Bill Caption

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for SB1408, As Introduced: a negative impact of ($4,309,587) 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 amend the Agriculture Code to establish a community development matching grant program for rural and small communities. The Texas Department of Agriculture (TDA) would administer the program and provide matching grants to qualified cities or counties to assist in the financing of projects listed in the bill. A city or county must be a nonentitlement area under the federal community development block grant program and be in good standing with TDA and the U.S. Department of Housing and Urban Development to receive matching grants. The bill would take immediate effect if the bill receives two-thirds the vote in each house; otherwise, the bill would take effect September 1, 2015.

Methodology

The Texas Department of Agriculture (TDA) indicates it would need 2.0 Program Specialists FTEs to implement provisions of the bill. Salaries and benefits for the new FTEs would cost of $144,985 in General Revenue each fiscal year. These 2.0 FTEs administer a grant program, which in this estimate is assumed to be $2 million each fiscal year and is shown in the table above. Other costs each fiscal year would include travel, other operating expenses,and payroll contributions. There would be one-time expenses of $8,730 in fiscal year 2016 to equip the new staff. TDA indicates there would also be minimal FTE costs for program startup in fiscal year 2016 which it is assumed may be reasonably absorbed within current resources. Also,at this time TDA has not indicated whether there are any federal funds available for this new program.  

Bill Analysis

SB 1408, if passed, would modify the Agriculture Code (Title 2) by adding a series of new sections which would establish a community development matching grant program, with the intent of assisting certain rural communities. The bill would essentially use Department of Agriculture funds to match funds from the United States Department of Housing and Urban Development. The various new sections of code that the bill would introduce will be discussed in turn.

Section 23.002 describes the activities for which grants may be used. These include trade related initiatives, community development projects, capacity building projects, renewable energy projects, restoration projects for water or wastewater infrastructure, economic development projects, environmental projects, and any other projects determined by the Texas Rural Health and Economic Development Advisory Council. (Details regarding what each of these projects entails can be found in the bill.)

Section 23.00s describes those entities which are eligible, and Section 23.004 describes the process by which eligible entities may submit applications for the aid under the bill. Section 23.005 describes the preference regime which would be put in place for multi-jurisdictional applications. The bill ends with a section on rules.

Vote Recommendation Notes

SB 1408 is a highly problematic bill. The fiscal impact is substantive, at over $4 million per biennium. More troublesome than the actual cost is the policy of using taxpayer funds to subsidize one group at the expense of another. Aside from being a mismanagement of taxpayer money, such activity would have a significant market-distorting effect. Community development is not a legitimate role of the government, especially when said development includes such projects as subsidizing renewable energy projects of questionable utility. Ultimately SB 1408 grows the size, cost, and scope of government in a way that distorts the marketplace. For these reasons we oppose SB 1408.