LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 17, 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.),
Committee Report 2nd House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB5, Committee Report 2nd House, Substituted: negative impact of *
* $(5,011,000) 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 $(2,208,000) *
* 2003 (2,803,000) *
* 2004 (6,127,000) *
* 2005 (8,447,000) *
* 2006 (10,488,000) *
****************************************************
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 $(45,000)$154,652,000 54.0 *
* $(2,208,000) $(154,355, *
* 653) *
* 2003 (2,803,000) (99,000) 163,343,000 55.0 *
* (161,985, *
* 624) *
* 2004 (6,127,000) (272,000) 171,389,000 55.0 *
* (169,740, *
* 244) *
* 2005 (8,447,000) (340,000) 180,047,000 55.0 *
* (178,088, *
* 504) *
* 2006 (401,000) 189,419,000 55.0 *
* (10,488,000) (187,179, *
* 344) *
***********************************************************************
Technology Impact
There would be a technology impact to four agencies: 1) the technology
impact to TNRCC is estimated at $48,000 in fiscal year 2002; 2) the
technology impact to the new agency, the Texas Council on Environmental
Technology would be $9,000 in fiscal year 2002 and $3,000 in 2003; 3)
the technology impact to the Comptroller's Office is estimated at
$570,300 in fiscal year 2002; 4) the technology impact to the Energy
Systems Laboratory (Texas Engineering Extension Service) would be
$140,000 in fiscal year 2002, with reduced amounts in 2003-06. There is
no significant technology impact expected for the Public Utility
Commission.
Fiscal Analysis
The bill would create the Texas Emissions Reduction Plan to be
administered by the Texas Natural Resource Conservation Commission
(TNRCC), the Comptroller, and the newly created Council on Environmental
Technology (TCET). The three agencies 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 Public Utility Commission (PUC) would provide grants
for a newly established energy program, and TCET would be responsible for
establishing and administering a new technology research and
development, 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;
- 0.5 percent of the charge for each sale, lease, or rental of new
or used construction equipment statewide;
- 5 percent of the total charge for every retail sale or lease of
year 1996 and earlier on-road diesel motor vehicles over 14,000 lbs.;
- $60 fee on motor vehicles registering for the first time in
Texas; and
- $1 hotel occupancy fee imposed on persons staying in hotels in
near nonattainment or nonattainment areas;
The bill would allocate 67 percent of revenues in the Fund for the diesel
reduction incentive plan to be administered by the TNRCC. Fifteen
percent of revenues in the Fund would be allocated to the motor vehicle
purchase or lease incentive program administered by the TNRCC and the
Comptroller. The PUC would administer the energy efficiency program with
7.5 percent of funds. The TCET would administer a technology research and
development program with an additional 7.5 percent of the funds. The
remaining 3 percent of revenues could be used by the TNRCC, the Energy
Systems Laboratory and the Comptroller of Public Accounts and the PUC for
administrative costs.
The bill would specify that the International Residential Code (IRC) be
adopted as the energy code for single family construction and that the
International Energy Conservation Code (IECC) be adopted as the energy
code. The Texas Engineering Experiment 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 and develop an
accreditation program for energy rating services. The ESL would provide
technical assistance to local jurisdictions. The bill would provide
authority to the ESL to set and collect fees to offset costs for these
activities.
Methodology
Based on estimates by the Comptroller, it is anticipated that $154.6
million in revenues from newly created and increased taxes and fees would
be collected for deposit into the TERP fund in 2002, with the amount
increasing to $189.4 million by 2006.
Of the amount available in the TERP fund each year, 67 percent or $103.6
million in 2002 would be used for the diesel emissions reduction
incentive program administered by the TNRCC. An estimated $23.2 million,
or 15 percent of revenues, would be allocated to the motor vehicle
purchase program administered by the TNRCC and the Comptroller. An
additional 7.5 percent each year, or $11.6 million in 2002 would be used
by the newly created TCET for the technology research and development
program, except for $500,000 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 energy
efficiency program to be administered by the PUC would receive
approximately $11.6 million, or 7.5 percent of TERP revenues, in 2002,
and the remaining 3 percent, or $4.6 million could be used by the
Comptroller, the ESL. the PUC 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 $10.8 million from the 7.5 percent of
TERP funds provided in the bill would be used to provide grants for
environmental technology development projects.
Administrative costs by the Comptroller are estimated at $1,066,565 in
fiscal year 2002, and the agency would require an additional 10 FTEs to
handle increased audit and accounting workload created by the bill.
Ongoing costs of $496,265 per year are anticipated in fiscal years 2003
through 2006. These amounts include benefits.
Administrative costs to the TNRCC are estimated to be $1,301,907 in
fiscal year 2002, based on 16 FTEs and one time costs. Ongoing costs of
$1,141,908 per year are anticipated in fiscal years 2003 through 2006.
These amounts include benefits. This estimate assumes the TNRCC would use
the $500,000 deposited to the credit of the Clean Air Account No. 151 to
contract for air quality planning in near non-attainment areas.
The Public Utility Commission would require 5.5 FTEs and incur costs of
$314,741 in each fiscal year to administer the energy efficiency grants
program.
The bill's requirements relating to energy efficient building standards
would result in annual costs of $1,660,000 in fiscal year 2002 and
$1,590,000 in fiscal years thereafter to the Texas Engineering Experiment
Station's Energy Systems Laboratory, including benefits, for an
additional 20 FTEs. 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 $50,000 in fiscal year 2004 and $100,000 in
fiscal years 2005 and 2006, reducing costs to the ESL by those amounts.
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.
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.
Affected counties would administer and enforce the International
Residential Code and the International Energy Conservation Code. County
officials indicate that administering and enforcing building codes would
require them to incur significant costs. Bexar and Travis counties
estimate that initial costs to develop a code administration and
enforcement program would be $1 million. Annual expenditures for Bexar
County to maintain the program are estimated at $490,000. Travis
estimates $600,000 annually to maintain the program.
Local government officials stated that political subdivisions in affected
counties could bare significant additional costs in order to implement
all energy efficiency measures that meet the standards established in a
contract under Section 302.004 (b), Local Government Code. However, it
is assumed that initial costs would be offset by future savings in
energy costs experienced by units of local government.
Source Agencies: 582 Texas Natural Resource Conservation Commission,
712 Texas Engineering Experiment Station, 405
Texas Department of Public Safety, 473 Public
Utility Commission of Texas, 304 Comptroller of
Public Accounts, 601 Texas Department of
Transportation
LBB Staff: JK, CL, TL, DW