TO: | Honorable Steve Ogden, Chair, Senate Committee on Finance |
FROM: | John S O'Brien, Director, Legislative Budget Board |
IN RE: | SB73 by Nelson (Relating to the removal of certain limitations on the debt issuance of the Cancer Prevention and Research Institute of Texas.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2012 | $782,079 |
2013 | $12,781,854 |
2014 | $30,280,192 |
2015 | $40,447,198 |
2016 | $42,728,190 |
Fiscal Year | Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Savings/(Cost) from Bond Proceed-Gen Obligat 780 |
---|---|---|
2012 | $782,079 | ($300,000,000) |
2013 | $12,781,854 | ($300,000,000) |
2014 | $30,280,192 | ($300,000,000) |
2015 | $40,447,198 | ($300,000,000) |
2016 | $42,728,190 | ($300,000,000) |
Based on information provided by TPFA, the estimated savings related to the provision in the bill which removes the escrow requirement for CPRIT debt is $13,563,933 in General Revenue in the 2012-13 biennium. The bill would allow the debt issuance to be delayed until CPRIT needs the funds to reimburse grantees. The savings estimates could change based on actual interest rates, issuance schedules, and costs of issuance which could impact the long term cost of the debt.
It is assumed that the legislature would appropriate $300,000,000 in General Obligation Bond Proceeds each fiscal year of the 2012-13 biennium and that the bond debt is issued as the funds are needed under the provisions of the bill, or on a staggered issuance schedule, for CPRIT agency operations and grant reimbursements. If the debt was issued under the provisions of the bill, the cost for the related debt service is estimated to be $1,297,373 in fiscal year 2012 and $7,770,064 in fiscal year 2013 out of General Revenue.
In comparison, assuming the legislature would appropriate $300,000,000 in General Obligation Bond Proceeds each fiscal year of the 2012-13 biennium and the debt is issued under current law, the related debt service is estimated to be $2,079,452 in fiscal year 2012 and $20,551,918 in fiscal year 2013 out of General Revenue.
Other debt service assumptions for the debt service estimates above include the issuance of taxable debt at a six percent interest rate and a 20 year level principal repayment schedule.
It is anticipated that any additional costs associated with implementation of the legislation could be absorbed within existing resources. However, it is uncertain if the language requiring certification by the Comptroller that reserve funds and capitalized interest and costs of issuance have been paid are consistent with the authority for CPRIT debt authorized by Article III, Section 67 of the Texas Constitution. Therefore, potential costs related to this provision in the bill, cannot be determined at this time.
Source Agencies: | 304 Comptroller of Public Accounts, 347 Public Finance Authority, 542 Cancer Prevention and Research Institute of Texas
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LBB Staff: | JOB, KK, MS, EP, SD
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