TO:	Honorable Tracy O. King, Chair, House Committee on Natural Resources

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HJR138 by Holland (Proposing a constitutional amendment providing for the creation of the land and water conservation fund, dedicating certain money in that fund to the conservation of, restoration of, or public access to land, water, or natural resources in this state, and providing for the transfer of certain general revenues to the economic stabilization fund, the land and water conservation fund, and the state highway fund.), As Introduced

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2024	($204,406)
2025	$0
2026	($499,126,000)
2027	($327,033,000)
2028	($340,135,000)

Fiscal Year	Probable (Cost) from General Revenue Fund 1	Probable Revenue (Loss) from General Revenue Fund 1	Probable Revenue (Loss) from Economic Stabilization Fund 599	Probable Revenue Gain from Land and Water Conservation Fund
2024	($204,406)	$0	$0	$0
2025	$0	$0	$0	$0
2026	$0	($499,126,000)	($93,738,000)	$268,519,000
2027	$0	($327,033,000)	$0	$318,027,000
2028	$0	($340,135,000)	$0	$327,033,000

Fiscal Year	Probable (Cost) from Land and Water Conservation Fund
2024	$0
2025	$0
2026	($268,519,000)
2027	($318,027,000)
2028	($327,033,000)

The joint resolution would amend Article III, Section 49-g of the Texas Constitution to reduce the transfer of General Revenue (GR) to the Economic Stabilization Fund (ESF) and instead transfer the amount of reduced ESF transfer to the newly created Land and Water Conservation Fund (LWCF). The newly allocated transfer would begin in fiscal year 2026.

Money in the LWCF could be spent without further appropriation and only for purposes related to the conservation of, restoration of, or public access to land, water, or natural resources in this state. The enabling legislation (HB 3165) would create the new Land and Water Conservation Board to manage the fund.

The proposed constitutional amendment would be submitted to the voters at an election to be held November 7, 2023. The changes to the transfers would take effect September 1, 2025.

The fiscal impacts in the above table reflect changing the allocation of the severance tax related general revenue to the ESF and State Highway Fund (SHF). Current law allocates 50% of the transfer to each fund. Under the resolution, the ESF transfer would be reduced to 46% and 4% would be transferred to the LWCF. The SHF transfer would be unaffected.

The fiscal impacts in the table below are based on the 2024-25 Biennial Revenue Estimate and the fiscal implications of SB 30, as engrossed. Supplemental appropriations as provided by SB 30 will materially affect the ESF balance, related reserves and transfers of severance tax revenue, and interest and investment earnings. Based on the 2024-2025 Biennial Revenue Estimate and subsequent adjustments in SB 30, the ESF balance in fiscal years 2027-28 is projected to be above its allowable constitutional cap, therefore the actual transfer of severance taxes to the ESF is projected to be zero, therefore the transfers to the LWCF would be reduced from GR in those years.

GR implications in fiscal year 2026 represent a loss of interest earnings that, under current law, would have been transferred to GR (as a result of the ESF reaching its constitutional cap) and reserve for transfer the LWCF in subsequent fiscal 2027. Implications to the ESF represent the net difference between transfers from the ESF and consequent changes to ESF interest.

Since the LWCF may be spent by the LWCB without further appropriation, this analysis assumes the LWCB would spend the entire transfer to the fund for purposes outlined in the resolution and costs associated with administering the fund in each fiscal year.

The cost to the state for publication of the resolution is $204,406.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION


April 4, 2023