LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 4, 1999 TO: Honorable Ken Armbrister, Chair, Senate Committee on Criminal Justice FROM: John Keel, Director, Legislative Budget Board IN RE: HB2617 by Bosse (Relating to the continuation of the Texas Board of Private Investigators and Private Security Agencies as the Texas Commission on Private Security and to the functions performed by that agency; providing a penalty.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2617, As Engrossed: negative impact of $(1,341,500) through the * * biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $(670,750) * * 2001 (670,750) * * 2002 (670,750) * * 2003 (670,750) * * 2004 (670,750) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) * * Year General Revenue Fund from General Revenue Fund * * 0001 0001 * * 2000 $41,750 $(712,500) * * 2001 41,750 (712,500) * * 2002 41,750 (712,500) * * 2003 41,750 (712,500) * * 2004 41,750 (712,500) * *************************************************************************** Fiscal Analysis The bill would continue the Board of Private Investigators and Private Security Agencies under the new name of the Private Security Commission (the "Board" or "Agency") until September 1, 2003. The bill would exempt full-time peace officers who serve as "extra job" coordinators from the provisions of the Private Security Agencies Act ( the "Act"). The bill would increase public representation on the Board from six members to nine members. The bill would apply the Act to uniformed security employees of certain entities to which the general public has access. The bill would transfer the agency's administrative hearing function to the State Office of Administrative Hearings (SOAH). The bill would allow the Agency to enter into reciprocal agreements with other states. The bill would remove the requirement for letters of notification to be sent to certain law enforcement officials. Methodology The Agency has submitted two cost estimates for the bill on the amount of revenue loss that would occur by exempting extra job coordinators from the Act. These estimates were prepared to offer a best case and a worse case scenario. The first estimate is based on 1,000 coordinators being exempted while the second is based on 5,000 coordinators being exempted. The methodology in the fiscal note uses 3,000 coordinators being exempted as a midpoint between the two scenarios offered by the Agency. Under current law, each of these people would pay $250 ($225 guard company license fee and $25 owner registration fee) per year. Exempting the extra job coordinators would result in a revenue loss of $750,000. Board member per diem is set at a maximum of $2,500 per year. The addition of three public members to the Board would result in an increase cost of $7,500 per year. Applying the Act to an individual who in the course of their employment regularly come into contact with the public, and wears a uniform with any type of badge or patch commonly associated with law enforcement or security personnel, could result in a substantial revenue gain to the General Revenue Fund as well as an increase in workload at the agency. The provision would extend Board oversight to security personnel at malls, amusement parks, athletic facilities, large corporate buildings, etc. Since the agency was appropriated 49% of the receipts it collects, the state would see a net gain of 51 cents for every dollar, assuming that the Agency was given additional appropriations to deal with the increased workload. Transferring the agencies administrative hearings process to SOAH would result in an estimated net loss to the agency of $76,750 per fiscal year. Although the agency would experience savings, given that it would no longer need an administrative law judge, the agency would incur costs of $112,000 for the retention of two legal staff to prepare cases for hearings before SOAH; and an estimated $190,936 in costs for new expenses relating to the billing from SOAH for all Agency hearings. The Sunset Commission comments that the costs tend to be more pronounced initially, but as both agencies adjust their resources to accommodate the transfer the cost should decrease. Allowing the agency to enter into reciprocal agreements with other states and provide provisional licenses or registrations to other states' registrants would generate additional revenue for the state. It is estimated that if the Board were to enter into an agreement just with Oklahoma, state revenue would increase by $71,250. This estimate is based on 15% of companies licensed in Oklahoma choosing to exercise their eligibility for a license and registration in Texas. In addition to Oklahoma, Arkansas, New Mexico and Louisiana have expressed interest in having reciprocal agreements. The bill would remove the requirement for letters of notification to be sent to certain law enforcement officials. The Sunset Commission relates that the Board processed approximately 42,000 registration applications per year. Assuming two letters per application at $1.50 (postage costs for business correspondence), this will save the Board $126,000 (84,000 x 1.5) in postage costs per year and $252,000 in postage costs for the biennium. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 467 Board of Private Investigators and Private Security Agencies, 360 State Office of Administrative Hearings, 116 Sunset Advisory Commission LBB Staff: JK, MD, DG