LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 20, 2001
TO: Honorable J.E. "Buster" Brown, Chair, Senate Committee on
Natural Resources
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
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB5, As Introduced: negative impact of $(516,041,000) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(246,488,000) *
* 2003 (269,553,000) *
* 2004 (287,027,000) *
* 2005 (305,671,000) *
* 2006 (326,749,000) *
****************************************************
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 from New New General Employees *
* General Available General Revenue from FY 2001 *
* Revenue School Fund Revenue Dedicated *
* Fund 0002 Dedicated-- *
* 0001 TERP Fund *
* 2002 $127,634,200 30.0 *
* $(105,759, $(140,729, $(127,634, *
* 000) 000) 200) *
* 2003 130,186,884 30.0 *
* (108,047, (161,506, (129,686, *
* 000) 000) 884) *
* 2004 132,790,621 30.0 *
* (115,670, (171,357, (132,290, *
* 000) 000) 621) *
* 2005 135,446,434 30.0 *
* (123,860, (181,811, (134,946, *
* 000) 000) 434) *
* 2006 138,155,363 30.0 *
* (133,121, (193,628, (137,655, *
* 000) 000) 363) *
***********************************************************************
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Savings/(Cost) Revenue Revenue *
* Gain/(Loss) from State Gain/(Loss) Gain/(Loss) *
* from State Highway Fund from Cities from Transit *
* Highway Fund 0006 Authorities *
* 0006 *
* 2002 $(422,187,000) $1,169,988 $(16,330,000) $(6,301,000) *
* 2003 (484,517,000) 0 (20,809,000) (8,029,000) *
* 2004 (514,072,000) 0 (22,265,000) (8,591,000) *
* 2005 (545,432,000) 0 (23,828,000) (9,194,000) *
* 2006 (580,884,000) 0 (25,595,000) (9,867,000) *
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*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* Counties &Other Special Districts *
* 2002 $(1,932,000) *
* 2003 (2,462,000) *
* 2004 (2,634,000) *
* 2005 (2,819,000) *
* 2006 (3,028,000) *
*****************************************************
Technology Impact
Three agencies would experience an increase in technology costs: (1) The
Department of Public Safety (DPS) would incur costs of $211,200 in
fiscal year 2002 for programming, based on 1,760 hours of programming at
$120 per hour, due to necessary changes to the Distributed Driver
License System and other agency databases; (2) 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; and (3) The
technology impact to the Comptroller's Office is estimated at $450,000
in fiscal year 2000 for contract programming to make changes to the
sales tax, motor vehicle tax, hotel tax, to develop a new system for
taxi surcharges and to update electronic data processing equipment.
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 Texas Emissions Reduction Plan (TERP) Fund would consist of new
surcharges and fees including:
-10 percent of the registration fee for truck trailers and
commercial vehicles statewide;
-$1 for each motor vehicle registered in a near nonattainment or
nonattainment area;
-$3 for each drivers' license renewed in a near nonattainment or
nonattainment area;
-$1 for each drivers' license renewed in all other areas of the
state;
-$3 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;
-$2 for each one year and $4 for each two year motor carrier
registration statewide;
-0.25 percent of the charge for each sale, lease, or rental of new
or used construction equipment statewide, not to exceed $750 for each
charge;
-0.1 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; and a
-$0.50 surcharge for each taxi fare statewide, unless the taxi is a
low emissions or alternatively fueled vehicle.
The bill would allocate 97.5 percent of revenues to the Fund for grants
in five categories of programs. The remaining 2.5 percent of revenues
could be used by the TNRCC and the Comptroller of Public Accounts for
administrative costs. The fund also would be used to offer franchise tax
credits to corporations for the incremental cost of using liquefied gas
to fuel a motor vehicle. Total credit available to all taxpayers would be
capped at a level to be determined by the TNRCC.
The bill also would require the TxDOT to issue specially designed license
plates for low-emissions and alternative fuel vehicles but does not
provide cost recovery for this activity.
The bill would exempt the sale of a refrigerator, clothes washer, clothes
dryer, dishwasher, or room air conditioner from the state sales and use
tax if the appliance qualifies under federal law for the "Energy Star"
label. Certain high efficiency central air conditioning units, heat pumps
and hot water heaters, as well as certain "fuel cells" also would be
exempt.
The bill would change the definition of "diesel fuel," so that any blend
of fuels that includes water could be considered not to be "diesel fuel"
for purposes of the Tax Code.
Methodology
It is anticipated that $127.6 million in revenues would be collected for
deposit into the TERP fund in 2002 based on the following assumptions:
-Assuming 166,000 vehicles would be subject to the 10 percent
surcharge on registration fees for truck trailers and commercial vehicles
statewide, and that the average fee would be $500, TxDOT estimates $8.3
million in annual revenues;
-Assuming 11.4 million vehicles would be subject to the $1 fee for
motor vehicles registered in a near nonattainment or nonattainment area
based on data from TxDOT, an estimated $11.4 million would be collected
each year;
-The DPS estimates that 1.6 million drivers' licenses would be
subject to the $3 fee for each drivers' license renewed in a near
nonattainment or nonattainment area, resulting in an estimated $4.8
million in annual revenue;
-The DPS estimates that 800,000 drivers' licenses would be subject
to the $1 fee for each drivers' license renewed in all other areas of the
state, resulting in an additional $800,000 in estimated annual revenue;
-The DPS estimates that 10.7 million vehicles would be subject to
the $3 fee for each motor vehicle inspected in a near nonattainment or
nonattainment area, resulting in an estimated $32.1 million in revenues
each year;
-The DPS estimates that 6.3 million vehicles would be subject to the
$1 fee for each motor vehicle inspected in all other areas of the state,
yielding an estimated $6.3 million in annual revenue;
-No significant revenues are anticipated from the bill's $2 fee for
each one year and $4 fee for each two year motor carrier registration
required by the bill;
-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;
-TxDOT estimates that the 0.1 percent surcharge on every retail sale
or lease of on-road diesel motor vehicles would yield a total $8.7
million in annual revenue, based on an estimated 35,740 diesel passenger
and light truck vehicles being sold at an average price of $10,000 and
8,557 large trucks being sold at an average price of $60,000;
-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; and
-Assuming 7.3 million taxi fares would be subject to the $0.50
surcharge imposed by the bill, an additional $3.7 million in annual
revenue is anticipated.
For the purposes of this estimate, it is assumed that revenues to the
TERP Fund would increase 2 percent per year.
It is estimated that 1000 vehicles would participate in the bill's
corporate franchise tax exemption at an average $2,500 per vehicle,
totaling $25 million per year. This would result in $102.6 million being
available in the Fund in fiscal year 2002. Of the amount available in the
TERP fund, 97.5 percent or $100.1 million would be used to make grant
awards to the five program areas. The remaining $2.5 million could be
used by the Comptroller and the TNRCC to cover administrative costs.
Administrative costs by the comptroller are estimated at $1,250,000 in
fiscal year 2002, including $450,000 in technology costs and $900,000 in
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.
Administrative costs to the TNRCC are estimated to be $120,000 in one
time computer and furniture costs in fiscal year 2002 and annual costs of
$900,000 in costs associated with 15 FTEs. Ongoing costs of $1,200,000
per year are anticipated in fiscal years 2003 through 2006. It is assumed
that all funds available for administrative expenses would be
appropriated to the Comptroller and the TNRCC in fiscal year 2002, with
approximately $500,000 per year remaining available in the TERP for
appropriations for administrative expenses.
It is estimated that the cost to TxDOT of producing new license plates
for low-emissions and alternative fuel vehicles would be $958,788 in
fiscal year 2002 only. This estimate is based on the production of 1
million plates, and the cost is expected to be paid out of the State
Highway Fund No. 006. Programming costs to the Texas Department of
Transportation (TxDOT) for changes to the registration and title system
(RTS) and the International Registration Plan (IRP) are not expected to
be significant.
The DPS would incur costs one-time costs of $211,200 in fiscal year 2002
for programming, based on 1,760 hours of programming at $120 per hour,
due to necessary changes to the Distributed Driver License System and
other agency databases. These costs are assumed to be paid out of the
State Highway Fund No. 006.
Based on data from the U.S. Census Bureau the Comptroller of Public
Accounts estimates that the exemption of clothes washers and dryers,
refrigerators, dishwashers, room air conditioners, air conditioning
units, heat pumps and hot water heaters from the sales and use tax would
result in a loss of revenue to the General Revenue Fund totaling $99.5
million in fiscal year 2002, rising to a loss of $141.8 million in 2003.
Local entities receiving proceeds of the sales and use tax would incur
similar losses, discussed below.
The Comptroller of Public Accounts estimates that, if the bill is
enacted, some amount of water would be added to all diesel fuel sold in
the state, exempting such sales from the motor fuel tax. The following
revenue losses are expected in fiscal year 2002, with amounts increasing
each year through 2006: $6.3 million loss in revenue to the General
Revenue Fund No. 001; $140.7 million loss to the Available School Fund
No. 002; and $422.2 million loss of revenue to the State Highway Fund No.
006.
Some state agencies could incur increased costs associated with the
bill's requirement that all commercial real estate comply with
energy-efficient standards. The General Services Commission reports that
energy-efficient standards can increase costs of a construction project
by 10 to 25 percent. However, such increased costs would be expected to
be recovered over life of project through reduced utility costs.
Local Government Impact
Local governments could experience increased costs associated with
increased vehicle registration and inspection requirements, but these
costs are not expected to be significant.
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.
The requirement that county tax assessor-collectors shall insert a notice
describing the low-emissions vehicle purchase or lease incentive program
with each annual vehicle registration could result in increased copying
and mailing costs, but these costs are not anticipated to be significant.
Local government could incur increased construction costs as a result of
complying with the energy efficiency standards established in the bill.
These costs would depend on the size of a building and whether an entity
currently practices energy efficient building practices. Increased costs
in the year of construction would be expected to be recovered over the
life of a project through reduced utility bills.
According to the Comptroller, the requirements of the provisions in the
bill would result in a statewide annual loss each of the first five
years of implementation from $16.3 million to almost $25.6 million in
city sales taxes; from $6.3 million to almost $9.9 million in mass
transit authority (MTA) sales taxes; and from over $1.9 million to
approximately $3 million in county/special purpose district taxes. These
tax losses would be spread over all the cities, MTAs, and
counties/special purpose districts and would vary in each.
Source Agencies: 303 General Services Commission, 305 General Land
Office, 332 Texas Department of Housing and
Community Affairs, 405 Texas Department of Public
Safety, 582 Texas Natural Resource Conservation
Commission, 601 Texas Department of
Transportation, 720 The University of Texas
System, 802 Texas Parks and Wildlife Department,
304 Comptroller of Public Accounts
LBB Staff: JK, CL, TL, DB, NV