Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 Phone: (614) 466-3615

Internet Web Site: http://www.lsc.state.oh.us/

BILL:

H.B. 443

DATE:

January 18, 2006

STATUS:

As Introduced

SPONSOR:

Rep. Uecker

LOCAL IMPACT STATEMENT REQUIRED:

No

Minimal cost

 


CONTENTS:

Revises and clarifies various provisions of law governing the Department of Natural Resources

 

State Fiscal Highlights

 

STATE FUND

FY 2006

FY 2007

FUTURE YEARS

General Services Division-Operating (Fund 117) Department of Administrative Services

Revenues

Loss in DNR property management fees

Loss in DNR property management fees

Loss in DNR property management fees

Expenditures

- 0 -

- 0 -

- 0 -

Enforcement Contraband, Forfeiture, and Other Fund (5 new funds within the Divisions of Forestry; Natural Areas and Preserves, Wildlife, Parks and Recreation, Watercraft)

Revenues

Potential gain from proceeds from forfeited property, contraband or moneys

Potential gain from proceeds from forfeited property, contraband or moneys

Potential gain from proceeds from forfeited, property, contraband or moneys

Expenditures

- 0 -

- 0 -

- 0 -

Corrupt Activity Investigation and Prosecution Fund (Fund 629) Attorney General

Revenues

Potential loss in proceeds now transferred to existing DNR funds

Potential loss in proceeds now transferred to existing DNR funds

Potential loss in proceeds
now transferred to existing
DNR funds

Expenditures

- 0 -

- 0 -

- 0 -

Water and Sewer Fund (Fund 444)

Revenues

- 0 -

- 0 -

- 0 -

Expenditures

Draw on current cash balance to support local assessments

Draw on current cash balance to support local assessments

Draw on current cash
balance to support local assessments

State Park Fund (Fund 512)

Revenues

Potential gain in tens of thousand or more, from the sale of timber

Potential gain in tens of thousand or more, from the sale of timber

Potential gain in tens of thousand or more, from the sale of timber

Expenditures

- 0 -

- 0 -

- 0 -


 

Capital Project Funds (Division of Engineering)

Revenues

- 0 -

- 0 -

- 0 -

Expenditures

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Wildlife Fund (Fund 015)

Revenues

Minimal gain from additional restitution payments

Minimal gain from additional restitution payments

Minimal gain from additional restitution
payments

Expenditures

Minimal savings from free licenses

Minimal savings from
free licenses

Minimal savings from
free licenses

Waterways Safety Fund (Fund 086)

Revenues

Minimal gain from additional identification plate revenue

Minimal gain from additional identification plate revenue

Minimal gain from
additional identification
plate revenue

Expenditures

- 0 -

- 0 -

- 0 -

Note: The state fiscal year is July 1 through June 30. For example, FY 2006 is July 1, 2005 June 30, 2006.

 

        Property Management. The bill precludes DAS' statutory authority over state property from interfering with the power of DNR to enter into leases of real property, buildings, and to purchase real property, or to prepare plans and specifications for and construct any buildings or other facilities under DNR control. Any additional resources needed by DNR for these duties will be covered with current funding. DAS may have to increase property management fees charged to state agencies to cover the fees lost by DNR's exemption. Any increase in fees will affect various state agency funds.

        Law Enforcement and Corrupt Activity Forfeiture Funds. Several new and existing funds in the Department will experience an increase in proceeds from the sale of forfeited property, seized contraband, and forfeited moneys. The proceeds will be credited to the fund(s) in the Division that actually conducted the investigation. Any additional revenues will be used to pay the costs of investigations, training or expertise, educational programs, and other purposes. The actual amount of additional revenue is currently unknown.

        Corrupt Activity Investigation and Prosecution Funds. The bill transfers the proceeds for forfeited property to the applicable DNR division funds that conducted the investigation leading to the forfeiture, rather than the proceeds remaining in the Corrupt Activity Investigation and Prosecution Fund (Fund 629).

        Water and Sewer Fund. The Water and Sewer Fund (Fund 444) may experience a draw on the fund's current cash balance as advancements are requested by political subdivisions to offset the loss of special assessment exemptions for state nature preserves.

        Timber Sales. The bill allows the Department to sell standing timber weakened by pestilence or timber that will improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area. Since this provision is specific to the Division of Parks and Recreation the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage. The actual amount of new revenue will depend on the number of trees harvested, the species and grade of tree harvested, and local market conditions.

 

        Engineering Savings. The bill makes several changes to the Department's contracting process. Many of these changes codify current practices. One of the changes will create incentives for contractors to look for project savings whereby the Department and the contractor would split the savings. The bill also allows the Department to reduce the amount of wage rate paperwork required in bidding documents. Currently, the Department does not have an estimate of the amount of savings that may be realized from both provisions.

 

        Free Hunting and Fishing Licenses. The bill allows permanently disabled veterans and former prisoners of war to obtain free hunting and fishing licenses on a multi-year basis or lifetime basis rather than an annual basis. This change may result in fewer licenses issued annually, in effect saving the Division of Wildlife time and resources to process these licenses. Any savings are expected to be minimal and will be deposited into the Wildlife Fund (Fund 015).

 

        Wildlife Buying Restitution. The bill adds that buyers of wild animals may also be charged with a fifth-degree felony and be required to pay restitution in the amount of the value of the animal. Currently, only sellers of wild animals are charged with this offense. This change may result in a negligible increase in additional revenue to the Wildlife Fund (Fund 015) from buyer restitution payments.

 

        Historic Watercraft Identification Plates. The bill eliminates the requirements that historic watercraft identification plates be restricted to wooden boats only. The Department estimates the Waterways Safety Fund (Fund 086) may experience a minimal increase in identification plate revenue as a result of the change.

 

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

County Auditors

Revenues

- 0 -

- 0 -

- 0 -

Expenditures

Minimal increase to track special assessments

Minimal increase to
track special assessments

Minimal increase to
track special assessments

Local Court

Revenues

- 0 -

- 0 -

- 0 -

Expenditures

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in
court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in
court costs to hear cases related to watercraft and wildlife law violations

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

 

        Special Assessments. County Auditors may experience a minimal increase in administrative expenses to track and record property data regarding the exemption of state nature preserves from public entity special assessments.

        Increased Court Costs. Local courts may experience a minimal increase in administrative expenses to hear cases regarding violations of watercraft and wildlife law, particularly violations regarding boating in federal security zones and buying wild animals. Any additional expenses are likely to be offset by court costs.


 


 

 

Detailed Fiscal Analysis

 

The bill makes various changes to the law governing the Department of Natural Resources. This fiscal note focuses only on those provisions in the bill with fiscal implications.

 

Property Management

 

The bill precludes the Department of Administrative Services' (DAS) general statutory authority over state property from interfering with the power of the Director of Natural Resources to enter into leases of real property, buildings, and office space for the use of the Department of Natural Resources (DNR), to purchase real property for division or district offices, or to prepare plans and specifications for and construct any buildings or other facilities that the Director may require for the administration of DNR.

 

DNR notes that no additional staff will be needed to carry out these new duties and any additional office resources that may be needed will be covered from the Division of Real Estate's current budget.

 

DAS indicates that the change in authority will result in a loss to their General Services Division-Operating Fund (Fund 117). Currently, DAS' General Services Division charges a property management fee to state agencies. The fee is in the form of a percentage of the total lease agreement or purchase price of the property. Currently, the percentage charged to all state agencies is 1.36%. DAS indicates that with this loss of authority the General Services Division will have to recoup the lost fees by increasing the overall percentage charged to all state agencies. This will result in an increase in expenditures of various state agencies that use DAS' property management services. Currently, DAS does not have an estimate of how much they may increase the percentage or how much it may end up costing state agencies.

 

Law Enforcement and Corrupt Activity Forfeiture Funds

 

The bill modifies the forfeited property and money disposition mechanism under the state Corrupt Activity Forfeiture Law and the Contraband Forfeiture Law by (1) expanding the distribution of proceeds, fines, and penalties credited to the Corrupt Activity Investigation and Prosecution Fund (Fund 629) by allowing DNR to receive a portion of these funds if DNR conducted the investigation, and (2) allowing various divisions of DNR to receive a portion of the proceeds from forfeited contraband or moneys when DNR law enforcement actually seize the contraband or moneys. The Corrupt Activity Investigation and Prosecution Fund (Fund 629) is administered by the Attorney General.

 

Corrupt Activity Forfeiture Law

 

Generally, when property is ordered forfeited pursuant to the Corrupt Activity Forfeiture Law, 10% of the proceeds of all property ordered forfeited is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to the Corrupt Activity Investigation and Prosecution Fund (Fund 629).

 

From the moneys credited to Fund 629, a certain amount is credited to the law enforcement trust fund of the prosecuting attorney and to the law enforcement trust fund of the law enforcement agency that actually conducted the investigation, be it a county sheriff, municipality, township, or park district. The bill expands the distribution of the money whereby if a DNR division substantially conducted the investigation, then it would receive a portion of the proceeds. Currently, none of DNR's funds are credited with any proceeds of any investigations conducted by the Department. The net effect of this change is that entity currently receiving proceeds will continue receiving them, despite DNR divisions receiving a share of their entitled portion.

 

However, under the bill if the Division of Forestry conducts the investigation, the remaining proceeds must be transferred to that Division for deposit into the existing State Forest Fund (Fund 509). If the Division of Natural Areas and Preserves conducts the investigation, the remaining proceeds must be transferred to the existing Natural Areas Check-Off Fund (Fund 522). If the Division of Wildlife substantially conducted the investigation, the remaining proceeds must be transferred to the existing Wildlife Fund (Fund 015). If the Division of Parks and Recreation conducts the investigation, the remaining proceeds must be transferred to the existing State Park Fund (Fund 512). If the Division of Watercraft substantially conducts the investigation, the remaining proceeds must be transferred to the existing Waterways Safety Fund (Fund 086).

 

With the crediting of proceeds going to DNR funds rather than to Fund 629, Fund 629 may experience a loss in revenue. An estimate of the actual loss the fund may experience is currently unknown.

 

Contraband Forfeiture Law

 

Similar to the Corrupt Activity Forfeiture Law, when certain contraband or forfeited moneys are ordered forfeited pursuant to the Contraband Forfeiture Law, 10% of the proceeds is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to law enforcement trust funds of the law enforcement agency that actually made the seizure of contraband or forfeited moneys. The bill expands the distribution of the proceeds whereby if the DNR substantially seized the contraband, then the particular division making the seizure would receive a portion of the proceeds. Like the Corrupt Activity Forfeiture Law, DNR currently does not receive any proceeds from the sale of any seized contraband or forfeited moneys.

 

Under the bill, if the Division of Forestry made the seizure of forfeited contraband or moneys, then the proceeds must be deposited into the Division of Forestry Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund). If the Division of Natural Areas and Preserves made the seizure, the proceeds must be deposited to the credit of the Division of Natural Areas and Preserves Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund). If the Division of Wildlife made the seizure, the proceeds must be credited to the Division of Wildlife Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund). If the Division of Parks and Recreation made the seizure, the proceeds must be credited to the Division of Parks and Recreation Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund). Finally, if the Division of Watercraft made the seizure, the proceeds must be credited to the Division of Watercraft Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).

 

Use of money from the new funds

 

For any of the proceeds that are credited to DNR's existing funds, under the Corrupt Activity Forfeiture Law, or any of DNR's new funds, under the Contraband Forfeiture Law, the moneys can only be used to pay the costs of the investigations or prosecutions, for technical training or expertise, for matching funds to obtain federal grants to aid law enforcement in educating adults and children of the dangers of drug abuse, to pay the costs of emergency action relative to the operation of an illegal methamphetamine laboratory if the forfeited property or money involved was that of a person responsible for the operation of the laboratory, or for other law enforcement purposes. Current law prohibits the specified funds from being used to meet the operating costs of the specified law enforcement agencies that are unrelated to law enforcement.

 

As of this writing, the Department is uncertain how much of the proceeds may be credited to the aforementioned funds. Further, the Department does not anticipate the need to hire any additional staff to assist in investigations, provide technical expertise, or program assistance.

 

Internal control. However, prior to the use of these funds, the Department must adopt a written internal control policy that addresses the use of the proceeds or moneys. The internal control policy must address the agency's use and disposition of all proceeds and forfeited moneys received and must provide for the keeping of detailed financial records of the receipts of the proceeds and forfeited moneys, the general types of expenditures made out of the proceeds and forfeited moneys, the specific amount of each general type of expenditure, and the amounts that must be used for community preventive education programs such as DARE programs. Current law states that all financial records of the receipts of the proceeds and forfeited moneys and all information that is prepared and maintained pursuant to the internal control policy are public records.

 

At this time, the Department does not foresee the need to hire any additional staff to account for the financial records and receipts in regard to a new internal control policy.

 

Reporting requirements

 

The bill requires the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, and Watercraft to each file a financial report with the Attorney General not later than January 31 of each calendar year. The report will contain information verifying that the proceeds in the fund were spent in accordance with the law.

Any additional costs for preparing the report will be handled with current staff and office resources. Expanding the filing requirements with the Attorney General (AG) is not expected to cause any additional fiscal impact since the AG already performs similar functions.


Special assessments on real property in nature preserves

 

The bill exempts state nature preserves from the collection of public entity special assessments for the purposes of sewer, water, or electrical service on real property.

 

As part of this change, the bill requires the county auditor, for each special assessment levied by a public entity on real property within a nature preserve for purposes of sewer, water, or electrical service, to make and maintain a list showing all of the following: (1) the name of the owner of each lot, tract, or parcel of land that is exempt, (2) a description of the exempt land, (3) the purpose of the special assessment, and (4) the amount of the uncollected assessment on the exempt land. The auditor also must record the assessments that are not collected under the bill in the county water works record. The recording of the assessments does not permit the collection of the assessments until the time that exempt lands are withdrawn from dedication as a nature preserve.

 

At this time, the County Auditor's Association reports that any additional administrative requirements for county auditors as outlined in the bill will create a minimal fiscal impact, if any.

 

Water and Sewer Commission. To offset the loss from the assessment, a board of county commissioners, legislative authority of a municipal corporation, or other governing board of any other public entity may apply to the Water and Sewer Commission for an advance of money from the existing Water and Sewer Fund (Fund 444) in an amount equal to that portion of the costs of a water or sewer improvement authorized by law that is to be financed by assessments whose collection is prohibited under the bill. The application for such an advance of money must be made in the manner prescribed by rules of the Commission. Upon collection of any assessment whose collection was prohibited under the bill, the board of county commissioners, legislative authority, or other governing board must repay the Commission the amount of any money advanced by it in regard to the assessments.

 

In discussions with the Water and Sewer Commission, there is currently no extra money in Fund 444 to support a significant number of advancements from local governments. Over the past few years the Commission has disbursed between $500,000 and $1,000,000 in loans. In most cases the loans are paid back by political subdivisions allowing Fund 444 to operate as a revolving loan fund. However, since the bill states that upon collection of any assessment whose collection was prohibited under the bill (in this case a state nature preserves), the Commission does not anticipate any of the advancements will be paid back to Fund 444. Ultimately, if the cash balance in Fund 444 is drawn down by advancements, various political subdivisions may not have the dollars to cover the full costs of certain utility projects. The amount of the advancements will depend on the level of assessment and the amount of state nature preserve property that would have been assessed. The Department states that the assessment exemption would apply to all existing nature preserves and future nature preserves.

 

Sale of timber

 

Currently, DNR is authorized to sell timber in a manner that will benefit the Division of Parks and Recreation that as a result of wind, storm, or any other natural occurrence may present a hazard to life or property or timber that has fallen on lands under the control and management of the Division. The bill also allows the Chief to sell standing timber that has been weakened by pestilence and presents a hazard to life or property, or any timber that requires management to improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area.

 

Since this provision is specific to the Division of Parks and Recreation, the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage. The actual amount of revenue the Department may realize per park will depend on several factors including the number of trees harvested, the species and grade of tree harvested, and local market conditions. That said, in total, annually, Fund 512 may realize a range of increased revenue from tens of thousands of dollars to hundreds of thousands of dollars depending on certain conditions.

 

Currently, the Department does not have an estimate of the amount of timber revenue it may realize. Furthermore, the Department indicates that these new provisions will allow the Department to harvest timber in parks as a result of the Emerald Ash Borer beetle infestation as well as giving the Division flexibility in clearing logs for habitat management, fire protection, and opening areas around lodges for better viewing by visitors.

Contracting

 

Bidding threshold. Currently, the Department is not required to bid out a construction or maintenance project if the project costs less than $10,000. The bill increases this threshold to $25,000. The Department notes that this increase is merely to adjust the bidding threshold to coincide with current market price for labor and materials. The Department does not anticipate an increase in in-house construction and maintenance projects as a result of the increase.

 

"Value engineering." The bill authorizes the Director to insert in any contract awarded under DNR's contracting authority a clause providing for value engineering change proposals. This incentive will allow a contractor who has been awarded a contract to propose a change in the plans and specifications of the project that saves DNR time or money on the project. The savings from the proposal must be divided between DNR and the contractor according to guidelines established by the Director, resulting in the contractor receiving at least 50% of the savings from the proposal.

 

The Department notes that this provision will result in savings for both the Department and the contractor. The contractor and the Department will determine how much a value engineering change will reduce the project's total cost and split the amount of the savings. Any additional savings will be credited to the Department's capital project funds.

 

Completing work. Under the bill when DNR determines that any contract work performed for the Department is not completed to specifications or as intended in the contract, DNR may require the contractor to provide, at no additional expense to DNR, any additional labor and materials that are necessary to complete the improvements at the level of quality and within the time of performance specified in the contract. The bill requires these procedures concerning such a requirement together with its format must be specified in the contract. If the contractor fails to comply with the requirement within the period specified in the contract, DNR may take action to complete the work through other means, up to and including termination of the contract.

 

 

Prevailing wage rate notices. The Wages and Hours on Public Works Law requires every public authority authorized to contract for or construct with its own forces a public improvement, to have the Director of Commerce determine the prevailing wage rates of mechanics and laborers for the class of work called for by the public improvement in the locality where the work is to be performed. The schedule of wages must be attached to and made part of the bid specifications. A copy of the schedule must be filed with the Director before the contract is awarded. The bill provides that DNR must include language in the contracts requiring the wage rate schedule be obtained electronically from the Department of Commerce, rather than attaching them to the actual bidding documents.

The Department notes that this change will create considerable printing and paper cost savings. Currently, 50% or more of contract documents are wage rate sheets. The Department recovers these costs by building them into the contract.

Provisions with Minimal or No Fiscal Effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

LSC fiscal staff: Jonathan Lee, Senior Budget Analyst

 

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