Delay Motor Fuels Tax Allocations

The state should delay allocating the fiscal 1995 June, July and August motor fuels tax collections until September 1995.


Background
The state s motor fuels taxes are allocated monthly, after making deductions for enforcement and unclaimed refunds, one-fourth to public education and three-fourths to highway construction and maintenance. The tax returns and payments are due the 25th of each month. Under current law, the allocations are maximized by making the actual monthly transfer of funds on the fifth working day of the following month, thus allowing as many tax returns as possible to be received through the mail and de posited in the State Treasury.


Recommendation
The fiscal 1995 June, July and August motor fuels tax collections should be allocated in September 1995. This would allow more cash to remain in the General Revenue Fund on August 31 to be available for certification by the Comptroller. This delay should be a one-time measure.


Implications
Neither the Highway Fund nor the Available School Fund will lose revenues. School finances would not be adversely affected since some of the gain in the General Reven ue Fund in the last quarter of fiscal 1995 will be used to cover the temporary shortfall in the Available School Fund. The Texas Department of Transportation s (TxDOT) cash flow, however, would be affected in the summer of 1995. TxDOT would have two years to plan for the implementation of this proposal. In addition, the Comptroller s office would work with TxDOT to minimize the adverse effect the delay could have on the department s cash flow.


Fiscal Impact
The proposal assumes the allocation delay would occur in fiscal 1995. There would be a one-time gain of $283.3 million in certification funds during the 1994-95 biennium. This figure is equal to the gain to general revenue minus the losses to the Available School Fund and the Comptroller s Operating Account. There would be no administrative costs.

Gain/(Loss) Gain/(Loss) Gain/(Loss) to Gain/(Loss) to
Fiscal to the General to the Available the Highway the Comptroller s Certification Change in
Year Revenue Fund 001 School Fund 002 Fund 006 Operating Account Gains FTEs

1994 $ 0 $ 0 $ 0 $ 0 $ 0 0
1995 382,970,000 (95,694,000) (283,331,000) (3,945,000) 283,331,000 0
1996 (382,970,000) 95,694,000 283,331,000 3,945,000 (283,331,000) 0
1997 0 0 0 0 0 0
1998 0 0 0 0 0 0