LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 19, 2001
  
  
          TO:  Honorable Pat Haggerty, Chair, House Committee on
               Corrections
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB1617  by Allen (Relating to funding for the expansion
               of the private sector prison industries program.), As
               Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB1617, As Introduced:  negative impact of $(571,650) 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                           $(285,825)  *
          *       2003                            (285,825)  *
          *       2004                            (285,825)  *
          *       2005                            (285,825)  *
          *       2006                            (285,825)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal    Probable Revenue Gain/(Loss)    Probable Revenue Gain/(Loss)   *
* Year      from General Revenue Fund       from Private Sector Prison    *
*                      0001                Industries Expansion Account   *
*  2002                        $(285,825)                        $250,083 *
*  2003                         (285,825)                         250,083 *
*  2004                         (285,825)                         250,083 *
*  2005                         (285,825)                         250,083 *
*  2006                         (285,825)                         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
Industries Expansion Account in the general revenue fund.  Half of the
funds collected by requiring a participant to contribute a percentage of
their wages (Government Code, Section 497.0581) would be deposited in
the account.  The remainder would continue to be deposited in the
general revenue fund.  Money in the account could only be appropriated
to construct work facilities and recruit corporations to participate as
private sector prison industries programs.  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).  Fifty percent of participant room and board
contributions, currently deposited in the general revenue fund, would be
deposited in the Private Sector Prison Industries Expansion Account.
With 222 current participants, it is estimated that this would cause a
revenue loss and gain between the two funds of $250,083 per year.
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:   304   Comptroller of Public Accounts, 302   Office of
                   the Attorney General, 696   Texas Department of
                   Criminal Justice
LBB Staff:         JK, JC, JN, VS