LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 21, 2001 TO: Honorable David Sibley, Chair, Senate Committee on Business & Commerce FROM: John Keel, Director, Legislative Budget Board IN RE: SB1296 by Lucio (Relating to the issuance of general obligation securities to provide financial assistance to counties for roadway projects for colonias.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1296, As Introduced: 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 * *************************************************************************** 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 purchases, and utility adjustments. Methodology The only additional cost to the General Revenue Fund anticipated to result from the adoption of this legislation are annual debt service payments to retire the general obligation bonds. For the 2002-03 biennium, these debt service requirements would total $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. However, to the extent interest earnings on bond proceeds are not needed for project costs, interest earnings are used to offset General Revenue allocated for debt service payments. Annual debt service requirements were calculated assuming a 6 percent interest rate and level debt service payments over twenty (20) years. It is assumed that the bonds would include two issues: an $80.0 million issue in February 2002; and a second issue made up of the remaining $90.0 million in August 2003. The bond proceeds would fund projects that provide residents of the colonias access to existing public roads for travel to and from jobs and school. The estimated average cost of the road improvements authorized by this legislation is $85,000 per mile. Assuming 1,000 miles are constructed each fiscal year, all bond proceeds would be expended by fiscal year 2004. 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: 347 Texas Public Finance Authority, 301 Office of the Governor LBB Staff: JK, JO, MF, ZS