LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 24, 1997 TO: Honorable John Whitmire, Chair IN RE: House Bill No. 1301, As Engrossed Committee on Criminal Justice By: Allen Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1301 ( Relating to the oversight of the private sector prison industries program.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1301-As Engrossed Implementing the provisions of the bill would result in a net positive impact of $1,094,000 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would partially implement Texas Performance Review (TPR) recommendation PSC5 in Gaining Ground: A Report from the Texas Performance Review (1994). The bill would amend certain portions of the Government Code relating to the private sector prison industries program. The bill would create the Private Sector Prison Industries Oversight Authority (authority) to approve, certify, and oversee the operations of private prison industries programs in the Texas Department of Criminal Justice (TDCJ), the Texas Youth Commission, and in county correctional facilities. The authority would consist of nine members appointed by the Governor. Authority members would not be entitled to compensation but would be entitled to reimbursement for travel expenses as provided in the General Appropriations Act. The executive director of TDCJ would be required to provide the authority with the necessary clerical and technical support to perform the duties imposed by the bill. The bill would require a private sector prison industries program to make an annual payment to the authority. The authority would be required to remit the fees collected to the Comptroller's Office for deposit to the credit of a new, dedicated Private Sector Prison Industries Oversight Account in the General Revenue Fund. The Legislature could appropriate funds from this account only for the purpose of paying the costs incurred by the authority and TDCJ to implement the terms of the bill. At the end of each fiscal year, the Comptroller would be required to transfer any excess funds in the account to the credit of the dedicated Compensation to Victims of Crime Account in the General Revenue Fund. This bill would take effect on September 1, 1997. TDCJ's power, duties, and obligations to oversee the program would be transferred to the authority on January 1, 1998, as would any funds appropriated to TDCJ for oversight of the program. Methodolgy The estimate for the annual payment that employers would be required to make to the authority is based on information from the Texas Workforce Commission. Unemployment insurance is paid on the first $9,000 of wages, and the rate ranges from 0.27 percent to more that 6 percent, depending on an employer's experience rating. The statewide average rate in 1996 was 1.47 percent and is projected to be 1.36 percent in 1997. Under the federal Prison Industry Enhancement Program guidelines, the state may make various deductions from an inmate's wages, including victim compensation and reimbursement to the state for a portion of the costs of incarceration. Victim compensation and offender reimbursements per fiscal year are estimated. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Revenue Probable Revenue Probable Revenue Probable Change in Number Gain/(Loss) from Gain/(Loss) from Gain/(Loss) from Savings/(Cost) of State General Revenue Compensation to New GR-Dedicated from New Employees from Fund Victims of Crime Account - GR-Dedicated FY 1997 Account/ Account - GR-Dedicated 0001 0469 8021 8021 1998 $156,000 $178,000 $30,000 ($30,000) 3.0 1998 938,000 713,000 92,000 (92,000) 3.0 2000 1,900,000 1,474,000 153,000 (104,000) 3.0 2001 3,090,000 2,457,000 245,000 (104,000) 3.0 2002 4,750,000 3,825,000 367,000 (104,000) 3.0 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $156,000 1999 938,000 2000 1,900,000 2001 3,090,000 2002 4,750,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No significant fiscal implication to units of local government is anticipated. Source: Agencies: 696 Department of Criminal Justice 304 Comptroller of Public Accounts 694 Youth Commission LBB Staff: JK ,CB ,JN