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F I S C A L I M P A C T R E P O R T
SPONSOR Robinson
ORIGINAL DATE
LAST UPDATED
2/10/07
HB
SHORT TITLE
Severance Tax Fund Investment in Film Funds
SB 739
ANALYST Francis
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
Indeterminate
* See Narrative
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to SB 865
SOURCES OF INFORMATION
LFC Files
Responses Received From
State Investment Council (SIC)
SUMMARY
Synopsis of Bill
Senate Bill 739 increases the maximum allocation of severance tax permanent fund (STPF)
investments for film loans to six percent. Under current law, the State Investment Council (SIC)
is restricted to five percent of the permanent fund or $219 million. SIC would be able to invest
an additional $43.8 million in film loans.
FISCAL IMPLICATIONS
The fiscal impact is indeterminate. While investments in film project so far have yielded very
little return, most of the loans are guaranteed loans with a profit percentage. Assuming that the
loans will not generate any revenue, the fiscal impact is the foregone interest by not investing the
funds elsewhere. SIC generally assumes an 8 percent interest rate target, so the short term
impact would be $3.8 million in reduced interest to the STPF. There are other impacts not
counted that arise from the investments in film projects, such as jobs and purchases of goods and
services, which could offset some of the foregone interest. Over the long term, however, there