LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 13, 2001 TO: Honorable David Sibley, Chair, Senate Committee on Business & Commerce FROM: John Keel, Director, Legislative Budget Board IN RE: SB578 by Madla (Relating to the provision of emergency communication services.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB578, As Introduced: negative impact of $(4,174,294) 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 $(2,321,654) * * 2003 (1,852,640) * * 2004 (1,772,666) * * 2005 (1,570,716) * * 2006 (1,619,895) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Revenue Savings/(Cost) Savings/(Cost) Number of State * * Gain/(Loss) from New from General Employees from * * from New General Revenue Revenue Fund FY 2001 * * General Revenue Dedicated 0001 * * Dedicated * * 2002 $17,790,000 $(20,111,654) $(2,321,654) 2.0 * * 2003 18,092,000 (19,944,640) (1,852,640) 2.0 * * 2004 18,400,000 (20,172,666) (1,772,666) 2.0 * * 2005 18,731,000 (20,301,716) (1,570,716) 2.0 * * 2006 19,068,000 (20,687,895) (1,619,895) 2.0 * *************************************************************************** Fiscal Analysis The bill would require the Commission on State Emergency Communications to install, operate and maintain an Emergency Telephone Call Box System along roads that are part of the state highway system in cooperation with the Texas Department of Transportation (TxDOT). In addition, the bill adds a $1 fee to the annual cost of motor vehicle registration to fund the call box system. The fee would be deposited to a new General Revenue-Dedicated Account entitled Emergency Highway Telephone Call Box, and used to fund the call box program. The bill would require the Commission on State Emergency Communications to submit a report concerning call box program activities to be submitted to the Lieutenant Governor, the Speaker of the House of Representatives, and the Legislative Budget Board by November 1 of each year. The bill would also require home-rule municipalities operating independent 9-1-1 systems to join the statewide 9-1-1 program, an existing emergency communications district, or form a new emergency communications district by January 1, 2003. Finally, the bill requires the Commission on State Emergency Communications to develop and fully implement the wireless 9-1-1 improvements required by the Federal Communications Commission by September 1, 2007. With the exception of the provisions relating to home-rule municipalities operating independent 9-1-1 systems, this bill would take effect on September 1, 2001. Methodology TxDOT assumes that 39,500 call boxes would be installed between 2002 and 2017, with only 17,675 call boxes installed over the next five fiscal years. The estimated 39,500 call boxes provide a call box for every two miles of state highway. Assumptions in estimating the cost include a cost of $4,000 per call box; a 7 percent knockdown rate with a repair cost of $1,250 per knockdown; annual air-time costs of $120 per box; a 6 percent vandalism rate with a cost of $300 per vandalized unit; and, maintenance costs of $300 per unit. Total cost to implement the system is an estimated $363.9 million. TxDOT estimates annual maintenance and operation costs, when the system is fully implemented, would be approximately $27.8 million per year. The Commission on State Emergency Communications estimates that their responsibilities under this bill would require the addition of two Telecommunications Specialist staff and related operating costs. The initial cost of these positions is $99,727; $96,127 in fiscal year 2003; and, $98,041 in each fiscal year thereafter. The $1 fee per motor vehicle registration would generate between $18.0 and $19.0 million per fiscal year in additional revenue. However, this amount is not sufficient to recover the estimated cost of the call box program. As a result, it is assumed that the General Revenue Fund would fund the difference between the revenue generated by the $1 fee and the cost of the call box program. The legislation requires home-rule cities to join or form an emergency communications district, or join the statewide 9-1-1 system by January 2003. Because the home-rule cities may choose between the statewide 9-1-1 system or an emergency communications district, the impact of this requirement on state revenues is difficult to determine. According to a recent survey by the Commission on State Emergency Communications of home-rule municipalities that operate 9-1-1 systems, those home-rule municipalities responding to the survey estimated emergency and wireless service fee collections of $17.7 million for 2000. Although all home-rule cities receive a distribution of wireless service fees based on their share of the state's population, not all home-rule municipalities that operate 9-1-1 systems levy and collect the emergency service fee. According to the Commission on State Emergency Communications, some home-rule cities fund 9-1-1 system costs exclusively with local revenue sources (e.g., property and sales taxes). Local Government Impact One of the requirements in requiring home-rule cities to join or form an emergency communications district or join the statewide 9-1-1 system would be a 3 percent cap placed on the fee charged for 9-1-1 services. The cities of Plano and Dallas were contacted regarding local fiscal impact. An official with the City of Plano said that the 3 percent cap on fees would result in a revenue loss of over $100,000 per year through only their predominant carrier. There would be additional loss for the city per carrier. Anticipated gain in revenue through increased business would not offset their losses, according to the city emergency communications representative. Officials in Dallas commented when the proposals were presented in a report on interim charges by the Senate Subcommittee on State Emergency Communications that their system would experience a major revenue loss. At least four of the home-rule cities that operate a 9-1-1 system currently charge 6 percent of the base rate and one charges 8 percent. Those cities would lose half of their revenue or more. Source Agencies: 477 Commission on State Emergency Communications, 601 Texas Department of Transportation, 304 Comptroller of Public Accounts LBB Staff: JK, JO, MF, ZS, DB