LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                             February 2, 2001
  
  
          TO:  Honorable Frank Madla, Chair, Senate Committee on
               Intergovernmental Relations
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB201  by Carona (Relating to the authority of certain
               counties to collect traffic fines through Internet
               transactions.), As Introduced
  
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*  No fiscal implication to the State is anticipated.                    *
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Local Government Impact
  
The bill would amend Chapter 130 of the Local Government Code and allow
county commissioners courts to authorize the county to collect traffic
fines via the Internet.  The bill would take effect immediately upon
two-thirds vote in each house or September 1, 2001 if the vote is not
received.

The following agencies and associations were contacted for information on
the local government fiscal impact of the proposed amendment: Texas
Association of Counties, Bexar County District Clerk's Office, Bexar
County Office of the Justice of the Peace #2, Tyler Municipal Court, and
the Tax Assessor-collectors Association of Texas (TACAT).

Under current statute, a county tax-assessor collector may accept a check
or credit card invoice for the payment of certain fees and taxes and may
accept payment electronically. The statute allows the tax
assessor-collector to charge a handling fee in addition to the amount of
the tax or fee collected. MasterCard and Visa credit card companies
charge the county a convenience fee, but do not allow the county to pass
that fee on to the person paying the tax or fee; therefore, counties
accepting these credit cards are absorbing the convenience fee, which
ranges from 3 to 6 percent per transaction.  If the county contracts with
a third party, the third party is allowed by the credit card companies
to pass the fee to the person making the payment; therefore, in some
instances, the county is able to avoid having to absorb the convenience
fee, although there may still be a cost involved for contracting with a
third party.

The local government entities that are using an electronic system for
collecting fees and taxes have had varied experiences with regard to
costs.  In some cases, there have been no implementation charges; the
vendor has provided the software and equipment for no charge, but
collects a fee from the contracted third party.  If the local vendors do
not offer that option, implementation costs between $500 and $1,000,
provided the county already has computer equipment.  According to TACAT,
it is necessary for the computer equipment of the entity collecting the
fines to interface with the tax assessor-collector's system in order to
confirm no outstanding fines prior to issuing licenses, permits, and
titles. An additional one-time software cost would be incurred if
interfacing needs to be established.

Bexar County collects court-ordered fees via the Internet. While the
payment compliance rate has not changed, more people now pay their fees
by credit card than prior to having an electronic payment option.  The
district clerk reports that credit card payments went from $350 per month
to $8,000 per month.  Electronic payment has reduced the number of
checks returned for insufficient funds (NSF), which provides a savings to
the county, as does the reduced amount of time staff spends collecting
fees in person.

The Tyler Municipal Court has been collecting traffic fines via the
Internet since March 2000.  Collections have increased by an average of
10 percent, with $8,000 to $10,000 collected each month. Electronic
payment also provides a cost savings by reducing the number of NSF checks
received.

Counties would experience a revenue gain as a result of increasing the
amount of traffic fines successfully collected.  The amount of gain would
vary by county based on number and amount of fines issued, as well as
compliance by those fined, but is anticipated to reach at least 10
percent. Counties would also experience a cost savings by reducing the
number of NSF checks received. Again, the amount would vary by county,
but is anticipated to be substantial.

Counties would experience a cost of 3 to 6 percent per transaction,
depending on their contract and the credit card company, but the cost
would be offset by the increase in collections and reduction in NSF
checks. Small counties (population under 20,000) and counties in remote
areas of the state would not experience sufficient revenue increases to
offset expenditures.
  
  
Source Agencies:   405   Texas Department of Public Safety
LBB Staff:         JK, DB