LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 3, 2001 TO: Honorable Pat Haggerty, Chair, House Committee on Corrections FROM: John Keel, Director, Legislative Budget Board IN RE: HB1617 by Allen (relating to the expansion of prison industries programs.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1617, Committee Report 1st House, Substituted: negative impact * * of $(1,071,816) through the biennium ending August 31, 2003. * * * * 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 * * 2002 $(535,908) * * 2003 (535,908) * * 2004 (535,908) * * 2005 (535,908) * * 2006 (285,825) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Revenue Probable Probable Revenue * * Year Gain/(Loss) from Savings/(Cost) from Gain/(Loss) from * * General Revenue Fund General Revenue Fund Private Sector * * 0001 0001 Prison Industries * * Expansion Account * * 2002 $(35,742) $(500,166) $500,166 * * 2003 (35,742) (500,166) 500,166 * * 2004 (35,742) (500,166) 500,166 * * 2005 (35,742) (500,166) 500,166 * * 2006 (35,742) (250,083) 250,083 * ************************************************************************** Fiscal Analysis The bill would eliminate the requirement that private sector prison industries programs in the Prison Industry Enhancement program make annual payments to the Private Sector Prison Industries Oversight Authority equal to the amount of money the program would have paid for unemployment insurance if the employees of the program were engaged in non-prison employment. The bill would create the private sector prison industry expansion account in the general revenue fund. Funds collected by requiring a participant to contribute a percentage of their wages (Government Code, Section 497.0581) would be deposited in the general revenue fund. Upon certification of the deposit, the comptroller would transfer an equivalent amount from the general revenue fund to the private sector prison industry expansion account. Upon reaching a balance of $2.0 million, only half of the amount deposited in the general revenue fund would be transferred to the private sector prison industry expansion account. The bill would also create the private sector prison industry crime victims assistance account in the general revenue fund. Money in the account could only be used for the purpose of aiding victims of crime. The bill would also establish the goal that the private sector prison industries program have at least 1,800 participants by January 1, 2006. The bill would partially implement recommendation PSC-1 from the Comptroller's e-Texas report. The bill would take effect September 1, 2001. Methodology The Comptroller of Public Accounts estimates that the average unemployment insurance equivalent payment equals $161 per participant in the Prison Industry Enhancement program. With 222 current participants, the revenue lost from the elimination of employer unemployment insurance equivalent payments would equal $35,742 per year. It is estimated that the average participant room and board contribution equals $2,253 per year ($5.15 per hour x 35 hours per week x 50 weeks per year x 25% to room and board). Amounts equal to the participant's room and board contributions, deposited in the general revenue fund, would be transferred to the private sector prison industries expansion account. With 222 current participants, it is estimated that the transfer between the two funds would equal $500,166 per year. Since the transfers would exceed $2.0 million by the end of the fourth year, transfers for fiscal year 2006 are reduced to 50 percent of the estimated amount of the deposits. Elimination of the unemployment equivalency payment and establishment of a fund for the construction of work facilities and the recruitment of additional programs may assist in attracting new programs to the state. Potential additional revenue from increased program participation have not been included in the fiscal estimate. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 696 Texas Department of Criminal Justice, 305 General Land Office, 304 Comptroller of Public Accounts LBB Staff: JK, JC, JN, VS