LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session March 5, 1995 TO: Honorable Curtis Seidlits, Chair IN RE: Senate BillNo. 102, Committee on State Affairs as engrossed House of Representatives By: Bivins Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 102 (Relating to state employee contributions to the federal old age and survivors insurance program.) this office has determined the following: The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The bill would eliminate the state's contribution for the employees' share of social security taxes, beginning January 1, 1996, and replace it with a supplemental pay increase for current state employees (i.e. those employed by the state as of August 31, 1995). Under current law, the state contribution for the employee's share of social security taxes equals 5.85 percent of the first $16,500 earned in a calendar year. The maximum contribution is $965.25 a year. In addition to the supplemental increase, the bill would require the state to pay for the employees' share of the additional retirement contribution that ordinarily would be incurred by converting social security contributions into direct employee compensation. Employees hired after August 31, 1995 would not be entitled to the state-paid social security taxes or the supplemental pay increase. Current employees who terminate from state employment and return within two years would receive the supplemental pay increase and employee retirement contribution offset. Implementation of these provisions would be contingent upon the legislature appropriating sufficient funds for the supplemental pay increase and retirement contribution offset. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Savings Probable Savings Probable Savings Year from General from General from General Revenue Fund 001 Revenue Fund 001 - Revenue Fund 001 - - Consolidated - Dedicated 1996 $1,743,000 $165,000 $473,000 1997 15,479,000 1,467,000 4,203,000 1998 30,761,000 2,915,000 8,353,000 1999 44,973,000 4,262,000 12,212,000 2000 58,224,000 5,518,000 15,810,000 Fiscal Probable Savings Year from Other Funds 1996 $296,000 1997 2,625,000 1998 5,216,000 1999 7,625,000 2000 9,872,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Comptroller of Public Accounts LBB Staff: JK, RN, DF