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

SPONSOR SFC

ORIGINAL DATE

LAST UPDATED

3/7/07

3/13/07 HB

SHORT TITLE Severance Tax Bond Projects

SB CS/827/aHTRC

ANALYST Kehoe

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$200,948.8

Non-Recurring Severance Tax Bond

Capacity

$404,911.2

Non-Recurring

General Fund

$1,185.2

Non-Recurring

Educational

Retirement Fund

$2,636.4

Non-Recurring Miners’ Trust Fund

$9,656.7

Non-Recurring

Public Employees

Retirement

Association Income

Fund

$2,750.0

Non-Recurring

State Road Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to multiple 2007 capital outlay requests statewide

Relates to Appropriation in the General Appropriation Act and House Bill 935

SOURCES OF INFORMATION

LFC Files

SUMMARY

Synopsis of HTRC Amendment

The House Taxation and Revenue Committee amendment appropriates approximately $207.8

million from the general fund for House and executive capital outlay projects statewide and

authorizes approximately $37.2 million from severance tax bond capacity for House and

executive capital outlay projects statewide.

CS/Senate Bill 827/aHTRC – Page

2

The amendment further makes changes to Laws 2006, Chapter 111, Section 68 to the first

tranche of the $100 million spaceport appropriation. Due to the contingencies of the current law,

it is unlikely that any of the $33 million that makes up the first tranche will be ready for bonding

in FY07. Therefore, the amendment removes the contingencies and allows up to $25 million of

the appropriation to be used immediately if there is available capacity. Although the severance

tax bond capacity authorizations have been decided, there may be a certain amount at the time

that Board of Finance issues the bond that is not ready and has not been certified. This

amendment will allow that unused amount to be used for the spaceport for specific infrastructure

projects. The unused amount will still be authorized in FY08.

The contingencies related to the first tranche are transferred to the second tranche of $33 million

so that no additional amount beyond the first $33 million can be certified if an environmental

study has not been completed and if the spaceport has not received an FAA operating permit.

Synopsis of Bill

The Senate Finance Committee Substitute for Senate Bill 827 authorizes approximately

$163.8

million from severance tax bond capacity and appropriates $197.1 million from the general fund to fund

both local and capital outlay projects statewide.

The bill contains an emergency clause.

FISCAL IMPLICATIONS

The authorization of $200.9 million from severance tax bond capacity contained in this bill is a

non-recurring expense to the severance tax bond fund. The unexpended balance from the

proceeds of severance tax bonds (STB) issued for a project, including projects that have been

reauthorized, shall revert to the STB fund as follows: 1) for projects for which STB were issued

to match federal grants, six months after completion of the project; 2) for projects for which STB

were issued to purchase vehicles, heavy equipment, educational technology or other equipment

or furniture that is not related to a more inclusive construction or renovation projects, at the end

of the fiscal year two years following the fiscal year in which the STB were issued for the

purchase; 3) for projects for which STB were issued to purchase emergency vehicles or other

vehicles that require special equipment, at the end of the fiscal year two years following the

fiscal year in which the STB were issued for the purchase; and 4) for all other projects for which

STB were issued, within six months of completion of the project, but no later than the end of

fiscal year 20011.

The appropriation of $404.9 million from the general fund, including changes to prior

appropriations, shall revert to the general fund as follows: 1) 1) for projects for which

appropriations were made to match federal grants, six months after completion of the project; 2)

for projects for which appropriations were made to purchase vehicles, heavy equipment,

educational technology or other equipment or furniture that is not related to a more inclusive

construction or renovation projects, at the end of the fiscal year two years following the fiscal

year in which the STB were issued for the purchase; 3) for projects for which appropriations

were made to purchase emergency vehicles or other vehicles that require special equipment, at

the end of the fiscal year two years following the fiscal year in which the STB were issued for

the purchase; and 3) for all other projects for which appropriations were made, within six months

of completion of the project, but no later than the end of fiscal year 20011.

CS/Senate Bill 827/aHTRC – Page

3

Except for appropriations to the capital program fund, money from STB proceeds may not be

used to pay indirect project costs. For the purposes contained in this bill, “unexpended balance"

is defined as the remainder of an appropriation after reserving for unpaid costs and expenses

covered by binding written obligations to third parties.

SIGNIFICANT ISSUES

Senate Bill 827 was substituted to include all projects funded by the Senate for local projects and

statewide projects agreed upon by the Senate, House and the executive and was further amended

to fund all House and executive capital projects statewide. The bill contains approximately $250

million for statewide projects. Some of the most significant projects funded include: $34

million for higher education facilities; $12 million for special schools; $5.5 million for senior

citizen center infrastructure needs; $7.8 million for phase I construction of a new Court of

Appeals; $29 million for public school renovations and materials; $45 million for water and

wastewater projects; $15 million for tribal renovations and infrastructure; over $60 million for

state-owned and operated facilities; and over $30 million for public school initiatives.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 935 proposes appropriations to similar projects contained in this bill.

Various capital outlay requests by various sponsors have requested funding for projects

duplicating some of the projects contained in this bill.

LMK/mt