LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 8, 2001 TO: Honorable Kip Averitt, Chair, House Committee on Financial Institutions FROM: John Keel, Director, Legislative Budget Board IN RE: SB1296 by Lucio (Relating to the issuance of general obligation bonds and notes to provide financial assistance to counties for roadway projects to serve border colonias.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1296, Committee Report 2nd House, Substituted: negative impact * * of $(7,480,000) 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 $0 * * 2003 (7,480,000) * * 2004 (12,753,200) * * 2005 (15,394,500) * * 2006 (15,400,400) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Savings/(Cost) Revenue Savings/(Cost) Number of State * * from General Gain/(Loss) from Bond Employees from * * Revenue Fund from Bond Proceeds FY 2001 * * 0001 Proceeds 0854 * * 0854 * * 2002 $0 $0 $0 0.0 * * 2003 (7,480,000) 42,500,000 (42,500,000) 0.0 * * 2004 (12,753,200) 85,000,000 (85,000,000) 0.0 * * 2005 (15,394,500) 47,500,000 (47,500,000) 0.0 * * 2006 (15,400,400) 0 0 0.0 * *************************************************************************** Technology Impact None. Fiscal Analysis Assuming the voters of Texas adopt the related constitutional amendment in November 2001, this bill would authorize the Texas Public Finance Authority to issue $175.0 million in general obligation bonds for county roads to improve access to colonias. Such funds could be used for construction, right-of-way acquisitions and utility adjustments. The bill as substituted directs the Office of the Governor to determine the number of bond issues, the amount and time of each issue. TxDOT is responsible for administering the use of the bond proceeds and determining in cooperation with the Office of the Governor the criteria for selecting the counties and colonias roadway projects eligible for bond funding. TxDOT is also required to work in cooperation with the Secretary of State and the Texas A & M University Center for Housing and Urban Development in the administration of this program. Methodology The only significant additional cost anticipated to result from the adoption of this legislation is annual debt service payments to retire the general obligation bonds. For the 2002-03 biennium, these debt service requirements total an estimated $7.4 million. Beginning in fiscal year 2004, annual debt service requirements increase to $15.4 million. Generally, debt service requirements are paid for out of the General Revenue Fund. Annual debt service payments were calculated assuming a 6 percent interest rate and level debt service payments over twenty (20) years. It is assumed that there would be two bond issues: an $80.0 million issue in February 2002; and a second issue of the remaining $90.0 million in August 2003. Assuming 1,000 miles are constructed each fiscal year and an average construction cost per mile of $85,000, all bond proceeds would be expended by fiscal year 2004. Both TxDOT and the Texas A & M University Center for Housing and Urban Development anticipate additional administrative costs as a result of this legislation. However, it appears that both agencies could absorb any additional administrative costs within existing resources. Local Government Impact Assuming the constitutional amendment is adopted by the voters in November 2001, the proposed bill would result in bond funds being available to counties to construct, improve or develop roads in, around or near colonias. The bond proceeds would be distributed to approximately 22 counties within the El Paso, Laredo and Pharr highway districts. It is anticipated that participating counties would provide in-kind matching contributions of 10 to 15 percent. These matching contributions would likely take the form of labor provided by county road crews. Source Agencies: 301 Office of the Governor, 710 The Texas A&M University System LBB Staff: JK, JO, ZS