LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 26, 2001
TO: Honorable Bill Ratliff, Lieutenant Governor
Honorable James E. "Pete" Laney, Speaker of the House
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB311 by zaffirini (relating ot the abolition of the
General Services Commission; to the transfer of its
functions to a newly created Texas Building and
Procurement Commission; and to the operations of certain
other state agencies having functions transferred from
or associated with the commission, including the
Department of Information Resources, the
telecommunications planning and oversight council, the
Legislative Budget Board, and the State Cemetery
Committee.), Conference Committee Report
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB311, Conference Committee Report: positive impact of *
* $28,636,500 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $4,423,500 *
* 2003 24,213,000 *
* 2004 24,213,000 *
* 2005 52,790,500 *
* 2006 52,793,000 *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable Change in *
* Year Savings/ Savings/ Revenue Savings/ Number of *
* (Cost) from (Cost) from Gain/(Loss) (Cost) from State *
* General General from All General Employees *
* Revenue Revenue General Revenue from FY 2001 *
* Fund Fund Revenue Dedicated *
* 0001 0001 Fund Accounts *
* 0001 *
* 2002 $3,894,000 $(50,500) $580,000 $0 1.0 *
* 2003 23,564,000 (48,000) 697,000 2,240,000 1.0 *
* 2004 23,564,000 (48,000) 697,000 2,240,000 1.0 *
* 2005 52,144,000 (50,500) 697,000 44,840,000 1.0 *
* 2006 52,144,000 (48,000) 697,000 44,840,000 1.0 *
***********************************************************************
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*Fiscal Probable Probable Probable Revenue *
* Year Savings/(Cost) from Savings/(Cost) from Gain/(Loss) from *
* Federal Funds - Other Funds Other Funds *
* Federal *
* 0555 *
* 2002 $0 $55,000 $72,000 *
* 2003 9,870,000 3,275,000 87,000 *
* 2004 9,870,000 3,275,000 87,000 *
* 2005 47,000,000 3,275,000 87,000 *
* 2006 47,000,000 3,275,000 87,000 *
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Technology Impact
$2,500 each in both FY 2002 and FY 2005 for computers.
Fiscal Analysis
The bill would abolish the General Services Commission (GSC), and
transfer many of its functions to a newly created Texas Building and
Procurement Commission (TBPC), and it would tranfer certain other
functions to other state agencies including the Department of Information
Resources (DIR) and the Attorney Gerneral (OAG). The bill would create
the Telecommunications Planning and Oversight Council and the State
Cemetery Committee.
The bill would also require the Office of the Attorney General (OAG), in
consultation with TBPC, DIR, the Comptroller of Public Accounts (CPA),
and the State Auditor's Office (SAO) to develop contracting guidelines
for state agencies, and to assist SAO in developing a training program
for contract managers. Additionally, DIR will participate with OAG, the
CPA, TBPC, and the Governor's Office on a Contract Advisory Team to
review solicitations of major contracts by agencies, and provide
recommendations to the OAG on contract guidelines and to the SAO on
training on contract management.
Methodology
The savings identified below could be realized with adoption and
implementation of an incentive rider directing the CPA to reduce the
appropriations in the appropriate amounts and to identify the agencies
and accounts from which those appropriations would be reduced.
(1) Contract Management: according to the CPA's E-Texas report, the
State of Texas contracts for $14 billion worth of goods and services
annually. Assuming that it takes 12 months to implement the statewide
contract management policy, and training for contract managers would not
take effect until September 1, 2002, fiscal year 2003 would be the
earliest that savings could be generated. Also assuming that contract
managers would save 0.25 percent on Texas contracts due to improved
contract management skills, this would equate to savings of $35 million
annually. These savings would be across every state agency and could
impact every fund excluding higher education the Texas Department of
Transportation contract relating to highway construction or highway
engineering.
(2) Electronic Procurement: FY 1999 procurement patterns for general
goods and services were used as a baseline for future savings. Saving
were then determined on a conservative estimate of 2 percent of all goods
and services purchased. According to the CPA, 2 percent is conservative
compared to private industry standards of 3-5 percent (Gartner Group and
other industry experts). General revenue savings were estimated at
$28.58 million per year, Federal Fund savings were estimated at $37.13
million per year, and Dedicated Accounts Funds savings were estimated at
$42.6 million per year.
(3) Reverse Auction Procedures: by allowing for the use of reverse
auction procedures in purchasing goods and services, the CPA's E-Texas
Report estimates potential savings generate by reverse auctions at
anywhere from 2 percent to 10 percent. In fiscal year 1999 approximately
$70 million was expended on such item as fuel, office furniture, paper,
reflective sheeting, salt, tires, and tire tubes. Using a midpoint of 6
percent as potential savings, less vendor payment of 20 percent, it is
estimated that approximately $3.4 million could be saved using reverse
auctions. Any costs associated with the implementation of electronic
procurement in this bill would be incurred by an outside contractor who
would recover costs from user fees.
(4) Emergency Leases: GSC indicated that the state pays above market
price on about 240 emergency leases with a total value of about $25
million per year. The emergency leases average 120 percent to 150
percent of market value. At 20 percent above market value, it is
estimated that $5 million is paid in above market rates. Assuming 10
percent of that figure can be avoided through the Sunset recommendations,
$500,000 per year would be saved. Based on the ratio of General Revenue
funded to non-General revenue funded agencies (as used in the fiscal
note to HB834) 89 percent of the savings would accrue to agency funding
from General Revenue, and 11 percent from other funds.
(5) Surplus Property: the TBPC would require an additional FTE for its
responsibility for the state's surplus property disposal process.
Estimated cost for the FTE is approximately $48,000 per year, benefits
included, plus a computer at a cost of $2,500 in the first year and
$2,500 for a computer refresher in FY 2005.
(6) Mandatory Recycling: a mandatory program would improve the State's
recycling efforts, resulting in a gain to General Revenue of $49,000 per
year. It is assumed that the number of tons recycled and the amount GSC
receives for each ton of paper will remain constant with 1999 figures.
In FY 1999, GSC collected $51,521 from recycling. With improved
recycling efforts in that same year, GSC would have earned $100,846.
(7) Internet Auction Sales: sales of surplus and salvage property would
have an estimated revenue gain in FY 2002 of $580,000 in General Revenue
and $72,000 in Other Funds. In following years the gain is estimated to
be $697,000 to General Revenue and $87,000 to Other Funds.
Local Government Impact
There could be cost savings to local governments who use electronic
procurement.
Source Agencies: 116 Sunset Advisory Commission
LBB Staff: JK, RB, SK