| TO: | Honorable Allan Ritter, Chair, House Committee on Economic Development |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | HB1711 by Alonzo (Relating to funding of economic development and job training in certain counties with a high unemployment rate.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | ($52,260,000) |
| 2007 | ($52,300,000) |
| 2008 | ($52,300,000) |
| 2009 | ($52,300,000) |
| 2010 | ($52,300,000) |
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from FOUNDATION SCHOOL FUND 193 |
Probable (Cost) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from TELECOMMUNICATIONS INFRA FUND 8345 |
|---|---|---|---|---|
| 2006 | $52,260,000 | ($52,260,000) | ($52,260,000) | $24,300,000 |
| 2007 | $52,300,000 | ($52,300,000) | ($52,300,000) | $700,000 |
| 2008 | $52,300,000 | ($52,300,000) | ($52,300,000) | $0 |
| 2009 | $52,300,000 | ($52,300,000) | ($52,300,000) | $0 |
| 2010 | $52,300,000 | ($52,300,000) | ($52,300,000) | $0 |
The bill requires that at least 5 percent of net state lottery proceeds, the Texas Enterprise Fund, the Skills Development Fund, and grants by the Telecommunications Infrastructure Fund (TIF) Board be awarded to recipients located in Texas counties that are adjacent the Mexican border and that have an average unemployment rate of more than 10 percent for the past two consecutive years.
Section 1: Under current law, 100 percent of net lottery proceeds are dedicated to the Foundation School Fund (FSF) and used to finance state aid to public schools. The diversion of 5 percent of these funds would reduce available lottery revenue to the FSF by an estimated $52.26 million in 2006 and an estimated $52.30 million in 2007 and beyond, while increasing revenue to General Revenue Fund 1 by the same amount for the purposes established by the bill. Under the assumption that the legislature would fund public schools at the statutory formula funding levels and not prorate payments due to the loss of revenue, Section 1 of the bill would cost $52.26 million in 2006 and $52.30 million in 2007 and beyond in General Revenue to make the FSF whole from the loss of lottery revenue.
Section 2 and Section 3 of the bill direct appropriated amounts from the Texas Enterprise Fund and the Skills Development Fund to be awarded to certain recipients. Therefore, no significant fiscal impact to the State is anticipated.
Section 5 repeals the sunset provision on the Telecommunications Infrastructure Fund, allowing the Fund to collect assessment revenue beyond the end of fiscal year 2005. Collections would remain limited to $1.75 billion, and it is estimated that the Fund would collect $23.6 million in fiscal year 2006 before reaching that limit. It is also estimated that the Fund would earn interest on that revenue in fiscal years 2006 and 2007 in the amount of $700,000 in each year.
According to the Office of the Governor, four Texas counties meet the requirements of the bill: Hidalgo, Maverick, Presidio, and Starr. The bill would result in a positive fiscal impact to local governmental entities in these four counties that apply for, are awarded, and accept a loan, grant, or other monetary award from the Texas Enterprise Fund, the Skills Development Fund, the state lottery fund, or the telecommunications infrastructure fund.
Section 4 dedicates 5 percent of grants and loans made by the TIF Board to counties adjacent to the Mexican border. However, the TIF Board is defunct and no grants and loans are being made from the Fund, so this provision would have no local impact.
| Source Agencies: | 301 Office of the Governor, 362 Texas Lottery Commission, 473 Public Utility Commission of Texas, 701 Central Education Agency, 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, JRO, JGM, SMi, KJG
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