NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Taylor

 

DATE TYPED:

1/30/03

 

HB

244

 

SHORT TITLE:

Abolish Tobacco Settlement Permanent Fund

 

SB

 

 

 

ANALYST:

Smith

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

42,900.0

37,200.0

 

Recurring

 

General Fund

6,550.0

 

 

Nonrecurring

General Fund

57,000.0

 

 

Nonrecurring

Operating Reserve

(57,000.0)

 

 

Nonrecurring

Tobacco Settlement Permanent Fund

(42,900.0)

(37,200.0)

 

Recurring

 

Tobacco Settlement Permanent Fund

(6,550.0)

 

 

Nonrecurring

Tobacco Settlement Program Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

Duplicates Senate Bill 298

 

SOURCES OF INFORMATION

 

Responses Received From

 

Department of Finance and Administration

 

SUMMARY

 

     Synopsis of Bill

 

House Bill 244 eliminates the tobacco settlement permanent and program funds and transfers all balances to the general fund.  All future tobacco settlement payments will be deposited in the general fund.  The balance in the tobacco settlement permanent fund will be deposited in the general fund operating reserve. 

 

 

     Significant Issues

 

This is a critical component of the Executive's budget recommendation.

 

FISCAL IMPLICATIONS

 

The LFC disagrees with the Executive’s scoring of the unappropriated balance of the tobacco settlement program fund as recurring FY03 revenue. Furthermore, policy makers should be aware that half of the FY03 revenue would otherwise be programmed to support FY04 programs.  The implication here is that half of the FY04 revenue will have to support existing programs.

 

Recent stock market performance has put the cash value of the permanent fund in doubt; the liquidated value of the fund may be less than the $57 million.

 

TECHNICAL ISSUES

 

The State Investment Council has noted that it could take a couple of weeks to liquidate the portfolio in an orderly manner.  It might be useful to amend the bill to include an effective date prior to passage.

 

SS/sb