LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 15, 2001
TO: Honorable Jim Solis, Chair, House Committee on Economic
Development
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB762 by Coleman (Relating to requiring certain
employers who contract with or receive financial
assistance from the state or a state agency to pay its
employees a living wage; providing a penalty.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB762, As Introduced: negative impact of $(170,819,436) through *
* the biennium ending August 31, 2003. *
* *
* 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 *
* 2002 $(83,326,554) *
* 2003 (87,492,882) *
* 2004 (91,867,526) *
* 2005 (96,460,902) *
* 2006 (101,283,948) *
****************************************************
All Funds, Five-Year Impact:
**************************************************************************
*Fiscal Probable Probable Probable *
* Year Savings/(Cost) from Savings/(Cost) from Savings/(Cost) from *
* General Revenue Fund Federal Funds - Other Funds *
* (includes all Federal 0997 *
* GR-related funds) 0555 *
* 0001 *
* 2002 $(83,326,554) $(40,753,292) $(15,917,725) *
* 2003 (87,492,882) (42,790,957) (16,713,611) *
* 2004 (91,867,526) (44,930,505) (17,549,292) *
* 2005 (96,460,902) (47,177,031) (18,426,756) *
* 2006 (101,283,948) (49,535,882) (19,348,093) *
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Fiscal Analysis
The bill would amend Title 2 of the Labor Code by adding Chapter 65,
requiring an employer that contracts with or receives a loan, grant, tax
abatement, or other subsidy from the state or a state agency and a
subcontractor on a service contract to pay employees who work in a
"market area" a living wage. A "market area" is an area designated by the
United States Department of Housing and Urban development in which the
employer's office is located at which an employee works or is based. The
living wage for the market area would be based on the fair market rent
for the market area.
The bill would take effect September 1, 2001.
Methodology
The fiscal impact is estimated to be $170.8 million of General Revenue
and General Revenue-Dedicated Funds, $83.5 million of Federal Funds, and
$32.6 million of Other Funds in the 2002-03 biennium. The estimate is
based on fiscal year 2000 contracts with all state agencies, totaling
$8.4 billion. For these contracts it was assumed that one-third of the
cost of the contracts were labor costs and that one-third of the
employees earning wages under these contracts were not being paid a
living wage as defined in the bill. For fiscal year 2002, it was
estimated there would be a 10 percent increase in wages for the portion
of the employees not earning a living wage. From fiscal year 2003
forward, it is estimated that there would be a 5 percent increase in the
living wage as fair market rents would increase.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 302 Office of the Attorney General, 320 Texas
Workforce Commission, 601 Texas Department of
Transportation
LBB Staff: JK, JO, RT, HL