LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION April 30, 2017 TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB84 by Hall (Relating to a pilot project for financing certain Texas Department of Transportation projects.), As Introduced Because the bill does not specify the location or boundaries of the newly created economic impact zone, the fiscal implications cannot be determined at this time. However, the bill is expected to result in a significant loss of General Revenue depending on the type and length of the highway project selected by the Texas Department of Transportation to be financed using revenue from an economic impact zone. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The bill would amend the Transportation Code to authorize the Texas Department ofTransportation (TxDOT) to finance one non-tolled highway project under a design-build contractto be financed, including through the issuance of bonds, wholly or partly using revenue fromtransportation reinvestment zones or an economic impact zone, as established by the bill. The billwould authorize TxDOT to establish an economic impact zone that extends not more than one milefrom the centerline of the chosen project. The bill would require the Comptroller to (1) at thebeginning of each calendar year, estimate the projected annual increase in state sales tax revenuein the zone during the calendar year over the amount of state sales tax revenue in the zone duringthe calendar year in which the zone was established; (2) monthly deposit one-twelfth of thatamount to a separate account outside the treasury for the purposes of financing the project; and(3) at the end of each calendar year, transfer from the separate account to TxDOT the amountnecessary to pay the costs of the project. The bill would require Comptroller to transfer anyamounts remaining in the separate account to the General Revenue Fund. The bill would stipulatethat revenue in the separate account may only be used for project development and construction,payment of debt, and project maintenance. The bill would require financing agreements for theproject to contain provisions to allow the early retirement of debt using money from an economicimpact zone or money appropriated by the Legislature. The bill would take effect on August 31,2017.The bill would require the Comptroller to deposit state sales tax revenue from taxable spendingwithin a TxDOT-designated economic impact zone to a separate account outside the StateTreasury rather than the General Revenue Fund. Based on the analysis provided by theComptroller's office, it is assumed the implementation of an economic impact zone would result ina significant revenue loss to the General Revenue Fund and gain to a separate account outside theTreasury. State sales tax revenue from taxable spending that would occur in the general region ofa project zone would be diverted from General Revenue to a separate account outside the treasuryfor the purpose of financing the project.Because the bill does not specify the location and zone boundaries, and annual project costs andthe economic characteristics of a zone are unknown, a specific estimate of the fiscal implicationscannot be determined at this time; however, the Comptroller's office indicates the bill could resultin a loss of sales tax revenue deposited to the General Revenue Fund ranging from $2.4 million to$9.7 million in the 2020-21 biennium. This estimated range of losses would increase to $5.7million to $23.8 million in the following biennium. This revenue would be deposited instead to thenew fund outside of the treasury. Because the bill does not specify a limit on the amount of revenue that may be transferred from the General Revenue Fund to the account or an end date forthe transfers, it is assumed the fiscal implications of the bill would continue indefinitely, and growby approximately 12 percent per biennium. The table below displays the Comptroller's range of estimates. Low Estimate Low Estimate High Estimate High Estimate Fiscal Year (Loss) to General Revenue Fund Gain to New Separate Account (Loss) to General Revenue Fund Gain to New Separate Account 2018 $0 $0 $0 $0 2019 $0 $0 $0 $0 2020 ($800,000) $800,000 ($3,100,000) $3,100,000 2021 ($1,600,000) $1,600,000 ($6,600,000) $6,600,000 2022 ($2,400,000) $2,400,000 ($10,000,000) $10,000,000 2023 ($3,300,000) $3,300,000 ($13,800,000) $13,800,000 2024 ($4,300,000) $4,300,000 ($17,800,000) $17,800,000 2025 ($5,300,000) $5,300,000 ($21,900,000) $21,900,000 2026 ($6,200,000) $6,200,000 ($25,290,000) $25,290,000 2027 ($7,300,000) $7,300,000 ($30,300,000) $30,300,000 2028 ($8,100,000) $8,100,000 ($34,000,000) $34,000,000 2029 ($8,900,000) $8,900,000 ($37,000,000) $37,000,000 2030 ($9,500,000) $9,500,000 ($39,600,000) $39,600,000 2031 ($10,100,000) $10,100,000 ($42,000,000) $42,000,000 2032 ($10,700,000) $10,700,000 ($44,500,000) $44,500,000 2033 ($11,300,000) $11,300,000 ($47,200,000) $47,200,000 2034 ($12,000,000) $12,000,000 ($50,000,000) $50,000,000 2035 ($12,700,000) $12,700,000 ($53,000,000) $53,000,000 2036 ($13,500,000) $13,500,000 ($56,200,000) $56,200,000 2037 ($14,300,000) $14,300,000 ($59,600,000) $59,600,000 2038 ($15,200,000) $15,200,000 ($63,200,000) $63,200,000 2039 ($16,100,000) $16,100,000 ($67,000,000) $67,000,000 2040 ($17,100,000) $17,100,000 ($71,000,000) $71,000,000 2041 ($18,000,000) $18,000,000 ($74,600,000) $74,600,000 2042 ($18,900,000) $18,900,000 ($78,300,000) $78,300,000 2043 ($19,800,000) $19,800,000 ($82,200,000) $82,200,000 2044 ($20,800,000) $20,800,000 ($86,300,000) $86,300,000 2045 ($21,800,000) $21,800,000 ($90,600,000) $90,600,000 2046 ($22,900,000) $22,900,000 ($95,100,000) $95,100,000 2047 ($24,000,000) $24,000,000 ($99,900,000) $99,900,000 2048 ($25,200,000) $25,200,000 ($104,900,000) $104,900,000 2049 ($26,500,000) $26,500,000 ($110,100,000) $110,100,000 This analysis assumes the provisions of the bill would not provide TxDOT with the authority toissue bonds for the purposes of financing the costs of a non-tolled highway project in connectionwith an economic impact zone. The Texas Transportation Commission and TxDOT have used allof the Commission's current bonding authority for non-tolled transportation projects. Therefore,this analysis assumes TxDOT would finance the costs of a design-build contract for a non-tolledhighway project subject to the provisions of the bill by using tax revenue from the account outsidethe Treasury and the agency's existing highway planning and construction funds. It is alsoassumed TxDOT would use proceeds from the account to fund ongoing routine maintenanceexpenses after the completion of the highway project. Based on LBB's analysis of TxDOT, it isassumed any additional costs or duties associated with implementing the provisions of the billcould be absorbed within the agency's existing resources.This legislation would do one or more of the following: create or recreate a dedicated account inthe General Revenue Fund, create or recreate a special or trust fund either with or outside of theTreasury, or create a dedicated revenue source. The fund, account, or revenue dedication includedin this bill would be subject to funds consolidation review by the current Legislature. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies:304 Comptroller of Public Accounts, 601 Department of Transportation LBB Staff: UP, KK, EH, TG, SD
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION
April 30, 2017
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB84 by Hall (Relating to a pilot project for financing certain Texas Department of Transportation projects.), As Introduced
TO: Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: SB84 by Hall (Relating to a pilot project for financing certain Texas Department of Transportation projects.), As Introduced
Honorable Jane Nelson, Chair, Senate Committee on Finance
Honorable Jane Nelson, Chair, Senate Committee on Finance
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
SB84 by Hall (Relating to a pilot project for financing certain Texas Department of Transportation projects.), As Introduced
SB84 by Hall (Relating to a pilot project for financing certain Texas Department of Transportation projects.), As Introduced
Because the bill does not specify the location or boundaries of the newly created economic impact zone, the fiscal implications cannot be determined at this time. However, the bill is expected to result in a significant loss of General Revenue depending on the type and length of the highway project selected by the Texas Department of Transportation to be financed using revenue from an economic impact zone. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Because the bill does not specify the location or boundaries of the newly created economic impact zone, the fiscal implications cannot be determined at this time. However, the bill is expected to result in a significant loss of General Revenue depending on the type and length of the highway project selected by the Texas Department of Transportation to be financed using revenue from an economic impact zone. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The bill would amend the Transportation Code to authorize the Texas Department ofTransportation (TxDOT) to finance one non-tolled highway project under a design-build contractto be financed, including through the issuance of bonds, wholly or partly using revenue fromtransportation reinvestment zones or an economic impact zone, as established by the bill. The billwould authorize TxDOT to establish an economic impact zone that extends not more than one milefrom the centerline of the chosen project. The bill would require the Comptroller to (1) at thebeginning of each calendar year, estimate the projected annual increase in state sales tax revenuein the zone during the calendar year over the amount of state sales tax revenue in the zone duringthe calendar year in which the zone was established; (2) monthly deposit one-twelfth of thatamount to a separate account outside the treasury for the purposes of financing the project; and(3) at the end of each calendar year, transfer from the separate account to TxDOT the amountnecessary to pay the costs of the project. The bill would require Comptroller to transfer anyamounts remaining in the separate account to the General Revenue Fund. The bill would stipulatethat revenue in the separate account may only be used for project development and construction,payment of debt, and project maintenance. The bill would require financing agreements for theproject to contain provisions to allow the early retirement of debt using money from an economicimpact zone or money appropriated by the Legislature. The bill would take effect on August 31,2017.The bill would require the Comptroller to deposit state sales tax revenue from taxable spendingwithin a TxDOT-designated economic impact zone to a separate account outside the StateTreasury rather than the General Revenue Fund. Based on the analysis provided by theComptroller's office, it is assumed the implementation of an economic impact zone would result ina significant revenue loss to the General Revenue Fund and gain to a separate account outside theTreasury. State sales tax revenue from taxable spending that would occur in the general region ofa project zone would be diverted from General Revenue to a separate account outside the treasuryfor the purpose of financing the project.Because the bill does not specify the location and zone boundaries, and annual project costs andthe economic characteristics of a zone are unknown, a specific estimate of the fiscal implicationscannot be determined at this time; however, the Comptroller's office indicates the bill could resultin a loss of sales tax revenue deposited to the General Revenue Fund ranging from $2.4 million to$9.7 million in the 2020-21 biennium. This estimated range of losses would increase to $5.7million to $23.8 million in the following biennium. This revenue would be deposited instead to thenew fund outside of the treasury. Because the bill does not specify a limit on the amount of revenue that may be transferred from the General Revenue Fund to the account or an end date forthe transfers, it is assumed the fiscal implications of the bill would continue indefinitely, and growby approximately 12 percent per biennium. The table below displays the Comptroller's range of estimates. Low Estimate Low Estimate High Estimate High Estimate Fiscal Year (Loss) to General Revenue Fund Gain to New Separate Account (Loss) to General Revenue Fund Gain to New Separate Account 2018 $0 $0 $0 $0 2019 $0 $0 $0 $0 2020 ($800,000) $800,000 ($3,100,000) $3,100,000 2021 ($1,600,000) $1,600,000 ($6,600,000) $6,600,000 2022 ($2,400,000) $2,400,000 ($10,000,000) $10,000,000 2023 ($3,300,000) $3,300,000 ($13,800,000) $13,800,000 2024 ($4,300,000) $4,300,000 ($17,800,000) $17,800,000 2025 ($5,300,000) $5,300,000 ($21,900,000) $21,900,000 2026 ($6,200,000) $6,200,000 ($25,290,000) $25,290,000 2027 ($7,300,000) $7,300,000 ($30,300,000) $30,300,000 2028 ($8,100,000) $8,100,000 ($34,000,000) $34,000,000 2029 ($8,900,000) $8,900,000 ($37,000,000) $37,000,000 2030 ($9,500,000) $9,500,000 ($39,600,000) $39,600,000 2031 ($10,100,000) $10,100,000 ($42,000,000) $42,000,000 2032 ($10,700,000) $10,700,000 ($44,500,000) $44,500,000 2033 ($11,300,000) $11,300,000 ($47,200,000) $47,200,000 2034 ($12,000,000) $12,000,000 ($50,000,000) $50,000,000 2035 ($12,700,000) $12,700,000 ($53,000,000) $53,000,000 2036 ($13,500,000) $13,500,000 ($56,200,000) $56,200,000 2037 ($14,300,000) $14,300,000 ($59,600,000) $59,600,000 2038 ($15,200,000) $15,200,000 ($63,200,000) $63,200,000 2039 ($16,100,000) $16,100,000 ($67,000,000) $67,000,000 2040 ($17,100,000) $17,100,000 ($71,000,000) $71,000,000 2041 ($18,000,000) $18,000,000 ($74,600,000) $74,600,000 2042 ($18,900,000) $18,900,000 ($78,300,000) $78,300,000 2043 ($19,800,000) $19,800,000 ($82,200,000) $82,200,000 2044 ($20,800,000) $20,800,000 ($86,300,000) $86,300,000 2045 ($21,800,000) $21,800,000 ($90,600,000) $90,600,000 2046 ($22,900,000) $22,900,000 ($95,100,000) $95,100,000 2047 ($24,000,000) $24,000,000 ($99,900,000) $99,900,000 2048 ($25,200,000) $25,200,000 ($104,900,000) $104,900,000 2049 ($26,500,000) $26,500,000 ($110,100,000) $110,100,000 This analysis assumes the provisions of the bill would not provide TxDOT with the authority toissue bonds for the purposes of financing the costs of a non-tolled highway project in connectionwith an economic impact zone. The Texas Transportation Commission and TxDOT have used allof the Commission's current bonding authority for non-tolled transportation projects. Therefore,this analysis assumes TxDOT would finance the costs of a design-build contract for a non-tolledhighway project subject to the provisions of the bill by using tax revenue from the account outsidethe Treasury and the agency's existing highway planning and construction funds. It is alsoassumed TxDOT would use proceeds from the account to fund ongoing routine maintenanceexpenses after the completion of the highway project. Based on LBB's analysis of TxDOT, it isassumed any additional costs or duties associated with implementing the provisions of the billcould be absorbed within the agency's existing resources.This legislation would do one or more of the following: create or recreate a dedicated account inthe General Revenue Fund, create or recreate a special or trust fund either with or outside of theTreasury, or create a dedicated revenue source. The fund, account, or revenue dedication includedin this bill would be subject to funds consolidation review by the current Legislature.
Low Estimate Low Estimate High Estimate High Estimate
Fiscal Year (Loss) to General Revenue Fund Gain to New Separate Account (Loss) to General Revenue Fund Gain to New Separate Account
2018 $0 $0 $0 $0
2019 $0 $0 $0 $0
2020 ($800,000) $800,000 ($3,100,000) $3,100,000
2021 ($1,600,000) $1,600,000 ($6,600,000) $6,600,000
2022 ($2,400,000) $2,400,000 ($10,000,000) $10,000,000
2023 ($3,300,000) $3,300,000 ($13,800,000) $13,800,000
2024 ($4,300,000) $4,300,000 ($17,800,000) $17,800,000
2025 ($5,300,000) $5,300,000 ($21,900,000) $21,900,000
2026 ($6,200,000) $6,200,000 ($25,290,000) $25,290,000
2027 ($7,300,000) $7,300,000 ($30,300,000) $30,300,000
2028 ($8,100,000) $8,100,000 ($34,000,000) $34,000,000
2029 ($8,900,000) $8,900,000 ($37,000,000) $37,000,000
2030 ($9,500,000) $9,500,000 ($39,600,000) $39,600,000
2031 ($10,100,000) $10,100,000 ($42,000,000) $42,000,000
2032 ($10,700,000) $10,700,000 ($44,500,000) $44,500,000
2033 ($11,300,000) $11,300,000 ($47,200,000) $47,200,000
2034 ($12,000,000) $12,000,000 ($50,000,000) $50,000,000
2035 ($12,700,000) $12,700,000 ($53,000,000) $53,000,000
2036 ($13,500,000) $13,500,000 ($56,200,000) $56,200,000
2037 ($14,300,000) $14,300,000 ($59,600,000) $59,600,000
2038 ($15,200,000) $15,200,000 ($63,200,000) $63,200,000
2039 ($16,100,000) $16,100,000 ($67,000,000) $67,000,000
2040 ($17,100,000) $17,100,000 ($71,000,000) $71,000,000
2041 ($18,000,000) $18,000,000 ($74,600,000) $74,600,000
2042 ($18,900,000) $18,900,000 ($78,300,000) $78,300,000
2043 ($19,800,000) $19,800,000 ($82,200,000) $82,200,000
2044 ($20,800,000) $20,800,000 ($86,300,000) $86,300,000
2045 ($21,800,000) $21,800,000 ($90,600,000) $90,600,000
2046 ($22,900,000) $22,900,000 ($95,100,000) $95,100,000
2047 ($24,000,000) $24,000,000 ($99,900,000) $99,900,000
2048 ($25,200,000) $25,200,000 ($104,900,000) $104,900,000
2049 ($26,500,000) $26,500,000 ($110,100,000) $110,100,000
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts, 601 Department of Transportation
304 Comptroller of Public Accounts, 601 Department of Transportation
LBB Staff: UP, KK, EH, TG, SD
UP, KK, EH, TG, SD