LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION March 30, 2025 TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1698 by Parker (Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.), As Introduced The fiscal implications of the bill cannot be determined due to unknown amounts and timing of any civil penalties or fees collected as a result of the bill. However, there would be significant administrative costs to the Comptroller to conduct the influx of audits required by the bill. The bill would require e-cigarette manufacturers to annually submit a certification form as prescribed by the Comptroller, and a fee of $2,500 for each e-cigarette product the sell in the state. The bill lists certain requirements for manufacturers not located in this state, including filing a surety bond with the comptroller for $25,000.The bill would require the Comptroller to maintain and post on their internet website, a directory listing of all e-cigarette manufacturers and e-cigarettes that require the certification. Importers, distributors, wholesalers, and retailers would be prohibited from selling an e-cigarette that is not included in the directory.The bill would require the Comptroller to provide two annual random audits of each importer, distributor, wholesaler, and retailer who sells or distributes e-cigarettes in this state. A subsequent audit would be required within 30 days of an audit that discovers non-compliance. The Comptroller would be required to publish the results of the audits on their internet website.Those selling products not in the directory would be subject to a civil penalty ranging from $1,000 to $2,000 for each individual e-cigarette sold, depending on number of offenses. A manufacturer who causes an e-cigarette removed from or not included in the directory to be sold or offered for sale in this state would be subject to a civil penalty of $10,000 for each individual e-cigarette. The Attorney General could bring action to recover the civil penalties, as well as reasonable attorney's fees. All fees and penalties collected related to Subchapter I could only be used for the administration and enforcement of that subchapter.The bill would require the Comptroller to submit an annual report on the directory to the Legislature. The Comptroller would adopt rules necessary to implement the bill.The number of e-cigarette directory certification forms to be submitted is unknown, as is the number of potential civil and criminal offenses; therefore, the fiscal implications of the bill cannot be determined.It is assumed that any impact on state correctional populations or on the demand for state correctional resources would not be significant.The Comptroller assumes there would be administrative costs of $27,432,000 in fiscal year 2026, and $25,477,000 in each subsequent fiscal year to implement the bill. According to the Comptroller, there are 17,836 permitted e-cigarette retailers and 501 unique cigarette/tobacco product distributors permitted. When considering audit of these permitted taxpayers for annual audits, there will be total of 36,674 total audits. The Comptroller would require 200.0 Tax Auditors III to reconcile reports and conduct the influx of audits. Additionally, 2.0 Administrative Assistants IV would be needed to assist with administrative tasks such as document management and other support functions; 17.0 Tax Auditor Supervisors would be required to accommodate and supervise the additional staff; 2.0 Tax Auditor Managers will be needed to oversee operational standards, ensure auditing standards are met, and assignments are compliant; and 2.0 Account Examiners III would be needed to process the applications for and maintain the vape directory. The total cost for the additional 223.0 FTEs would be $25,477,000 annually. There would be an additional one-time start-up cost of $1,955,000 in fiscal year 2026.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 the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature. Local Government ImpactIt is assumed that any fiscal impact to units of local government associated with enforcement, prosecution, supervision, or confinement would not be significant. Source Agencies: b > td > 212 Office of Court Administration, Texas Judicial Council, 302 Office of the Attorney General, 304 Comptroller of Public Accounts LBB Staff: b > td > JMc, WP, LCO, CSmi
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
March 30, 2025
TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1698 by Parker (Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.), As Introduced
TO: Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB1698 by Parker (Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.), As Introduced
Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
Honorable Bryan Hughes, Chair, Senate Committee on State Affairs
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB1698 by Parker (Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.), As Introduced
SB1698 by Parker (Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.), As Introduced
The fiscal implications of the bill cannot be determined due to unknown amounts and timing of any civil penalties or fees collected as a result of the bill. However, there would be significant administrative costs to the Comptroller to conduct the influx of audits required by the bill.
The fiscal implications of the bill cannot be determined due to unknown amounts and timing of any civil penalties or fees collected as a result of the bill. However, there would be significant administrative costs to the Comptroller to conduct the influx of audits required by the bill.
The bill would require e-cigarette manufacturers to annually submit a certification form as prescribed by the Comptroller, and a fee of $2,500 for each e-cigarette product the sell in the state. The bill lists certain requirements for manufacturers not located in this state, including filing a surety bond with the comptroller for $25,000.The bill would require the Comptroller to maintain and post on their internet website, a directory listing of all e-cigarette manufacturers and e-cigarettes that require the certification. Importers, distributors, wholesalers, and retailers would be prohibited from selling an e-cigarette that is not included in the directory.The bill would require the Comptroller to provide two annual random audits of each importer, distributor, wholesaler, and retailer who sells or distributes e-cigarettes in this state. A subsequent audit would be required within 30 days of an audit that discovers non-compliance. The Comptroller would be required to publish the results of the audits on their internet website.Those selling products not in the directory would be subject to a civil penalty ranging from $1,000 to $2,000 for each individual e-cigarette sold, depending on number of offenses. A manufacturer who causes an e-cigarette removed from or not included in the directory to be sold or offered for sale in this state would be subject to a civil penalty of $10,000 for each individual e-cigarette. The Attorney General could bring action to recover the civil penalties, as well as reasonable attorney's fees. All fees and penalties collected related to Subchapter I could only be used for the administration and enforcement of that subchapter.The bill would require the Comptroller to submit an annual report on the directory to the Legislature. The Comptroller would adopt rules necessary to implement the bill.The number of e-cigarette directory certification forms to be submitted is unknown, as is the number of potential civil and criminal offenses; therefore, the fiscal implications of the bill cannot be determined.It is assumed that any impact on state correctional populations or on the demand for state correctional resources would not be significant.The Comptroller assumes there would be administrative costs of $27,432,000 in fiscal year 2026, and $25,477,000 in each subsequent fiscal year to implement the bill. According to the Comptroller, there are 17,836 permitted e-cigarette retailers and 501 unique cigarette/tobacco product distributors permitted. When considering audit of these permitted taxpayers for annual audits, there will be total of 36,674 total audits. The Comptroller would require 200.0 Tax Auditors III to reconcile reports and conduct the influx of audits. Additionally, 2.0 Administrative Assistants IV would be needed to assist with administrative tasks such as document management and other support functions; 17.0 Tax Auditor Supervisors would be required to accommodate and supervise the additional staff; 2.0 Tax Auditor Managers will be needed to oversee operational standards, ensure auditing standards are met, and assignments are compliant; and 2.0 Account Examiners III would be needed to process the applications for and maintain the vape directory. The total cost for the additional 223.0 FTEs would be $25,477,000 annually. There would be an additional one-time start-up cost of $1,955,000 in fiscal year 2026.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 the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
Local Government Impact
It is assumed that any fiscal impact to units of local government associated with enforcement, prosecution, supervision, or confinement would not be significant.
Source Agencies: b > td > 212 Office of Court Administration, Texas Judicial Council, 302 Office of the Attorney General, 304 Comptroller of Public Accounts
212 Office of Court Administration, Texas Judicial Council, 302 Office of the Attorney General, 304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, WP, LCO, CSmi
JMc, WP, LCO, CSmi