TO:	Honorable Lyle Larson, Chair, House Committee on Natural Resources
FROM:	John McGeady, Assistant Director     Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:	HB13 by Phelan (Relating to flood planning, mitigation, and infrastructure projects; making an appropriation.), As Introduced

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020	($11,110,827)
2021	($39,239,913)
2022	($46,222,993)
2023	($46,235,387)
2024	($46,232,279)

All Funds, Five-Year Impact:

Fiscal Analysis

The bill would amend the Water Code regarding to create the Flood Infrastructure Fund (FIF). The fund would be held in the state treasury outside of general revenue and would be administered by the Texas Water Development Board (TWDB), without further legislative appropriation, to assist in the financing, through loans and grants, of drainage, flood control, and flood mitigation projects. The fund would consist of appropriations from the Legislature, proceeds of general obligation bonds, repayments from loans made from the fun, and proceeds from the sale of bonds or other obligations held in the fund.  The bill would authorize river authorities to engage in collaborative planning to secure funding from the fund.

The bill would require TWDB to develop a comprehensive statewide flood plan that incorporates regional flood plans by September 1, 2024, and every fifth year thereafter. The bill would also require TWDB to create dam repair and maintenance report that must be updated every ten years. The bill would require TWDB to act as an information clearinghouse for state and federal funding programs for flood planning, mitigation, and control.

The bill would broaden the type of contracts that can be funded through the Research and Planning program to include work related to planning for flood protection. The bill would provide for higher consideration for applications for financial assistance from counties with a median household income not greater than 85 percent of the state's median household income.

The bill would appropriate $3,260,000,000 from the Economic Stabilization Fund No. 599 (ESF) to the FIF if the bill was approved by a two-thirds vote of the members present in each house of the Legislature. In addition, the bill would take effect on the January 1, 2020, only if the constitutional amendment adding Section 49-d-14, Article III, Texas Constitution, creating the Flood Infrastructure Fund, is approved by voters. If the amendment is not approved by voters, the bill would not take effect.

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 with or outside of 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.

Methodology

This analysis assumes that $3,260,000,000 would be appropriated from the ESF to the new FIF, subsequent to the bill receiving a two-thirds majority vote in both house of the Legislature. This analysis also assumes the constitutional amendment adding Section 49-d-14, Article III, Texas Constitution, creating the Flood Infrastructure Fund, would be approved by voters. Based on information provided by the Comptroller of Public Accounts, the transfer of funds from the ESF to the FIF would result in reduced earnings and investment on the ESF cash balance each year beginning in 2020. In addition, TWDB estimates that one-fifth, or $652.0 million, would be spent each year during 2020-24, out of the FIF for the purposes of the fund.

The bill would establish five new responsibilities for TWDB: administering the FIF, reviewing applications for financial assistance from the fund, compiling a state flood plan, preparing a plan for the repair and maintenance of dams, and acting as an information clearinghouse for information related to state and federal flood funding programs that exist outside TWDB. In order to support the new responsibilities for the FIF, TWDB would need to undergo regular financial capacity modeling, develop new accounting processes, and develop new general obligation bond resolutions. Based on the analysis provided by TWDB, the agency would need to make improvements to its financial management database and to its online loan application system. These enhancements would be $500,000 in 2020 and $500,000 in 2021.

To implement the bill, the TWDB would require for fiscal years 2020-24, 1.0 Director III ($113,022 per year), 1.0 Administrative Assistant IV ($41,876 per year), 2.0 Manager IV ($83,298 per FTE per year),  1.0 Planner IV ($72,789 per year), 3.0 Data Base Administrator IV ($77,862 per FTE per year), 1.0 Director II ($102,747 per year), 1.0 Administrative Assistant III ($37,348 per year), 3.0 Engineer VI  ($93,406 per FTE per year), 3.0 Engineer IV ($77,862 per FTE per year), 1.0 Natural Resource Specialist III ($55,602 per year), 2.0 Systems Analyst VI ($93,406 per FTE per year), 1.0 Contract Specialist III ($55,602 per year), 1.0 Budget Analyst III ($63,616 per year), 1.0 Accountant V ($63,616 per year), 2.0 Attorney III ($72,789 per FTE per year), 1.0 Administrative Assistant V ($46,976 per year), 1.0 Business Analyst III ($77,862 per year),  2.0 Systems Support Specialist IV ($55,602 per FTE per year), 1.0 Systems Analyst V ($77,862 per year), 1.0 Systems Administrator IV ($68,047 per year), 1.0 Planner II ($55,602 per year), 1.0 Data Analyst III ($68,047 per year), 2.0 Accountant IV ($55,602 per FTE per year), 1.0 Financial Analyst II ($68,047 per year), 1.0 Financial Examiner V ($83,298 per year), 1.0 Staff Services Officer III ($55,602 per year), 1.0 Project Manager I ($59,473 per year), 2.0 Project Manager III ($77,862 per FTE per year), 3.0 Program Specialist III  ($55,602 per FTE per year), 1.0 Program Specialist V ($63,616 per year), 1.0 Manager V ($93,406 per year), 2.0 Human Resources Specialist II ($45,054 per FTE per year), 2.0 Contract Specialist IV ($63,616 per FTE per year), 1.0 Engineer III ($72,789 per year), and 1.0 Engineer V ($83,298 per year). 
 
For fiscal years 2021-2024, TWDB would additionally require 3.0 Planner IIs ($55,602 per FTE per year), 1.0 Programmer V ($83,298 per year), 4.0 Engineering Specialist VI ($68,047 per FTE per year), 2.0 Hydrologist II ($55,602 per FTE per year), 2.0 Geographic Information Specialist I ($51,985 per FTE per year), 2.0 Natural Resource Specialist III ($55,602 per FTE per year), and 1.0 Contract Specialist III ($55,602 per year).  
 
For fiscal years 2022-24, TWDB would additionally require 1.0 Planner II ($55,602 per year).  
 
For fiscal years 2023-24, TWDB would additionally require 3.0 Planner IIs ($55,602 per FTE per year).
 
Salaries, benefits, travel and other costs associated with these FTEs would be $5,483,652 in 2020, $6,397,265 in 2021, $6,327,068 in 2022, $6,600,740 in 2023, and $6,567,722 in 2024.

Based on the analysis provided by TWDB, additional office space would be required for the new FTEs. Rental costs would be $280,500 in 2020, $375,540 in 2021, $394,630 in 2022, $426,650 in 2023, and $441,350 in 2024.

This analysis assumes TWDB would issue planning grants to regional flood planning groups to submit flood plans. To prepare those flood plans, regional groups would use grant funding to hire contractors and engineering firms to conduct studies, write reports, and perform in depth modeling specific to each region's flood planning area. This information would be used by the regional groups to develop flood mitigation and recovery plans that would be incorporated into the final report each group submits to TWDB. TWDB estimates the grants would be $245,000 in fiscal year 2020 as the program ramps up and $20,592,809 in fiscal year 2021 as full planning implementation begins. Planning costs would continue at $20,477,904 in fiscal year 2022; $20,394,591 in fiscal year 2023; and $20,396,056 in fiscal year 2024.

TWDB estimates that it would incur operating costs for supplies for data collection stations and other specialized equipment. The agency estimates it would need three trucks and three boats to carry out the necessary planning activities statewide. The agency would need to conduct floodplain mapping for every watershed in Texas, and would need to purchase license agreements for mapping software. These combined operational costs total $4,601,675 in 2020, $11,374,299 in 2021, $19,023,391 in 2022, $18,813,406 in 2023, and $18,827,151 in 2024.

Local Government Impact

According to the Texas Association of Counties, the bill may have a positive fiscal impact on those counties that, in the future, obtain a grant or secure zero or low interest loan from the Flood Infrastructure Fund. However, since the amount of funding that counties will obtain from the fund, as well as the amount they will save on interest, on those future projects is unknown at this time, the fiscal impact to local government entities cannot be determined at this time