 0666 *
* 2002 $0 $0 *
* 2003 0 0 *
* 2004 100,000 (100,000) *
* 2005 200,000 (200,000) *
* 2006 200,000 (200,000) *
***************************************************************************
Technology Impact
There would be a technology impact to four agencies: 1) the technology
impact to TNRCC is estimated at $45,000 in fiscal year 2002, based on
new computers and software for 15 FTEs at a cost of $3,000 each; 2) the
technology impact to the new agency, the Texas Council on Environmental
Technology would be $9,000 in fiscal year 2000 and $3,000 in 2003 for
the purchase of computers and related equipment for new FTEs; 3) the
technology impact to the Comptroller's Office is estimated at $500,000
in fiscal year 2000 for contract programming to make changes to the
sales tax, hotel tax, to develop a new system for taxi surcharges and to
update electronic data processing equipment; 4) the technology impact to
the Energy Systems Laboratory (Texas Engineering Extension Service)
would be $140,000 in fiscal year 2002, $60,000 in fiscal year 2003,
$50,000 in 2004, $30,000 in 2005 and $20,000 in 2006 for computers,
software upgrades and additional servers.
Fiscal Analysis
The bill would create the Texas Emissions Reduction Plan to be
administered by the Texas Natural Resource Conservation Commission
(TNRCC). TNRCC would be required to provide and manage grants and other
funding for several incentive programs aimed at lowering emissions that
impede air quality attainment under the federal Clean Air Act. The TNRCC
would be required to evaluate project cost effectiveness and prepare
reports regarding the progress of the plan, the amount of grants being
awarded and emissions reductions attributable to the plan.
The bill would create the Texas Council on Environmental Technology
(TCET). The TCET would be responsible for establishing and administering
a new technology research and development program, which would include
grants to support the development of emissions-reducing technologies.
The Texas Emissions Reduction Plan (TERP) Fund would be a new account in
the General Revenue Fund to be administered by the Comptroller consisting
of new surcharges and fees including:
- 10 percent of the registration fee for truck trailers and
commercial vehicles statewide;
- $5 for each motor vehicle inspected in a near nonattainment or
nonattainment area;
- $1 for each motor vehicle inspected in all other areas of the
state;
- 0.25 percent of the charge for each sale, lease, or rental of new
or used construction equipment statewide;
- 1 percent of the total charge for every retail sale or lease of
on-road diesel motor vehicles;
- $1 hotel occupancy fee imposed on persons staying in hotels in
near nonattainment or nonattainment areas;
- $3 for each registration renewal for a motorboat if operated
primarily in a near nonattainment or nonattainment area;
- $1 surcharge for each taxi fare to or from an airport in a
nonattainment or affected county; and a
- $0.25 per gallon surcharge on bunker fuel (fuel for ocean-going
vessels and boats) sold by petroleum refineries;
The bill would allocate 88.5 percent of revenues in the Fund for grants
in three categories of programs to be administered by the TNRCC. The TCET
would administer a technology research and development program with 7.5
percent of the funds. The remaining 4 percent of revenues could be used
by the TNRCC, the Energy Systems Laboratory and the Comptroller of Public
Accounts for administrative costs.
The bill also would require the Texas Department of Transportation
(TxDOT) to produce specially designed insignias for "clean vehicles,"
which would allow such vehicles to travel in preferential car pool or
high occupancy lanes.
The bill would exempt any portion of diesel fuel that consists of water
from the sales and use tax.
The bill would create several advisory councils, including the Texas
Building Energy Performance Advisory Committee. The International
Residential Code (IRC) would be adopted as the energy code for single
family construction and the International Energy Conservation Code (IECC)
would be adopted as the energy code.
The Texas Experimental Engineering Station's Energy Systems Laboratory
(ESL) would be required to review and evaluate local amendments to the
IRC and IECC. The ESL also would be required to develop energy savings
estimates and set targets for each municipality in a near nonattainment
area to develop and implement energy savings and weatherization programs
to meet the targets. Additionally, the ESL would make materials
available to the building industry explaining requirements of the IRC
and the IECC, the ESL would develop an accreditation program for energy
rating services, and the ESL would provide technical assistance to local
jurisdictions concerning implementation and enforcement of building
codes for energy efficiency. The bill would provide authority to the ESL
to set and collect fees to offset costs for these activities.
Methodology
It is anticipated that $136.9 million in revenues would be collected for
deposit into the TERP fund in 2002 based on the following assumptions:
- Assuming 173,000 vehicles would be subject to the 10 percent
surcharge on registration fees for truck trailers and commercial vehicles
statewide, the Comptroller estimates $10.2 million in revenues in 2002;
- Based on data provided by the Texas Department of Public Safety
(DPS), it is estimated that 8.8 million vehicles would be subject to the
$5 fee for each motor vehicle inspected in a near nonattainment or
nonattainment area, resulting in an estimated $44.3 million in revenues
each year;
- Based on data provided by the DPS, it is estimated that 3.7
million vehicles would be subject to the $1 fee for each motor vehicle
inspected in all other areas of the state, yielding an estimated $3.7
million in annual revenue;
- Based on data from the U.S. Census Bureau, the Comptroller of
Public Accounts estimates that the new 0.25 percent surcharge on each
sale, lease, or rental of new or used construction equipment statewide
would result in $6.2 million in revenue in fiscal year 2002;
- The Comptroller estimates that the one percent surcharge on every
retail sale or lease of on-road diesel motor vehicles in excess of
14,000 pounds would yield a total $3.4 million in revenues in 2002, based
on estimated sales in 2000 of trucks weighing between 14,000 and 33,000
pounds (this estimate assumes trucks over 33,000 pounds would be exempt);
- The $1 hotel occupancy fee imposed on persons staying in hotels
in near nonattainment or nonattainment areas is estimated by the
Comptroller to generate an additional $53,095,000 in fiscal year 2002;
- Assuming 189,000 boats would be subject to the $3 fee for each
registration renewal for a motorboat if operated primarily in a near
nonattainment or nonattainment area, the Texas Department of Parks and
Wildlife estimates annual revenue of $567,000;
- Assuming 2.5 million taxi fares would be subject to the $1
surcharge imposed by the bill, an additional $2.5 million in revenue in
fiscal year 2002 is estimated by the Comptroller; and
- The 0.25 per gallon bunker fuel fee is estimated by the
Comptroller to generate $12.8 million in additional revenues in fiscal
year 2002.
Total revenues to the TERP Fund for 2003 through 2006 are based on growth
estimates provided by the Comptroller.
Of the amount available in the TERP fund each year, 88.5 percent or
$121.1 million in 2002 would be used for incentive programs administered
by the TNRCC. 7.5 percent each year, or $10.3 million would be used by
the newly created TCET for the technology research and development
program, except for $200,000 of that amount, which would be deposited to
the credit of the Clean Air Account No. 151 to supplement funding for air
quality planning activities in near-nonattainment areas. The remaining
$5,474,902 million could be used by the Comptroller, the ESL and the
TNRCC to cover administrative costs.
This estimate assumes that the TCET would be a new agency with an
administrative budget of $250,000, as provided by the bill, and that the
TCET would require 3 FTEs in the first year of operation, and 4 FTEs in
subsequent years. The agency would be housed at the Center for
Environmental Resources at the University of Texas at Austin. It is
assumed that the TCET would contract for a health effects study for
$200,000 per year. The remaining $9.7 million from the 7.5 percent of
TERP funds provided in the bill would be used to provide grants for
environmental technology development projects. It is expected that a
significant portion of these grant funds would be awarded to projects at
state owned institutions of higher education.
Administrative costs by the comptroller are estimated at $1,850,000 in
fiscal year 2002, including $500,000 in technology costs and the
remaining costs associated with an additional 16 FTEs to handle increased
audit and accounting workload created by the bill. Ongoing costs of
$950,000 per year are anticipated in fiscal years 2003 through 2006.
These amounts do not include benefits, estimated at $225,000 per year.
Administrative costs to the TNRCC are estimated to be $1,420,000 in
fiscal year 2002 based on 15 FTEs and one time computer and furniture
costs. Ongoing costs of $1,250,000 per year are anticipated in fiscal
years 2003 through 2006. These amounts do not include benefits. This
estimate assumes the TNRCC would use the $250,000 deposited to the credit
of the Clean Air Account No. 151 to contract for air quality planning in
near non-attainment areas.
It is estimated that the cost to TxDOT of producing insignias for "clean
vehicles" would not be significant.
The table above includes estimated losses to the General Revenue Fund and
State Highway Fund No. 006 provided by the Comptroller. The Comptroller
derived these losses based on the estimated dynamic tax feedback effects
created by the increase in industry and individual tax burdens.
The exemption from the motor fuel tax of the portion of water contained
in diesel fuel is not expected to result in a significant revenue loss to
the state.
The bill's requirements relating to energy efficient building standards
would result in annual costs of $1,950,000 in fiscal year 2002 and
$1,750,000 in fiscal years thereafter to the Texas Experimental
Engineering Station's Energy Systems Laboratory, including benefits, for
an additional 24 FTEs, plus related costs. This estimate assumes that
costs to the ESL would be paid out of the TERP Fund in fiscal years 2002
and 2003, since no significant fees could be charged while the ESL is
developing materials required to administer programs created by the bill.
In years 2004 through 2006 Appropriated Receipts from fees authorized
from the bill would generate an estimated $100,000 in fiscal year 2004
and $200,000 in fiscal years 2005 and 2006, reducing costs to the ESL by
those amounts.
Costs to the ESL would stem from requirements including the development
of energy savings estimates, the development of targets for each
municipality in a near nonattainment areas to develop and implement
energy savings and weatherization programs to meet the targets.
Additionally, the ESL would incur costs in making materials available to
the building industry, developing an accreditation program for energy
rating services, and providing technical assistance to local
jurisdictions concerning implementation and enforcement of building codes
for energy efficiency.
This estimate assumes that all funds in the TERP allocated for
administration would be spent in 2002, but that approximately $1 million
would remain available in the administration allocation in 2003,
increasing to approximately $2.5 million by fiscal year 2005.
Local Government Impact
Local governments could experience positive fiscal impacts, reducing the
cost of acquiring equipment and vehicles, if they are successful in
receiving grants from the TNRCC.
Local governments could incur some costs associated with administering
the Local Government Grant Program, depending on the number of grants
that would be awarded in a particular jurisdiction. However, it is
assumed that any significant costs in administering the program would be
borne by the TNRCC.
The Building Officials Association of Texas indicated that municipalities
have planned to incorporate, or already have incorporated, the
International Residential Code and the International Energy Conservation
Code. These new standards will not have a significant impact on
municipalities. The association did indicate that municipalities in
affected counties could bare significant additional costs depending upon
several factors:
1) program targets set and fees for services assessed by the Energy
Systems Laboratory; 2) availability of
grant funds; and 3) the scope of energy savings and weatherization
programs. However, costs incurred could be offset by energy cost
savings.
Source Agencies: 405 Texas Department of Public Safety, 601 Texas
Department of Transportation, 304 Comptroller of
Public Accounts, 582 Texas Natural Resource
Conservation Commission, 712 Texas Engineering
Experiment Station
LBB Staff: JK, CL, TL, DW