LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 80TH LEGISLATIVE REGULAR SESSION

May 1, 2007

TO:	Honorable Bill Callegari, Chair, House Committee on Government Reform
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	HB970 by Christian (Relating to the adoption of state agency rules that impose certain costs on local governments or persons.), Committee Report 1st House, Substituted

The impact to state agencies would vary, depending on what rules may or may not be authorized by the legislature to be imposed. State agencies might have to assume responsibility for what otherwise may have been required of local governments, and therefore any associated costs.

The bill would add Section 2001.042 to the Government Code to prohibit a state agency from adopting a rule for which a fiscal note estimates there would be additional costs to local governments as a result of enforcing or administering the rule or if a fiscal note were to indicate there would likely be economic costs to persons required to comply with the rule. However, if the legislature by law expressly authorizes the adoption of the rule with the costs, the agency may adopt the rules. In addition, rules adopted by the School Land Board or the land commissioner for the enforcement or implementation of a provision of the Natural Resources Code relating to the management of state-owned land or the protection of the state's natural resources would be exempt from the requirements of the bill.

The bill would apply only to rules proposed by a state agency and for which notice has been provided on or after December 1, 2007.

The bill would take effect September 1, 2007.

The impact to state agencies would vary, depending on what rules may or may not be authorized by the legislature to be imposed. State agencies might have to assume responsibility for what otherwise may have been required of local governments, and therefore any associated costs; however, for most agencies it is anticipated that the agencies would make adjustments whenever possible so that it could absorb costs using existing resources.

Three of the agencies with rule-making authority that submitted a fiscal analysis assume the delay in adopting rules until legislative authority may be obtained could result in losses: Texas Department of Transportation (TxDOT), Texas Commission on Environmental Quality (TCEQ), and the Health and Human Services Commission (HHSC).

TxDOT reports that there could be a significant negative fiscal impact in delaying projects that could otherwise be implemented cost-effectively if rules were not to be delayed. Areas of concern for the agency include local participation requirements, motor carrier regulations, billboards, and possibly toll roads.

TCEQ reports that prohibiting rule-making without legislative approval would hinder the agency's ability to enforce compliance with federal or state mandates, particularly those related to air pollution. The agency reports that it would not be able to collect revenue that would support activity for mandated or needed rule actions. The inability to collect revenue to cover costs could hinder the agency's ability to comply with federal or state mandates.

HHSC reports that the proposed change in statute would hinder the agency's ability to make programmatic changes.

Local Government Impact

Local governments would be protected from new or additional costs, although to what extent would depend on what a state agency may have otherwise required of the local governments and what rules may still be imposed because of legislative approval.

Source Agencies:

582 Commission on Environmental Quality, 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 320 Texas Workforce Commission, 473 Public Utility Commission of Texas, 529 Health and Human Services Commission, 551 Department of Agriculture, 601 Department of Transportation, 701 Central Education Agency

LBB Staff:

JOB, MN, JB, DB