| TO: | Honorable Bill Ratliff, Chair, Senate Committee on State Affairs |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | SB654 by Shapleigh (Relating to access to capital and other funds by individuals and new businesses in this state.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | $0 |
| 2005 | ($40,000,000) |
| 2006 | ($20,000,000) |
| 2007 | ($20,000,000) |
| 2008 | ($20,000,000) |
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from FOUNDATION SCHOOL FUND 193 |
Probable Revenue Gain from GENERAL REVENUE FUND 1 |
Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
|---|---|---|---|---|
| 2004 | $0 | $0 | $137,152 | ($137,152) |
| 2005 | ($30,000,000) | ($10,000,000) | $259,305 | ($259,305) |
| 2006 | ($15,000,000) | ($5,000,000) | $259,305 | ($259,305) |
| 2007 | ($15,000,000) | ($5,000,000) | $259,305 | ($259,305) |
| 2008 | ($15,000,000) | ($5,000,000) | $259,305 | ($259,305) |
| Fiscal Year | Change in Number of State Employees from FY 2003 |
|---|---|
| 2004 | 1.5 |
| 2005 | 3.0 |
| 2006 | 3.0 |
| 2007 | 3.0 |
| 2008 | 3.0 |
The provisions of the bill would require the Finance Commission (FC), Department of Economic Development (TDED), and the Department of Housing and Community Affairs (TDHCA) to file a biennial strategic plan for access to capital in unserved and underserved areas of the state no later than November 1, 2004. Only after that date would a corporation be able to develop and implement a community reinvestment plan. The Finance Commission would then have to certify that the corporation met each of its plan targets for the corporation to be eligible to receive a franchise tax credit. The maximum credit available to an eligible corporation would be the corporation's qualifying expenditures up to a limit of 15 percent of the corporation's tax liability. Qualifying expenditures would include (1) lending money to borrowers in underserved areas of the state; (2) investing in or with nonprofit lending institutions for lending activities in underserved areas in the state; and (3) investing in or with community development financial institutions. A corporation could not carry forward or assign unused credits; the franchise tax credit would apply to reports due on or after January 1, 2004 and to expenditures made on or after January 1, 2004.
In addition, the Finance Commission, in consultation with TDED and TDHCA, would assist lenders in identifying and setting community reinvestment targets for the submission of community reinvestment plans. The Finance Commission would adopt policies and rules as necessary, including policies and rules that provide lenders with specific guidelines and procedures for the adoption and submission to the Commission of community reinvestment plans, including a reasonable time frame for implementation of the plan; and create a certification process for lenders that meets each of the targets set under their respective plan. The Finance Commission may consult with and request relevant information from the TDED and TDHCA. The provisions of the bill require that the Finance Commission adopt rules not later than November 1, 2003.
According to the Comptroller, assuming it did certify the availability of funds following adjournment sine die of the 78th Legislature, Regular Session, and further assuming that the maximum allowable investment was made and credit claims filed in calendar 2004, the first credits claimed would occur in fiscal 2005, in the aggregate amount of $40 million. Each year thereafter through the projection period, the losses would be $20 million.
According to information provided from the Finance Commission, the duties and responsibilities would require three FTEs and approximately $260,000 each full year in associated costs starting in fiscal year 2005. Costs for fiscal year 2004 are estimated to occur after November 1, 2003 and only for six months. It is assumed that any costs incurred by the Finance Commission would be offset by an equal amount of revenue.
Based on the analysis of the Comptroller, TDED, TDHCA, Office of Consumer Credit Commissioner, duties and responsibilities associated with implementing the provisions of the bill could be accomplished by utilizing existing resources.
The bill takes effect September 1, 2003.
| Source Agencies: | 304 Comptroller of Public Accounts, 307 Secretary of State, 332 Department of Housing and Community Affairs, 451 Department of Banking, 466 Office of Consumer Credit Commissioner, 480 Texas Department of Economic Development
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| LBB Staff: | JK, RR, RT, DE
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