| TO: | Honorable Mike Hamilton, Chair, House Committee on Licensing & Administrative Procedures |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HJR112 by Menendez (Proposing a constitutional amendment creating the Texas Gaming Commission and authorizing and regulating casino games and slot machines by licensed operators and certain Indian tribes to provide money for the property tax relief fund and additional financial aid for higher education students.), As Introduced |
Estimated Two-year Net Impact to General Revenue Related Funds for HJR112, As Introduced: a negative impact of ($11,313,477) through the biennium ending August 31, 2013.
However the positive all funds impact would be $252.4 million in fiscal year 2012 growing to $828.8 million in fiscal year 2016.
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2012 | ($917,308) |
| 2013 | ($10,396,169) |
| 2014 | ($6,464,462) |
| 2015 | ($3,491,373) |
| 2016 | $11,194,627 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Texas Casino & Slot Gaming Fund |
Probable Savings/(Cost) from Texas Casino & Slot Gaming Fund |
Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Revenue Gain/(Loss) from General Revenue Fund - Compulsive Gambling Program 1 |
|---|---|---|---|---|
| 2012 | $318,982,000 | ($65,699,167) | ($610,308) | $2,399,000 |
| 2013 | $342,649,000 | ($65,699,167) | ($521,169) | $9,144,000 |
| 2014 | $521,186,000 | ($65,699,167) | ($517,462) | $20,247,000 |
| 2015 | $646,551,000 | ($65,699,167) | ($468,373) | $35,266,000 |
| 2016 | $883,304,000 | ($65,699,167) | ($468,373) | $48,180,000 |
| Fiscal Year | Probable Revenue Gain/(Loss) from General Revenue Fund - Tx Gaming Commission for Gambling Offenses 1 |
Probable Revenue Gain/(Loss) from General Revenue Fund - Bingo 1 |
Probable Savings/(Cost) from Foundation School Fund 193 |
Change in Number of State Employees from FY 2011 |
|---|---|---|---|---|
| 2012 | $1,599,000 | ($378,000) | ($3,927,000) | 223.0 |
| 2013 | $6,096,000 | ($2,223,000) | ($22,892,000) | 223.0 |
| 2014 | $13,498,000 | ($3,551,000) | ($36,141,000) | 223.0 |
| 2015 | $23,511,000 | ($5,598,000) | ($56,202,000) | 223.0 |
| 2016 | $32,120,000 | ($6,308,000) | ($62,329,000) | 223.0 |
This resolution is self-enacting and has the terms necessary, with the exception of Indian tribal gaming, to calculate a fiscal impact. The analysis is based on the estimated number of gaming machines, the average ratio of gaming revenue from tables to machines, the ramp-up time for slot establishments and casinos in other states, average play per gaming machine in other states, competition effects based on the number of gaming machines, the impact on the traditional lottery and bingo, and impacts on sales tax related to capital gains and gaming dollars "repatriated" to Texas. Non-gaming taxes, to be deposited toward the TEXAS grant program, cannot be estimated.
Because of time necessary to establish rules and regulations, develop infrastructure, and acquire operating systems, most revenue expected in fiscal 2012 is from application fees ($325,000,000). The full number of slot establishments and casinos allowed by the resolution are assumed to apply for a license, but based on experience in other states, the full complement of licenses will not occur in one year.
Indian casino operations will provide gaming competition to state revenues, but the positive revenue from the state from Indian casino operations cannot be estimated without a compact between the Indians and the state. As a hypothetical example, a 5 percent state tax on Indian casino operations would increase state revenues by about $25 million per year at full implementation.
This analysis assumes the new Gaming Commission will be structured similiar to the Lottery Commission. Therefore, 217.5 additional FTEs will be required and administrative costs of $65,699,167 per year to the new Casino & Slot Gaming Fund.
Given the amount of litigation that will be generated from the licensing and regulation of casinos in Texas, the Office of the Attorney General (OAG) will need an additional one full-time Assistant Attorney General VI, two full-time Assistant Attorneys General III, one full-time Legal Assistant II, and one full-time Legal Secretary II to handle the increased workload. Additionally, OAG anticipates that there would be some litigation testing the parameters of the Gaming Commission’s rules related to the administration of the gross receipts tax. The OAG will need an additional half-time Assistant Attorney General III during FY2013 and FY2014 to handle those cases. The fiscal impact to the OAG is $504,813.00 in fiscal year 2012, $521,168.50 in fiscal year 2013, $517,461.50 in fiscal year 2014 and $468,373.00 in fiscal years 2015-2016.
The cost for publication of the resolution is $105,495.
This legislation would 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.
| Source Agencies: | 302 Office of the Attorney General, 304 Comptroller of Public Accounts
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| LBB Staff: | AG, JOB, SD, KKR
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