LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 6, 1999
TO: Honorable Jim Solis, Chair, House Committee on Economic
Development
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3657 by Oliveira (relating to the continuation,
funding, and operation of certain workforce development
programs), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3657, Committee Report 1st House, Substituted: impact of $0 *
* through the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $0 *
* 2001 0 *
* 2002 0 *
* 2003 0 *
* 2004 0 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Revenue Revenue Savings/ Number of *
* Gain/(Loss) Gain/(Loss) Gain/(Loss) (Cost) from State *
* from from from Smart Smart Jobs Employees *
* Unemployme- Holding Jobs Trust Trust Fund from FY 1999 *
* nt Trust Fund Fund 0891 *
* Compensati- 0890 0891 *
* on *
* Clearance *
* Account *
* 0936 *
* 2000 $54,142,000 33.0 *
* $(28,841, $(15,701, $(35,944, *
* 000) 180) 871) *
* 2001 86,762,000 43,381,000 33.0 *
* (46,218,000) (53,917,307) *
* 2002 30,856,000 15,428,000 33.0 *
* (16,437,000) (17,972,436) *
* 2003 0 0 0 0 0.0 *
* 2004 0 0 0 0 0.0 *
***********************************************************************
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*Fiscal Probable Revenue Gain/(Loss) Probable Revenue Gain/(Loss) *
* Year from New - Other Smart Jobs from New - GR Dedicated Skills *
* Rainy Day Fund Development Account *
* 2000 $16,242,600 $53,600,580 *
* 2001 17,352,400 26,028,600 *
* 2002 6,171,200 9,256,800 *
* 2003 0 0 *
* 2004 0 0 *
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Fiscal Analysis
The bill would amend the expiration date in Section 204.0065 of the Labor
Code's current "temporary" maximum tax rate of 2.6 percent of wages, to
December 31, 2001. Due to the reduction of the maximum employer
contribution rate from 2.7 to 2.6 percent, the Comptroller estimates a
loss in revenue to the Unemployment Compensation Clearance Account 0936
of $28.8 million in fiscal year 2000 and $46.2 million in fiscal year
2001.
Due to the continuation of the 0.1 percent Smart Jobs contribution after
December 31, 1999 by the bill, the Comptroller estimates a gain in
revenue of $54.1 million in fiscal year 2000, $86.7 million in fiscal
year 2001 and $30.9 million during the first four months of 2002 to the
Smart Jobs Holding Trust Fund 0890.
The bill would also amend Section 481.161 of the Government Code setting
December 31, 2001 as the expiration date of the Smart Jobs program and
amend Section 481.154 of the Government Code creating a new Smart Jobs
Rainy Day Fund to be used if the unemployment rate exceeds 125 percent of
the rate during the previous three years or to address severe economic
dislocations. The bill would also amend Section 204.123 of the Labor
Code allocating 14 percent of transferred funds to the Smart Jobs Trust
Fund 0891, 20 percent to the new Smart Jobs Rainy Day Trust Fund, and 66
percent to the new General Revenue-Dedicated Skills Development Account
in fiscal year 2000. Allocations in subsequent years would be 50 percent
to the Smart Jobs Fund, 20 percent to the Rainy Day Fund, and 30 percent
to the Skills Development Account.
Based on past Legislative appropriation levels, the Texas Department of
Economic Development (TDED) estimates a cost to the Smart Jobs Trust
Fund 0891 of $35.9 million for the remaining eight months of fiscal year
2000, $53.9 million in fiscal year 2001 and $17.9 million for the first
four months of 2002.
Methodology
The Comptroller estimates the gain from continuing the 0.1 percent Smart
Jobs contribution by multiplying the Holding Trust Fund 0890 fiscal year
1998 revenues (which equaled $70.7 million) by the projected growth rate
of statewide wage and salary disbursements based on the Comptroller's
fall 1998 economic forecast. Because current Smart Jobs contributions
are set to end on December 31, 1999, the projected gain for fiscal year
2000 was adjusted to reflect a partial year of "new" collections from
January 1 to August 31 of that year.
Revenues for the Smart Jobs Fund 0891, the new Smart Jobs Rainy Day Fund
and the new Skills Development Account reflect transfers from Holding
Account 0890 based on the percentages in Section 204.123 of the Labor
Code as amended by the bill. Expenditure levels for the Smart Jobs Rainy
Day Fund would depend on economic conditions and administration by TDED.
The total amount of expenditures from the Smart Jobs Fund and Rainy
Day Fund would be limited to appropriations made to the TDED for this
program.
The Comptroller estimates the loss to the Unemployment Compensation
Clearance Account 0936 by multiplying the fund's fiscal 1998 revenues
(which equaled $978.8 million) by the ratio of the 0.1 percent rate
reduction. The resulting amount was then multiplied by the projected
growth rate of statewide wage and salary disbursements based on the
Comptroller's fall 1998 economic forecast.
TDED based the estimates of continuing the Smart Jobs program on the
staff and funding level for the program in the 1998-99 biennium, which
is 33 FTEs and $53.9 million per year. For fiscal year 2000, the fiscal
impact is determined by estimating that two-thirds of the fiscal year
1999 annual cost would be used for the program from January through
August 2000. The decrease in revenue in fiscal year 2000 reflects a
lower level of transfers from Holding Fund 0890. For fiscal year 2002,
the fiscal impact is determined by estimating that one-third of the
fiscal year 2002 annual cost would be used for the program from
September through December 2001.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
LBB Staff: JK, TH, RT, DP