LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 16, 2001
  
  
          TO:  Honorable Florence Shapiro, Chair, Senate Committee on
               State Affairs
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB407  by Cain (Relating to the authority of a public
               entity to borrow funds from the state infrastructure
               bank.), As Introduced
  
**************************************************************************
*  No significant fiscal implication to the State is anticipated.        *
**************************************************************************
  
The bill would amend Chapter 222 of the Transportation Code to allow a
public entity to borrow directly from the State Infrastructure Bank to
construct, maintain, or finance a qualified project. The bill would take
effect immediately if it receives the requisite of two-thirds majority
votes of each house of the Legislature.  Otherwise, it would take effect
September 1, 2001. 

The bill would allow public entities, including municipalities, counties,
districts, authorities, agencies, departments, boards, or commissions to
borrow directly from the Texas Department of Transportation's State
Infrastructure Bank for qualified projects.
  
Local Government Impact
  
Local public entities spend time implementing the tax note approach and
incur costs for bond counsel and financial advisors that would not be
otherwise required.  According to the Texas Bond Review Board, issuance
costs primarily consist of underwriters fees, bond counsel fees,
financial advisor fees, rating agency fees, and printing costs.  These
costs average $3.21 per $1,000 issued in 2000.  Generally, the larger the
bond issue, the greater the issuance costs.

Local government entities that choose to utilize the State Infrastructure
Bank because of direct borrowing would incur a cost savings from reduced
issuance costs.  The amount of savings would vary based on the amount of
each loan and the number of projects for which money is borrowed.
  
  
Source Agencies:   601   Texas Department of Transportation, 304
                   Comptroller of Public Accounts
LBB Staff:         JK, RB, MW, DB