LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 7, 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.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2617, Committee Report 2nd House, Substituted: positive impact * * of $182,110 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 $91,055 * * 2001 91,055 * * 2002 91,055 * * 2003 91,055 * * 2004 91,055 * **************************************************** 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 $49,305 * * 2001 41,750 49,305 * * 2002 41,750 49,305 * * 2003 41,750 49,305 * * 2004 41,750 49,305 * *************************************************************************** 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 in municipalities with populations of one million or more 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 change the agency fee structure, and allow the agency board rather than the General Appropriations Act to set certain types of registration fees. 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 contacted officials of the Dallas, Houston and San Antonio police departments in order to estimate the number of officers that might work as extra job coordinators. In total, approximately 250 officers from these cities might work as an extra job coordinator exempted from the Act. 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 from these metropolitan areas would result in a revenue loss of $62,500 . 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. 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. The bill would increase seven fees and decrease one fee. According to the Agency, the unarmed guard registration fee, currently set at $50 would be decreased to $25. This fee generates $1,498,300, therefore decreasing the fee to $25 is expected to result in a revenue loss of $749,150. The seven fee increases and increases due to the growth of the registrant pool are expected to generate in aggregate a revenue gain of $823,455. However, it is anticipated that this revenue loss of $749,150 might be offset by additional revenue that the State will gain from provisions of the bill that authorize the Board to increase certain licensing and registration fees, and provision which expand the agency's regulatory authority to cover uniformed employees of businesses that are open to the public. Overall, it is estimated that the State will see a net revenue gain of approximately $74,305 ($823,455 - $749,150) from these bill provisions. 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 and individuals licensed and registered 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: LBB Staff: JK, MD, DG