LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 17, 2001
TO: Honorable Steven Wolens, Chair, House Committee on State
Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1675 by Burnam (Relating to the establishment of a
minimum wage for public employees.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1675, As Introduced: negative impact of $(61,600,000) 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 $(26,750,000) *
* 2003 (34,850,000) *
* 2004 (45,500,000) *
* 2005 (57,000,000) *
* 2006 (71,600,000) *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) *
* from General from General from Federal from Other *
* Revenue Fund Revenue Funds - Federal Special State *
* 0001 Dedicated 0555 Funds *
* Accounts (ERS 0998 *
* and CPA only) *
* 0994 *
* 2002 $(26,750,000) $(2,900,000) $(14,650,000) $(3,050,000) *
* 2003 (34,850,000) (3,900,000) (17,750,000) (4,100,000) *
* 2004 (45,500,000) (5,300,000) (21,500,000) (5,600,000) *
* 2005 (57,000,000) (6,800,000) (25,500,000) (7,200,000) *
* 2006 (71,600,000) (8,750,000) (30,250,000) (9,200,000) *
***************************************************************************
Fiscal Analysis
The bill would increase the minimum governmental salary to the federal
poverty level for a family of 4. In 2001 this is $17,650, but is
increased each year by the increase in the Consumer Price Index (CPI).
Using CPI projections from the Comptroller's Fall 2000 Economic Forecast
gives projected salary levels of $18,100, $18,550, $19,050, $19,550, and
$20,100 in fiscal years 2002 through 2006 respectively.
Methodology
Using the February 2000 Job Class download which lists number of full
time state employees by group and step in schedule A, and salary rates
from the 2000-01 biennium, the cost would be $19.6 million in 2002,
increasing to $59.5 million in 2006. There would be additional costs for
part time and non classified employees, though these are relatively
small. The increased salary costs would require increased appropriation
amounts.
The impact on higher education would be higher proportionately, as they
have a much greater incidence of positions with relatively low salaries.
The impact is estimated by taking the cost for state employees and
multiplying by the ratio of higher education payroll over state agency
payroll and multiplying by 1.5 to reflect the greater incidence of low
salaried positions. These costs would require increased appropriation
amounts.
There would be additional costs to the Department of Mental Health and
Mental Retardation (MHMR) community centers, estimated at $17.8 million
in 2002 to $30.5 million in 2006. These centers are staffed with
employees who would be considered local government employees, and
appropriation amounts would need to be increased accordingly.
The General Appropriations Bill as introduced and the House
Appropriations Committee Substitute of the General Appropriations Bill
contain no increases for state employee salaries, and this is reflected
in the amounts listed above and in the tables above. The Senate Finance
Committee Substitute of the General Appropriations Bill includes a pay
increase for state employees and higher education non faculty employees
which would increase salaries of affected positions by $1,200 a year.
This greatly lessens the impact of the bill. The resulting impact on
state agency employees alone would be $6.2 million in 2002, $10.0 million
in 2003, and increase to $33.2 million by 2006. The effect of this
increase on higher education would be similar, as would the effect on
MHMR community centers.
Local Government Impact
In total, local governments had more than 3 times as many Full Time
Equivalent employees as the state in 1997; 850,000 compared to 260,000.
Therefore local government costs would be estimated to be more than 3
times higher than the state and higher education costs listed above.
Harris county, and the City of Grand Prairie estimated that House Bill
1675 would have a significant impact on their annual budget. Harris
county (population 3.2 million) indicated a budgetary increase of
$1,000,000 for 2001, and Grand Prairie (population 119,000) estimated an
increase of $100,000 for 2001. These costs are estimated to increase by
the same rate as state costs, by 50% in 2002, 100% in 2003, 175% in 2004,
250% in 2005, and 350% in 2006.
Source Agencies: 332 Texas Department of Housing and Community
Affairs, 327 Employees Retirement System, 304
Comptroller of Public Accounts
LBB Staff: JK, RB, WM, DW