Bill Caption

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for HB1269, As Introduced: a negative impact of ($906,734) through the biennium ending August 31, 2017. 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 Analysis

The bill would require the Texas Commission on Environmental Quality TCEQ to approve a compliance Supplemental Environmental Project (SEP) if the respondent is a county with a population of less than 50,000 or a local government with any territory located within a county with a population of less than 50,000. The bill also would require an "Applicable Local Government" (ALG),as defined by the bill, to spend an amount equal to the difference between the cost of the project and the assessed administrative penalty to upgrade the facility where the violation for which the penalty was assessed occurred. The bill also would exempt an ALG from the certain penalty assessments to prevent regulated entities from systematically avoiding compliance through compliance SEPs. The bill would take effect immediately upon receiving a two-thirds majority vote in both houses; otherwise, the bill would take effect September 1, 2015.

Methodology

According to the TCEQ, passage of the bill could result in a decrease in the amount of administrative penalties deposited to the General Revenue Fund from violations by ALGs. The agency reports that during fiscal year 2014, ALGs paid approximately $453,367 in penalties. This represents 4.5 percent of the approximately $10.1 million in total penalties paid. Upon passage of the bill, these penalty payments would no longer be deposited to the General Revenue Fund, but would instead be put towards compliance SEPs or facility upgrades. This estimate assumes the revenue loss during 2016 to 2020 would continue at the 2014 level. Although the bill would require certain changes to TCEQ policies,administrative costs to the agency are not expected to be significant and would be absorbed using existing agency resources. 

Bill Analysis

HB 1269, if passed, would modify Subchapter C, Chapter 7 of the Water Code, by adding a new section (7.0671) titled “Supplemental Environmental Projects Implemented by Local Governments”. Specifically, this section would allow local governments to spend funds on supplemental environmental projects in lieu of paying administrative penalties, if said penalties are administered by the Texas Commission on Environmental Quality. There are restrictions as to when this option may be used, namely that it only applies to counties with a population of less than 50,000. 

Vote Recommendation Notes

Practically speaking, HB 1269 would be a beneficial bill. It would allow municipalities to address outstanding environmental issues without merely funneling funds to the state government. There would be a negative fiscal impact on the state, but presumably a proportional positive fiscal impact on local governments.

Ultimately flexibility would be increased, future penalties avoided, and local environmental issues better managed. We would like to see this option extended to all counties though. Though it mostly pertains to government entities, we believe the greater flexibility offered by this bill would translated to less work, and therefore fits with our principle of Limited Government. We support this bill, as we did a similar bill SB 394.