LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION March 27, 2011 TO: Honorable Rodney Ellis, Chair, Senate Committee on Government Organization FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB654 by Whitmire (Relating to the continuation and functions of the Texas Public Finance Authority.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB654, As Introduced: a positive impact of $13,563,933 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
March 27, 2011
TO: Honorable Rodney Ellis, Chair, Senate Committee on Government Organization FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB654 by Whitmire (Relating to the continuation and functions of the Texas Public Finance Authority.), As Introduced
TO: Honorable Rodney Ellis, Chair, Senate Committee on Government Organization
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: SB654 by Whitmire (Relating to the continuation and functions of the Texas Public Finance Authority.), As Introduced
Honorable Rodney Ellis, Chair, Senate Committee on Government Organization
Honorable Rodney Ellis, Chair, Senate Committee on Government Organization
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
SB654 by Whitmire (Relating to the continuation and functions of the Texas Public Finance Authority.), As Introduced
SB654 by Whitmire (Relating to the continuation and functions of the Texas Public Finance Authority.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB654, As Introduced: a positive impact of $13,563,933 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for SB654, As Introduced: a positive impact of $13,563,933 through the biennium ending August 31, 2013.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: 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
2012 $782,079
2013 $12,781,854
2014 $30,280,192
2015 $40,447,198
2016 $42,728,190
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromBond Proceed-Gen Obligat780 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)
Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromBond Proceed-Gen Obligat780 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)
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)
Fiscal Analysis
The bill would amend statute relating to the continuation and operation of the Texas Public Finance Authority (TPFA). TPFA is subject to the Sunset Act and will be abolished on September 1, 2011, unless continued by the Legislature. The bill would continue TPFA for 12 years and would take effect on September 1, 2011. Sections 1 and 8: The bill would continue the operation of TPFA for 12 years, until September 1, 2023. The bill would take effect September 1, 2011. Section 2: The bill would amend Chapter 1232 of the Government Code to add negotiated rulemaking and alternative dispute resolution provisions. Sections 3 and 5: The bill would amend Chapter 55 of the Education Code to remove Stephen F. Austin State University as an entity that TPFA may issue bonds for, and adds the Texas State Technical College System as an entity that TPFA is authorized to issue bonds for. In addition, the bill would authorize TPFA to issue bonds for certain institutions of higher education upon agreement with those institutions, and allow TPFA to be reimbursed for its related costs. Section 4: The bill would amend Chapter 1232 of the Government Code to allow multiyear projects funded by the Cancer Prevention and Research Institute of Texas (CPRIT) to begin after the TPFA certifies obligations in an amount sufficient to fund the project that has been authorized by TPFAs governing board and by the Bond Review Board; or after the proceeds have been deposited into the state treasury and the Comptroller has certified that the proceeds are available; and reserve funds and capitalized interest, and costs of issuance have been paid. Section 6: The bill would amend Chapter 102.257 of the Health and Safety Code to remove the requirement that funds for multiyear projects awarded by CPRIT be maintained in an escrow account and require CPRIT to distribute funds as needed. Section 7: The bill would provide that any grant awarded by CPRIT for multiyear projects before the effective date of the bill, September 1, 2011, are governed by the law in effect on the date the grant was made, and the former law is continued in effect for that purpose.
The bill would amend statute relating to the continuation and operation of the Texas Public Finance Authority (TPFA). TPFA is subject to the Sunset Act and will be abolished on September 1, 2011, unless continued by the Legislature. The bill would continue TPFA for 12 years and would take effect on September 1, 2011.
Sections 1 and 8: The bill would continue the operation of TPFA for 12 years, until September 1, 2023. The bill would take effect September 1, 2011.
Section 2: The bill would amend Chapter 1232 of the Government Code to add negotiated rulemaking and alternative dispute resolution provisions.
Sections 3 and 5: The bill would amend Chapter 55 of the Education Code to remove Stephen F. Austin State University as an entity that TPFA may issue bonds for, and adds the Texas State Technical College System as an entity that TPFA is authorized to issue bonds for. In addition, the bill would authorize TPFA to issue bonds for certain institutions of higher education upon agreement with those institutions, and allow TPFA to be reimbursed for its related costs.
Section 4: The bill would amend Chapter 1232 of the Government Code to allow multiyear projects funded by the Cancer Prevention and Research Institute of Texas (CPRIT) to begin after the TPFA certifies obligations in an amount sufficient to fund the project that has been authorized by TPFAs governing board and by the Bond Review Board; or after the proceeds have been deposited into the state treasury and the Comptroller has certified that the proceeds are available; and reserve funds and capitalized interest, and costs of issuance have been paid. Section 6: The bill would amend Chapter 102.257 of the Health and Safety Code to remove the requirement that funds for multiyear projects awarded by CPRIT be maintained in an escrow account and require CPRIT to distribute funds as needed.
Section 7: The bill would provide that any grant awarded by CPRIT for multiyear projects before the effective date of the bill, September 1, 2011, are governed by the law in effect on the date the grant was made, and the former law is continued in effect for that purpose.
Methodology
ASSUMPTIONSSections 1, 2, 3, 5, 6, and 7: It is anticipated that any additional costs associated with implementation of the legislation could be absorbed within existing resources. Sections 4: 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 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 or savings related to this provision in the bill, cannot be determined at this time.
ASSUMPTIONSSections 1, 2, 3, 5, 6, and 7: It is anticipated that any additional costs associated with implementation of the legislation could be absorbed within existing resources.
Sections 4: 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 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 or savings related to this provision in the bill, cannot be determined at this time.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 116 Sunset Advisory Commission, 347 Public Finance Authority, 542 Cancer Prevention and Research Institute of Texas, 719 Texas State Technical College System Administration, 755 Stephen F. Austin State University, 304 Comptroller of Public Accounts
116 Sunset Advisory Commission, 347 Public Finance Authority, 542 Cancer Prevention and Research Institute of Texas, 719 Texas State Technical College System Administration, 755 Stephen F. Austin State University, 304 Comptroller of Public Accounts
LBB Staff: JOB, KM, MS, EP, KK, SD
JOB, KM, MS, EP, KK, SD