LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 13, 1997
         
         
      TO: Honorable John Whitmire, Chair            IN RE:  House Bill No. 1301, Committee Report 2nd House, as amended
          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-Committee Report 2nd House, as amended
         
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:
 

 
              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