COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION



FISCAL NOTE



L.R. NO.: 3132-01

BILL NO.: SB 741

SUBJECT: Bonds: Natural Resources

TYPE: Original

DATE: January 19, 2000




FISCAL SUMMARY



ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 2001 FY 2002 FY 2003
General Revenue ($2,735,961) ($2,588,259) ($2,588,572)
Total Estimated

Net Effect on All

State Funds

($2,735,961) ($2,588,259) ($2,588,572)



ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 2001 FY 2002 FY 2003
None $0 $0 $0
Total Estimated

Net Effect on All

Federal Funds

$0 $0 $0



ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 2001 FY 2002 FY 2003
Local Government $0 $0 $0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS



ASSUMPTION



Officials of the Office of Administration - Division of Accounting (OA) assume the proposal would authorize $47.5 million in bonds for water pollution control. They indicate that the bond issue date would depend on the use of available bond proceeds from bonds authorized but not yet issued. OA officials assume a single bond sale, 25-year maturities, 7% interest rate, level debt service, and annualized costs based on a sale in FY 2001 of $30 million, with $17.5 million to be issued in FY 2004 or later (according to OA, there have been sufficient amounts authorized in the past, all of which have not yet been issued, so that only $30 million would need to be issued immediately). Based on these factors, annual debt service would approximate $2,574,000 during the fiscal note period.



OA officials also assume that one-time costs per issue would include personal services of .06 Director, .12 Assistant Director, .12 Accounting Analyst IV, .17 Accounting Analyst II, and .04 Clerk Typist III plus fringe benefits for total one-time personnel costs of $33,030. One-time costs would also include issuance costs, including costs of financial advisor, legal counsel, printing, rating agency fees, official statements, etc. at a total cost of $150,000. Total one-time costs for FY 2000 would be $183,030.



Oversight assumes that the one-time personal services noted above would be performed by existing staff, with no increased costs to OA for these services.



OA officials also request that .25 Executive Assistant be hired to initiate general revenue transfers to the appropriate debt service funds, reconcile all paying agent transactions for principal and interest, and monitor all fees due to the paying agent. Total costs for this position, including fringe benefits, equipment and expense would be $9,961 in FY 2001, $12,259 in FY 2002, and $12,572 in FY 2003. Paying agent fees are expected to approximate $2,000 each year.



Department of Natural Resources (DNR) officials assume the proposal would authorize the sale of $47.5 million of water pollution and stormwater control bonds to be used as a match to a federal capitalization grant for the State Revolving Fund (SRF), to continue the state's 40% State Construction Grants Program for those economically disadvantaged communities that do not qualify for the SRF loan program, and the state's rural water and sewer grant program and stormwater grant program. It would also allow the initiation of loan programs under each.









ASSUMPTION (continued)



DNR officials indicate that funds would be used as follows: $20 million for Stormwater Control, $12.5 million for the Rural Water and Sewer Program, $12 million for the SRF (20% match required to receive federal funds), and $3 million for the 40% State Construction Grant Program.



FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003

(10 Mo.)

GENERAL REVENUE FUND



Costs-Office of Administration

Personal service (.25 FTE) ($6,747) ($8,299) ($8,506)

Fringe benefits (2,075) (2,552) (2,616)

Equipment and expense (1,139) (1,408) (1,450)

Paying agent fees (2,000) (2,000) (2,000)

Costs of issuance (150,000) 0 0

Transfer to principal & interest sinking fund (2,574,000) (2,574,000) (2,574,000)



ESTIMATED NET EFFECT ON

GENERAL REVENUE FUND ($2,735,961) ($2,588,259) ($2,588,572)



FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003

(10 Mo.)



0 0 0



FISCAL IMPACT - Small Business



No direct fiscal impact to small businesses would be expected as a result of this proposal.



DESCRIPTION



The proposal would authorize the issuance of $47.5 million in bonds for the control of water pollution and stormwater.



This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.







SOURCES OF INFORMATION



Office of Administration - Division of Accounting

Department of Natural Resources









Jeanne Jarrett, CPA

Director

January 19, 2000