LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 78TH LEGISLATIVE REGULAR SESSION
 
April 2, 2003

TO:
Honorable Steve Ogden, Chair, Senate Committee on Infrastructure Development and Security
 
FROM:
John Keel, Director, Legislative Budget Board
 
IN RE:
SB1082 by Ogden (Relating to loans from the permanent school fund for the acquisition of rights-of-way for the state highway system.), Committee Report 1st House, Substituted



Estimated Two-year Net Impact to General Revenue Related Funds for SB1082, Committee Report 1st House, Substituted: a negative impact of ($21,510,000) through the biennium ending August 31, 2005.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2004 ($7,170,000)
2005 ($14,340,000)
2006 ($14,340,000)
2007 ($14,340,000)
2008 ($14,340,000)




Fiscal Year Probable Revenue Gain/(Loss) from
STATE HIGHWAY FUND
6 		Probable Savings/(Cost) from
STATE HIGHWAY FUND
6 		Probable Revenue Gain/(Loss) from
AVAILABLE SCHOOL FUND
2
2004 $1,000,000,000 ($1,028,800,000) ($7,170,000)
2005 ($57,600,000) ($14,340,000)
2006 ($57,600,000) ($14,340,000)
2007 ($57,600,000) ($14,340,000)
2008 ($57,600,000) ($14,340,000)

Fiscal Analysis

The bill is contingent on the passage and voter approval of Senate Joint Resolution (SJR) 43, or similar legislation which proposes a constitutional amendment authorizing the State Board of Education (SBE) to loan money to the Texas Department of Transportation (TxDOT) from the Permanent School Fund (PSF) for the purposes of acquiring rights-of-way for development of the state highway system.  The bill would establish guidelines, restrictions, and requirements governing interest rates and loan agreements made under the provisions of the bill.  The bill would require loans to be guaranteed by the first deposits made to the State Highway Fund each year. 

 

The bill would take effect on the date on which the constitutional amendment proposed by the 78th Legislature, Regular Session, authorizing the issuance of bonds for improvements to the state highway system would take effect.  If that amendment does not receive approval by the voters, this bill would have no effect.

Methodology

This analysis assumes the passage and voter approval of SJR 43, or similar legislation; that interest payments would be required on one loan of $1.0 billion for right-of-way purchases on March 1, 2004 at an interest rate of 5.76 percent, which is equal to the most recent five-year average return reported by the Comptroller of Public Accounts; that the term of the loan would extend beyond the five year period noted above; that TxDOT would spend the full amount during the first year; and that interest payments of $28.8 million in fiscal year 2004 and $57.6 million in each subsequent year would be realized from the State Highway Fund for the term of the loan.  It is also assumed that the Texas Education Agency would have invested funds from the PSF in income producing assets in the absence of making a loan to TxDOT.  Based on the current interest earnings yield of 7.19 percent, it is assumed that the Available School Fund (ASF) would realize a revenue loss equitable to the difference from the current interest earned by the PSF and the most recent five-year average return of 5.76.  It is also assumed the ASF would receive six months of the current yield in fiscal 2004 due to the estimated loan date.

 

If the SBE either did not make a loan under the provisions of the bill, or made a loan where interest payments would provide a return similar to other available investment opportunities in the market, then there would be no fiscal impact.  If the loan interest actually exceeded the return on other investments, then there would be a revenue gain to the ASF.

Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
601 Department of Transportation, 701 Central Education Agency
LBB Staff:
JK, JO, RR, RT, MW