| TO: | Honorable Joseph Pickett, Chair, House Committee on Transportation |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2116 by Pickett (Relating to the issuance by the Texas Transportation Commission of general obligation bonds for highway improvement projects.), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2010 | ($30,000,000) |
| 2011 | ($101,872,800) |
| 2012 | ($173,748,400) |
| 2013 | ($245,620,000) |
| 2014 | ($317,492,950) |
| Fiscal Year | Probable (Cost) from General Revenue Fund 1 |
Probable Revenue Gain from New General Revenue Dedicated - 10 Percent of Bond Proceeds |
|---|---|---|
| 2010 | ($30,000,000) | $100,000,000 |
| 2011 | ($101,872,800) | $100,000,000 |
| 2012 | ($173,748,400) | $100,000,000 |
| 2013 | ($245,620,000) | $100,000,000 |
| 2014 | ($317,492,950) | $100,000,000 |
The bill would authorize the Texas Transportation Commission (TTC) to issue up to $5 billion in general obligation bonds to fund state highway improvement projects under the authority of Section 49-p, Article III of the Texas Constitution. The bill would specify that proceeds of the bonds may not be used for purposes other than the payment of costs related to the bonds; highway improvement projects defined in the bill as acquisition of highway, construction, reconstruction and major maintenance; and providing a source of funding to the Texas Transportation Revolving Fund or similar fund if authorized by statute in order to make loans for improvement projects. The bill would require the Comptroller to pay the principal and interest and any costs related to the bonds that become due, including payments under credit agreements. The bill would require 10 percent of the proceeds from the sale of the bonds to be deposited to the credit of a separate account in the general revenue fund to be used for the sole purpose of financing projects authorized by Section 222.104 of the Transportation Code.
The bill would take effect immediately upon receiving a vote of two-thirds of all members elected to each house or otherwise on September 1, 2009.
Based on the analysis of the Bond Review Board, the debt service estimates in the table above assume $1 billion in general obligation bonds for highway improvement projects would be issued each year from fiscal year 2010 through fiscal year 2014 with a 6 percent interest rate and 30-year level debt service structure. The estimated debt service payments would increase to $359.4 million in fiscal year 2015 and continue through fiscal year 2044.
This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
Based on the assumption that $1 billion in general obligation bonds would be issued each year, it is assumed that $100 million (10 percent) of the bond proceeds from each issuance would be deposited to the credit of a new dedicated account in the General Revenue Fund for the purpose of financing projects authorized under Section 222.104, Transportation Code.
Note: The $5.0 billion in general obligation bonds for highway improvement projects, authorized by voters in the November 2007 election, is assumed to be repaid with General Revenue Funds. As not self-supporting general obligation debt, these bonds are currently factored into the state's constitutional debt limit. As of the end of fiscal year 2008, the constitutional debt limit for issued and unissued debt is 4.09 percent. As specified in Article III, Section 49-j of the Texas Constitution, the Legislature may not authorize debt if the maximum annual debt service in any fiscal year on state debt payable from the General Revenue Fund exceeds 5 percent of an amount equal to the average of the amount of General Revenue Fund revenues for the three preceding fiscal years. This limitation includes amounts for authorized but unissued bonds. The Bond Review Board estimates that if a 30-year amortization schedule is used for these bonds with a 6 percent interest rate, this bill would decrease the current 4.09 percent debt limit by 0.20 percent to 3.89 percent.
| Source Agencies: | 304 Comptroller of Public Accounts, 352 Bond Review Board, 601 Department of Transportation
|
| LBB Staff: | JOB, KJG, MW, TG, MN, JJO
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