LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 23, 2001 TO: Honorable Carlos F. Truan, Chair, Senate Committee on Veteran Affairs & Military Installations FROM: John Keel, Director, Legislative Budget Board IN RE: SB1815 by Truan (Relating to establishing a loan program to assist communities that may be affected by federal military base closures.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1815, As Introduced: negative impact of $(6,000,000) 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 $(6,000,000) * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Savings/(Cost) Savings/(Cost) Revenue Number of State * * from General from Gain/(Loss) Employees from * * Revenue Fund Appropriated from FY 2001 * * 0001 Receipts Appropriated * * 0666 Receipts * * 0666 * * 2002 $(6,000,000) $(78,262) $78,262 1.5 * * 2003 0 (1,270,862) 1,270,862 1.5 * * 2004 0 (78,262) 78,262 1.5 * * 2005 0 (1,270,862) 1,270,862 1.5 * * 2006 0 (78,262) 78,262 1.5 * *************************************************************************** Fiscal Analysis The bill amends Sections 486, Government Code to authorize a revolving loan program to communities potentially affected by defense base reduction and limits eligibility for the revolving loans from the program. According to the Department of Economic Development (TDED), $6 million in General Revenue would be needed for implementation of the bill. TDED anticipates that expenses arising from the administration of the bill would be covered in full by Appropriated Receipts in the form of interest earnings and fees authorized by rules established to administer the program. Expenses to administer the program are anticipated to be $78,262 in FY 2002 and $70, 862 in FY 2003 for a total of $149,124 for the biennium. Expenses for future years are anticipated to be $72,862 in FY 2004, $71,262 in FY 2005 and $70,462 in FY 2006. Loan repayments will be redistributed as new loans throughout the life of the program. In order to carry out the responsibilities of the program TDED estimates that at least one and one-half additional FTE s would be required in the administering agency. The bill would take effect September 1, 2001. Methodology The TDED anticipates that expenses arising from the administration of the bill would be covered by interest earnings and fees authorized by rules established to administer the program. It is assumed that the revolving loan program established by the bill would be financially self-sustaining after the initial appropriation. Expenses to administer the program are anticipated to be $6,078,262 in FY 2002 with unexpended balance authority and $70,862 in FY 2003 for a total of $6,149,124 Expenses for future years are anticipated to be $72,862 in FY 2004, $71,262 in FY 2005 and $70,462 in FY 2006. The program established by the bill provides for financing in the form of a revolving loan to eligible communities. Loans would be provided under the program to assist in developing infrastructure within eligible communities. The terms of the loans extended would be provided for through the rule-making process. Local Government Impact Units of local government that qualify for loans under this bill would experience an increase in revenue that is proportionate to the negative impact on general revenue funds experienced by TDED. Source Agencies: 480 Department of Economic Development LBB Staff: JK, RB, RT, ER, DW