Honorable Robert Nichols, Chair, Senate Committee on Transportation
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
SB87 by Hall (Relating to the repeal of the driver responsibility program and the vehicle safety inspection program for certain vehicles; imposing replacement fees.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB87, As Introduced: a negative impact of ($115,941,875) through the biennium ending August 31, 2021. The bill would have a negative impact on the General Revenue-Dedicated Clean Air Account No. 151 of ($8,106,000), a negative impact on the Texas Mobility Fund No. 365 of ($8,503,000), a positive impact on the General Revenue-Dedicated Emissions Reduction Plan Account No. 5071 of $10,511,000, and a positive impact on the General Revenue-Dedicated Designated Trauma Facility and Emergency Medical Services Account No. 5111 of $114,727,000 through the biennium.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020
($46,122,085)
2021
($69,819,790)
2022
($69,903,129)
2023
($69,819,790)
2024
($69,903,129)
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from General Revenue Fund (Vendor Compensation) 1
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Savings/(Cost) from Clean Air Account 151
2020
$9,519,701
($7,622,391)
($48,019,395)
($800,000)
2021
$14,279,551
($11,433,587)
($72,665,754)
$0
2022
$14,279,551
($11,433,587)
($72,749,093)
$0
2023
$14,279,551
($11,433,587)
($72,665,754)
$0
2024
$14,279,551
($11,433,587)
($72,749,093)
$0
Fiscal Year
Probable Revenue Gain/(Loss) from Clean Air Account 151
Probable Revenue Gain/(Loss) from Texas Mobility Fund 365
Probable Revenue Gain/(Loss) from Texas Emissions Reduction Plan 5071
Probable Revenue Gain/(Loss) from Trauma Facility And Ems 5111
2020
($3,194,000)
($5,590,000)
$4,179,000
$44,797,000
2021
($4,912,000)
($2,913,000)
$6,332,000
$69,930,000
2022
($4,986,000)
($51,000)
$6,332,000
$72,017,000
2023
($5,061,000)
($86,000)
$6,332,000
$74,135,000
2024
($5,136,000)
($86,000)
$6,332,000
$76,284,000
Fiscal Year
Change in Number of State Employees from FY 2019
2020
(43.0)
2021
(43.0)
2022
(43.0)
2023
(43.0)
2024
(43.0)
Fiscal Analysis
The bill would amend the Code of Criminal Procedure, the Education Code, the Government Code, the Health and Safety Code, and the Transportation Code as they relate to the repeal of the Driver Responsibility Program (DRP) and the vehicle safety inspection program for certain vehicles, and the imposition of certain fees.
The bill would repeal DRP and eliminate the surcharges assessed on drivers convicted of certain driving offenses. The bill would forgive surcharges assessed on or before the effective date of the bill.
The bill would amend the Health and Safety Code to remove provisions that allocate DRP surcharge revenue to the General Revenue-Dedicated Designated Trauma Facility and Emergency Medical Services Account No. 5111 (Account 5111) and the General Revenue Fund. The bill would remove references to the allocation of DRP surcharge and state traffic fine revenue to the Texas Mobility Fund No. 365 (TMF) that would occur if combined deposits to the General Revenue Fund from these sources reach $250 million in a fiscal year.
The bill would amend the Health and Safety Code to eliminate the requirement that $2 of inspection fee collections be deposited to the General Revenue-Dedicated Clean Air Account No. 151 (Clean Air Account).
The bill would amend the Transportation Code to allow collection of the $10 Texas Emission Reduction Plan (TERP) fee for commercial vehicles to continue until the expiration of the TERP program at the end of the biennium in which Texas attains the national ambient air quality standards for ground-level ozone. The fee expires August 31, 2019 under current law. There would be a four-month lapse in fee collection, as the bill's effective date is January 1, 2020.
The bill would require the Texas Department of Motor Vehicles (TxDMV) or the county tax assessor-collector, if applicable, to assess additional annual fees, due at the time of registration or renewal, to replace DRP surcharges and vehicle safety inspection fees.
The bill would repeal sections of the Transportation Code that list various vehicles and equipment subject to inspection, require a general annual inspection, and require an initial two-year inspection for a new vehicle. The bill would also repeal sections regarding the vehicle inspection and maintenance program and the certification of certain inspection stations, and sections which require and set inspection fees for noncommercial motor vehicles.
This bill would take effect January 1, 2020.
Note: The bill would reduce, rescind, or repeal the dedication of a specific source or portion of revenue dedicated to the Texas Mobility Fund. Article 3, Section 49-k, of the Texas Constitution, specifies that while money in the Texas Mobility Fund is pledged for the payment of any outstanding debt obligations, the Legislature may not reduce, rescind, or repeal the dedication of a specific source or portion of revenue dedicated to the Texas Mobility Fund unless the Legislature by law dedicates a substitute or different source of revenue that is projected by CPA to be of a value equal to or greater than the source or amount being reduced, rescinded, or repealed.
Note: 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 in, with, or outside of the Treasury, or create a dedicated revenue source. Legislative policy, implemented as Government Code 403.095, consolidated special funds (except those affected by constitutional, federal, or other restrictions) into the General Revenue Fund as of August 31, 1993 and eliminated all applicable statutory revenue dedications as of August 31, 1995. Each subsequent Legislature has reviewed bills that affect funds consolidation. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
Methodology
The repeal of DRP would eliminate surcharge assessments and the associated revenue, 50.5 percent of which is currently allocated to General Revenue, and 49.5 percent of which is allocated to Account 5111. According to the Comptroller of Public Accounts (CPA), the repeal of DRP surcharges would decrease revenue to General Revenue by $47.5 million in fiscal year 2020 (due to the effective date of the legislation being January 1, 2020), and $72.0 million in subsequent fiscal years. The repeal of DRP would decrease revenue to Account 5111 by approximately $46.1 million in fiscal year 2020 and $69.2 million in future fiscal years.
According to CPA and the Texas Department of Transportation (TxDOT), the provision eliminating the potential for diversion of DRP and state traffic fine revenue from General Revenue to the TMF would have no fiscal impact, as the conditions required for that allocation have never been met.
The repeal of DRP would also eliminate DRP administration costs. According to LBB analysis, the total cost of administering DRP is an estimated $14.3 million per year or $28.6 million each biennium, including Department of Public Safety (DPS) program staff and operating costs ($2.8 million each fiscal year and 43.0 full-time equivalent positions), and compensation (an estimated $11.4 million each fiscal year) to the vendor that, among other things, collects the surcharges. However, the cost savings of the $11.4 million in vendor compensation is also considered a General Revenue loss, as that revenue is generated by additional vendor fees and is remitted to CPA before it is distributed to the vendor. The bill has a start date of January 1, 2020, so cost savings and revenue loss would be reduced by one-third in fiscal year 2020.
DPS estimates that the elimination of the mandatory annual vehicle safety inspection program for certain vehicles would reduce license applications for vehicle inspection stations and inspectors. Of the 12,187 licensed vehicle inspection stations, 54 percent (6,527) conduct safety-only operations and would no longer continue operations. 27,744 licensed safety inspectors would no longer need licenses because the stations are no longer operational. LBB analysis of DPS estimates that the elimination of station and inspector license fees would lead to annual General Revenue loss of $499,395 in fiscal year 2020, $665,754 in fiscal year 2021, $749,093 in fiscal year 2022, $665,754 in fiscal year 2023, and $749,093 in fiscal year 2024.
The bill would repeal Transportation Code, Section 548.501, which set an annual inspection fee of $12.50 for noncommercial motor vehicles and $5.75 for mopeds, of which $5.50 is remitted to the state. $3.50 of state revenue is deposited to the TMF and $2 is deposited to the Clean Air Account. The bill would also repeal Section 548.503, which sets a two-year inspection fee of no less than $21.75 for new noncommercial motor vehicles, of which $14.75 is remitted to the state. $12.75 is deposited to the TMF and $2 is deposited to the Clean Air Account.
The bill would establish annual inspection program replacement and trauma care fees, due at the time of registration or renewal. Under the bill's amended Section 548.510, the fee for new passenger cars or light trucks would be $9.25, the fee for mopeds would be $12.75, and the fee for other noncommercial vehicles would be $12.50. The annual fee for trailers, semitrailers, pole trailers, and mobile homes would be $7.50. These vehicles currently pay a fee of $7.50 at the time of registration, as they are not subject to vehicle safety inspections.
The $9.25 annual new passenger car or light truck fee would be deposited to the credit of the TMF. $3.50 of the annual fee assessed for trailers and other listed vehicles would be deposited to the TMF, $2 would be deposited to Account 5111, and the remaining $2 would be deposited to the credit of the Clean Air Account. $3.50 of the annual fee for mopeds would be deposited to the TMF, $7.25 to Account 5111, and $2 to the credit of the Clean Air Account. $3.50 of the annual fee for other noncommercial vehicles would be deposited to the credit of Account 5111, and $2 to the Clean Air Account.
Based on estimates from CPA and DPS, the elimination of DRP assessments and the reduction in license applications for vehicle inspection stations and inspectors would lead to a net revenue loss in General Revenue of $48.0 million in fiscal year 2020, and $72.7 million in subsequent fiscal years. This loss does not include the loss to General Revenue in vendor compensation of $7.6 million in fiscal year 2020, and $11.4 million in subsequent fiscal years. These losses would be partially offset by savings from eliminating DRP administrative costs of $9.5 million in fiscal year 2020, and $14.3 million in future fiscal years.
CPA estimates that the elimination of vehicle safety inspection fees for certain vehicles and the allocation of new replacement fees would lead to a net revenue loss to the TMF of $5.6 million in fiscal year 2020, $2.9 million in fiscal year 2021, $51,000 in fiscal year 2022, and $86,000 in fiscal years 2023 and 2024. The bill would also result in a net revenue loss to the Clean Air Account of $3.2 million in fiscal year 2020, $4.9 million in fiscal year 2021, $5.0 million in fiscal year 2022, and $5.1 million in fiscal years 2023 and 2024.
The bill would reinstate the $10 commercial motor vehicle fee for the General Revenue-Dedicated Emissions Reduction Plan Account No. 5071 (TERP Fund), which was set to expire under current law on August 31, 2019. CPA estimates that extending the $10 fee would have a net revenue gain of $4.2 million in fiscal year 2020 and $6.3 million in subsequent fiscal years for the TERP Fund.
According to CPA, the elimination of DRP assessments and the allocation of new replacement fees would increase net revenue to Account 5111 by $44.8 million in fiscal year 2020, $69.9 million fiscal year 2021, $72.0 million in fiscal year 2022, $74.1 million in fiscal year 2023, and $76.3 million in fiscal year 2024.
Based on information provided by the Texas Commission on Environmental Quality (TCEQ), this estimate assumes TCEQ would be required to modify vehicle emissions analyzer software to align the safety inspection sequence to the items of inspection as provided in the bill for an estimated one-time cost of $800,000 in fiscal year 2020.
DPS indicates that they would require contractors to provide programming support to modify the Driver License System and discontinue the DRP assessment of surcharges. LBB analysis of DPS indicates that these costs could be absorbed within existing resources.
TxDMV anticipates one-time information technology programming costs to implement the bill. LBB analysis of TxDMV indicates that these costs could be absorbed within agency resources.
Technology
Based on information provided by TCEQ, this estimate assumes TCEQ would be required to modify vehicle emissions analyzer software to align the safety inspection sequence to the items of inspection as provided in the bill for an estimated one-time cost of $800,000 in fiscal year 2020.
DPS indicates that they would require contractors to provide programming support to modify the Driver License System and discontinue the DRP assessment of surcharges. LBB analysis of DPS indicates that these costs could be absorbed within existing resources.
TxDMV anticipates one-time information technology programming costs to implement the bill. LBB analysis of TxDMV indicates that these costs could be absorbed within agency resources.
Local Government Impact
TCEQ estimates that the bill would result in a cost savings for local and other governmental entities by eliminating the requirement for annual safety inspections of their fleet vehicles and the associated fees charged by inspection stations to conduct the safety inspections.
The Texas Association of Counties indicates that the fiscal implications of the bill for counties cannot be determined at this time.
Source Agencies:
304 Comptroller of Public Accounts, 405 Department of Public Safety, 452 Department of Licensing and Regulation, 537 State Health Services, Department of, 582 Commission on Environmental Quality, 601 Department of Transportation, 608 Department of Motor Vehicles