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