LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 22, 1997 TO: Honorable David Sibley, Chair IN RE: Senate Bill No. 643 Committee on Economic Development By: Galloway, Michael Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB643 ( Relating to the experience rate applicable to certain successor employers for contributions under the unemployment compensation system.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB643-As Introduced Implementing the provisions of the bill would result in a net impact of $0 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. Fiscal Analysis Under current statute, successor employers do not have a new tax rate calculated in the year of acquisition since they are already experience rated. This bill would amend Section 204.085 of the Texas Unemployment Compensation Act to require the calculation of an interim tax rate for all successor employers in the year of the acquisition where transfer of compensation experience is mandatory. The bill would also allow certain employers that are taxed for unemployment compensation contributions to apply to the Texas Workforce Commission between September 1, 1997 and December 31, 1997 for a recomputation of their experience rate. According to the Texas Workforce Commission, Unemployment Insurance Federal Funds costs to implement the provisions of the bill would be $194,664 in FY 1998 and $29,464 per year thereafter. These costs include one new FTE, an Accounts Examiner, to process the tax rate calculations and answer questions raised due to the additional interim rate. FY 1998 costs include start-up costs to re-program the existing tax rate calculation to provide for an interim calculation, training for home office and field office staff to properly analyze the interim tax rate computations, and printing , mailing, and processing costs for new application forms and additional tax notices. Methodolgy Costs to Federal Fund Account 5026 were based upon the following assumptions: (1) Costs to re-program the existing tax rate calculation to provide for an interim calculation would be $25,000 in FY 1998. (2) Training for home office and field office staff to properly analyze the interim tax rate computations would cost $131,200 in FY 1998 (328 FTEs * 16 hours of training * $25/hour). 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 Change in Number Savings/(Cost) of State from Workforce Employees from Commission FY 1997 Federal Account - Federal 5026 1998 ($194,664) 1.0 1998 (29,464) 1.0 2000 (29,464) 1.0 2001 (29,464) 1.0 2002 (29,464) 1.0 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 $0 1999 0 2000 0 2001 0 2002 0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. Source: Agencies: LBB Staff: TH ,BK