| TO: | Honorable Edmund Kuempel, Chair, House Committee on Licensing & Administrative Procedures |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB4018 by Gutierrez (Relating to local option elections to legalize or prohibit the operation of amusement redemption machines and imposing a fee on amusement redemption machines; providing penalties.), As Introduced |
The bill would add new Chapter 502 to the Election Code regarding procedures for counties, justice precincts or municipalities to conduct elections to legalize or prohibit the operation of amusement redemption machines. Amusement redemption machines as defined by this bill would include eight-liner machines that could pay individual cash prizes not to exceed $2,000.
The bill would add new Subchapter K to Chapter 2153 of the Occupations Code to establish procedures for licensing to operate amusement redemption machines and to establish annual fees for operators and individual amusement redemption machines. If a local option election would establish that amusement redemption machines are legal in a local area, the application fee to obtain a new or renewal vendor's license to operate an amusement redemption machine business would be $100,000, payable to the Comptroller. A $500 annual license fee would be required for each amusement redemption machine put in operation at a licensed location, and each premise could have a maximum of five operating amusement redemption machines. The state would receive all annual vendor and machine license application fees for maintenance of the state run program, and the state would be allocated all of the annual vendor and machine renewal fees. Each licensed premise would be required to allocate 40 percent of its post-audit gross revenues to the county in which it is located.
The bill would set up regulations regarding the location of a business premise and the usage of signs, allowing only non-digital signs of limited size, defaulting to prevailing local standards. The Texas Lottery Commission would be required to conduct an annual audit on each licensed vendor.
The Lottery Commission indicates that if two-thirds of the localities voted to legalize the machines, there would be expenses of $1.8 million in fiscal year 2010 and $1.6 million each fiscal year thereafter to conduct the audits.
The revenue impact of this bill would depend on the timing and outcome of local option elections. The number of elections and the population covered by areas approving amusement redemption machines, and consequently the amount of revenue generated, cannot be estimated.
The bill would take effect on September 1, 2009.
The bill would require political subdivisions in existence for 18 months or more to hold local option elections to legalize or prohibit the operation of amusement redemption machines. A political subdivision would require 10 or more qualified voters in order to hold a local option election to legalize or prohibit the machines.
Local option elections could only be held once year, and local governments would be required to pay the costs, as specified by the provisions. If a county is not required to pay election costs, a county clerk would be required to collect a non-refundable deposit from the applicants before issuing a petition. Money collected would be deposited in the county’s general revenue fund. A person who issues a petition before collecting a deposit from applicants would commit a misdemeanor offense punishable by a fine of $200 to $500, a maximum of 30 days confinement in a county jail, or both a fine and confinement.
According to information provided by the Texas Association of Counties (TAC), the provisions of the bill related to calling for a local option election would be significantly costly to counties because of the potential number of elections that could occur. No data was available on which to project estimates for costs and revenue if a county legalizes amusement redemption machines.
According to information provided by various municipalities, similar to that provided by TAC, there would be costs associated with conducting elections, and unknown revenue gain if the operation of amusement redemption machines are approved.
| Source Agencies: | 304 Comptroller of Public Accounts, 362 Texas Lottery Commission, 696 Department of Criminal Justice
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| LBB Staff: | JOB, JRO, SD, TP
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