| TO: | Honorable Kip Averitt, Chair, Senate Committee on Natural Resources |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB1785 by Averitt (Relating to the implementation of clean energy projects in this state, including certain tax exemptions and rollbacks. ), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | ($30,127,500) |
| 2009 | ($127,500) |
| 2010 | ($30,127,500) |
| 2011 | ($127,500) |
| 2012 | ($30,127,500) |
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from New General Revenue Dedicated--Ultraclean Energy Project |
Probable Savings/(Cost) from New General Revenue Dedicated--Ultraclean Energy Project |
Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
|---|---|---|---|---|
| 2008 | ($30,000,000) | $30,000,000 | ($10,000,000) | ($127,500) |
| 2009 | $0 | $0 | ($10,000,000) | ($127,500) |
| 2010 | ($30,000,000) | $30,000,000 | ($10,000,000) | ($127,500) |
| 2011 | $0 | $0 | ($10,000,000) | ($127,500) |
| 2012 | ($30,000,000) | $30,000,000 | ($10,000,000) | ($127,500) |
| Fiscal Year | Change in Number of State Employees from FY 2007 |
|---|---|
| 2008 | 2.0 |
| 2009 | 2.0 |
| 2010 | 2.0 |
| 2011 | 2.0 |
| 2012 | 2.0 |
The bill would create the Advanced Clean Energy Project Grant and Loan Program to encourage the development of advanced clean energy projects that produce reliable and affordable electric power in an environmentally protective manner. The program would be administered by the State Energy Conservation Office (SECO) located within the Office of the Comptroller. The bill would create the new General Revenue-Dedicated Advanced Clean Energy Project (ACEP) Account within the General Revenue Fund. Money in the account could only be appropriated to the SECO to award grants or make or guarantee loans under the program.
The ACEP Account would consist of bonds issued by the Texas Public Finance Authority; the first $30 million in revenues from the miscellaneious gross receipt taxes from utilities collected in any biennium; appropriations by the Legislature to the account; gifts grants and donations; and interest earned on the investment of money in the account. From the proceeds of the gross receipt tax, the SECO would be authorized to award up to $20 million in grants from the ACEP account each fiscal biennium and up to $10 million to make or guarantee loans.
The Texas Public Finance Authority (TPFA) would be directed to issue general obligation bonds. Loans made or guaranteed from the proceeds of such bonds would have to satisfy conditions in the Texas Constitution, Article III, Section 49-p.
The Texas Commission on Environmental Quality would be required to establish a permitting procedure for advanced clean energy projects. The TCEQ would also be required to establish a nonexclusive list of facilities, devices or methods for the control of air, water or land pollution. The bill would provide various forms of tax relief, abatement, exemptions, and property appraisal limitations for advanced clean energy projects.
The TCEQ and the SECO would be required to issue a joint report to the Legislature on the implementation of the advanced clean energy project grant and loan program and an assessment of the emissions profile with recommendations to increase or decerease elements of the emissions profile.
The bill would require the SECO to establish the advanced energy grant and loan program by January 1, 2008. The bill would require the TCEQ to adopt rules relating to the advanced clean energy project and rollback relief by January 1, 2008. The provision relating to the issuance of general obligation bonds by the TPFA would take effect only if the constitutional amendment proposed by the 80th Legislature, Regular Session, 2007, authorizing the issuance of general obligation bonds to provide and guarantee loans to encourage the use of carbon-free hydrogen energy were approved by the voters.
This estimate assumes that the transfers from gross receipt taxes to the newly created General Revenue-Dedicated ACEP Account would occur in the first year of each future biennium.
For the TPFA to issue the general obligation bonds required by the bill, a constitutional amendment would have to be passed and approved by voters to authorize the bonds. House Joint Resolution 93 proposes $250 million in bonds for projects encouraging the use of carbon-free energy project loans. This estimate assumes that if the resolution were approved, such bond proceeds would only be used to guarantee loans to business entities; no General Revenue is expected to be needed for debt service because loan repayments would be used to repay the debt. The total debt service on such bonds is estimated at $24.6 million for the 2008-09 biennium. If a portion of loans would default, the state could be liable for a portion of that debt service.
The above estimate includes salary and related costs for 2 FTE positions for the SECO to implement the advanced clean energy grant and loan programs. This estimate assumes such costs would be paid out of the General Revenue Fund because the bill does not provide for payment of administrative costs out of the newly created ACEP Account. This estimate assumes that the SECO would make $10 million in grant awards out of the ACEP Account per year, or 50 percent of the biennial amount designated for such purposes. This estimate assumes that the $10 million biennial allocation of ACEP Account funds for loans would not be spent; rather it would remain in the account to guarantee the loans.
The bill's exemption on the sale of electricity generated by an advanced clean energy project from gross receipts taxes would likely result in a loss in tax revenue to the state. The loss would depend on the number of advanced clean energy facilities that would become operational and the electricity sales associated with such facilities.
No significant administrative costs to the TCEQ or to the TPFA are expected as a result of the bill's passage.
| Source Agencies: | 304 Comptroller of Public Accounts, 582 Commission on Environmental Quality
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| LBB Staff: | JOB, WK, ZS, TL
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