LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 21, 1997 TO: Honorable Bill Ratliff, Chair IN RE: Senate Bill No. 310, Committee Report 1st House, Substituted Committee on Finance By: Brown Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB310 ( relating to certain judicial salaries) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB310-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net negative impact of $(13,053,332) to General Revenue Related Funds through the biennium ending August 31, 1999. 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 provide for a justice of the Supreme Court to receive an annual salary from the state that is at least $102,463. The bill would also provide that visiting judges would receive a salary that was the greater of the regular judge's salary from the state on August 31, 1997 or 85 percent of the regular judge's salary from the state. The bill would take effect September 1, 1997. Fiscal Analysis The salary provisions of the bill would provide for salary increases for the judges of the Supreme Court, Court of Criminal Appeals, fourteen Courts of Appeals and the state district courts as provided in Section 659.012 of the Government Code. Salaries of the district attorneys would also be increased pursuant to Section 46.003 and Section 41.013 of the Government Code. The salaries of retired and former judges serving as visiting judges would be capped at 85% of the sitting judge's salary, or the salary from the state on August 31, 1997, whichever was greater. The proposed salary changes would impact the Employees Retirement System (ERS) since benefits for members of the elected class are based on the salary of a district judge. The bill would increase the liabilities and the normal cost of the ERS slightly as a result of the increase in benefits. However, the fund has a large actuarial surplus and could absorb these increases. An increase in state contributions to the program would not be necessary. The costs for the state's contributions to the Judicial Retirement System Plan Two (JRS-2) would increase as a result of the increase in total judicial payroll. Additionally, the liabilities of the JRS-2 would increase, along with the amortization period. However, the amortization period would still be below the 30 year period required by statute; therefore, an increase in the contribution rate would not be necessary. At the current state contribution rate of 16.54%, the increase in state contributions resulting from the increased payroll would be $450,000 in FY1998, $487,930 in FY1999, $490,246 in FY2000, $512,740 in FY2001, and $514,394 in FY2002. The increase in salaries would also impact the state's expenditures for the Judicial Retirement System Plan One (JRS-1) because the benefits of retired judges in the system are based on current judicial salaries. Since this program is funded on a pay-as-you-go basis, an increase in pension benefits results in a direct increase in state expenditures. The increase in benefits expenditures resulting from this bill would be $1.5 million in FY1998, $1.6 million in FY1999, $1.7 million in FY2000, $1.8 million in FY2001, and $2.0 million in FY2002. Methodolgy Using the calculations, provided in the bill for salary adjustments, the Chief Justice of the Supreme Court and the Presiding Judge of the Court of Criminal Appeals would receive $105,247, the justices of the Supreme Court and Court of Criminal Appeals would receive $102,463, the Chief Justice of a Court of Appeals would receive $97,870 and a justice of the Court of Appeals would receive $97,340 annually. District court judges would receive an increase to $92,217 annually, as would prosecutors within the professional prosecutors act. Prosecutors with general felony jurisdiction, not within the professional prosecutors act, would receive $73,774 annually. The salary apportionment for the county attorney performing the duties of a district attorney in Oldham County would increase to $22,132 annually. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Savings/(Cost) from General Revenue Fund 0001 1998 ($6,457,701) 1998 (6,595,631) 2000 (6,697,947) 2001 (6,820,441) 2002 (7,022,095) Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 ($6,457,701) 1999 (6,595,631) 2000 (6,697,947) 2001 (6,820,441) 2002 (7,022,095) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No significant fiscal implication to units of local government is anticipated. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: RR ,SC ,DC