FISCAL NOTE
Date Requested: January 29, 2024
Time Requested: 11:11 AM |
| Agency: |
Puchasing Division |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3208 |
Introduced |
HB5194 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
N/A
Sources of Revenue:
Other Fund This fund does not affect the WV Purchasing Division.
Legislation creates:
Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This bill proposes to amend W.Va. Code §5A-3-10. While these changes would not directly impact the Purchasing Division, they create significant financial challenges to agencies seeking services offered by non-profit workshops.
This change to the Code would require agencies to purchase exclusively from non-profit workshops, eliminating the benefits of the competitive bidding process, forcing agencies to pay more for these commodities and services in most situations.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
9,099,800 |
9,099,800 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
9,099,800 |
9,099,800 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would amend W. Va. Code §5A-3-10 by replacing permissive language with mandatory language. While this change would not impact the Purchasing Division’s budget, it would have fiscal consequences on agencies seeking goods or services offered by non-profit workshops. Virtually unlimited cost increases would result from enacting this legislation.
While it is difficult to quantify the exact impact to the State, the most recent hourly janitorial services rate increase-requests from the central nonprofit agency are currently under review by the Purchasing Division as presented to the Committee on the Purchase of Commodities and Services from the Handicapped.
Proposed rate increases vary among the 22 participating nonprofits, with an average of 34.6%. During 2023, the Purchasing Division reported $26,300,000 encumbered, statewide, on janitorial contracts with the central nonprofit. Applying the average rate increase of 34.6% to prior year costs, the additional expense to the state during a 12-month period totals $9,099,800.
The Department of Administration’s General Services Division (GSD) utilizes eight of these non-profit workshops. These workshops provide janitorial services in 21 State facilities. Based on the current rates, GSD anticipates expenses of $2,400,000 for FY24. If the rate increase is adopted, the average increase across these contracts would be 39.15%. This would result in an annual increase in Current Expenses of approximately $892,000. GSD pays these expenses from its Special Revenue account, derived from State agency rent and lease payments. GSD is not the largest user of these services. Many other departments and agencies would experience similar increases but the Department of Administration does not have access to their specific budget information.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Samantha Knapp
Email Address: Samantha.S.Knapp@wv.gov