LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 20, 2001
TO: Honorable Jim Solis, Chair, House Committee on Economic
Development
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1207 by Brimer (Relating to notice and protest rights
of certain reimbursing employers under the unemployment
compensation system.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1207, As Introduced: positive impact of $0 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Revenue Gain/(Loss) Probable Savings/(Cost) from *
* Year from Unemployment Compensation Unemployment Compensation *
* Clearance Account Benefit Account *
* 0936 0937 *
* 2002 $2,779,293,627 $(2,779,293,627) *
* 2003 2,779,293,627 (2,779,293,627) *
* 2004 2,779,293,627 (2,779,293,627) *
* 2005 2,779,293,627 (2,779,293,627) *
* 2006 2,779,293,627 (2,779,293,627) *
***************************************************************************
Fiscal Analysis
This bill would amend Chapter 205 of the Labor Code, allowing a school
district that elects to reimburse the unemployment compensation benefit
account notice and protest rights under certain circumstances, including
the school district being the last employer in the base period
unemployment insurance claim.
If enacted the bill would be effective September 1, 2001.
Methodology
The Texas Workforce Commission (TWC) estimates the fiscal impact of this
bill would be about $2.8 billion to the Unemployment Compensation Benefit
Account 0937 in each year of the 2002-03 biennium due to Texas becoming
ineligible for the deferred tax credit under the Federal Unemployment Tax
Act (FUTA). The deferred tax credit is equivalent to 5.4 percent of the
first 7,000 of wage compensation paid to covered workers in the state. To
make up for the loss of this credit, contributory employers (those who
make contributions for covered employees to the Unemployment Compensation
Clearance Account annually) would have to pay an additional $378 per
covered worker to the Unemployment Compensation Clearance Account 0936 in
each year of the 2002-03 biennium. In calendar year 1999, there were
7,352,627 covered workers in Texas.
The bill would give school districts that reimburse unemployment
insurance benefit payments to the unemployment compensation clearance
account the same rights of protest afforded to contributory employers,
provided the school district and the claimant meet certain specified
characteristics. If such rights were to be granted and the reimbursing
employer "won" the protest action, that employer would be relieved of
any payment obligation and the benefit costs of paying the claim would
be borne by the pool of contributory employers.
Local Government Impact
The potential savings to school districts is explained above. No
significant fiscal implication to other units of local government is
anticipated.
Source Agencies: 701 Texas Education Agency, 320 Texas Workforce
Commission
LBB Staff: JK, JO, HL, PF