Report to the 86th Legislature: Sunset Advisory Commission Page: 14

                                
February 2019                                                    Sunset Advisory Commission
-  technical changes needed, including but not limited to removing unconstitutional provisions
and outdated language, updating the code's structure to comply with modern drafting standards,
and correcting legal citations; and
- other changes needed to modernize the code within the three-tier system.
TLC would identify statutory inconsistencies and other issues that may impede modernizing the code.
Sunset staff would work directly with TLC and TABC to determine whether and how to address the
identified issues. Sunset staff would be authorized to engage interested stakeholders in this process.
TLC would prepare a non-substantive revision bill to address any technical changes needed, which the
Sunset Commission would consider for a vote by September 1,2022. Separately, Sunset staff would make
recommendations to the Sunset Commission by September 1,2022, to address other, more substantive
issues needed to modernize the Texas Alcoholic Beverage Code.
Fiscal Implication Summary
Overall, the Sunset Commission's recommendations would result in a negative fiscal impact to the state
of about $440,000 per year. However, the -recommendations would result in increased efficiency and
effectiveness for TABC and lower the cost of regulation for the alcoholic beverage industry.
Expanding the commission from three to five members would result in minimal additional costs of
approximately $4,000 per year in per diem and travel expenses for two new members.
The Sunset Commission's recommendations to modernize and streamline the state's alcoholic beverage
licensing structure are designed to improve the efficiency ofTABC's licensing and regulatory operations
and, with the exception of a reduction in excise taxes on malt beverages, should be cost-neutral to the
state since TABC is required to generate revenue sufficient to cover the cost of regulation. Applying
the beer excisetax rate to all malt beverages would result in a loss to general revenue of approximately
$350,000 per year. This estimate is based on applying the beer excise tax rate of about $0.194 per gallon
to approximately 79 million gallons of ale taxed in fiscal year 2017.
The recommendation to transition to a federal COLA as the basis for the malt beverage registration
process would reduce the number and amount of fees collected from malt beverage applications. In
fiscal year 2017, licensees paid a $25 fee for 3,553 additional sizes of a malt beverage product beyond
the first size being approved. Under a COLA-based approval process, licensees would only be required
to pay a single $25 fee, regardless of container size, resulting in an estimated loss to general revenue of
$88,825 annually.
Texas Alcoholic Beverage Commission

Loss to the General  Cost to the General
Fiscal Year     Revenue Fund        Revenue Fund
2020            $438,825             $4,000
2021            $438,825             $4,000
2022            $438,825             $4,000
2023            $438,825             $4,000
2024           $438,825              $4,000

4      Texas Alcoholic Beverage Commission
Report to the 86th Legislature

I
I
I
I
I