LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 11, 2001
TO: Honorable Kim Brimer, Chair, House Committee on Business
& Industry
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3342 by Moreno, Joe E. (Relating to the rights of
temporary employees.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3342, As Introduced: positive impact of $85,950,000 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 $35,550,000 *
* 2003 50,400,000 *
* 2004 53,800,000 *
* 2005 57,400,000 *
* 2006 61,800,000 *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Savings/(Cost) Revenue *
* Gain/(Loss) Gain/(Loss) from Gain/(Loss) to *
* from General from Unemployment Cities *
* Revenue Fund Unemployment Compensation *
* 0001 Compensation Benefit Account *
* Clearance 0937 *
* Account *
* 0936 *
* 2002 $35,550,000 $2,779,293,627 $6,419,000 *
* $(2,779,293,627) *
* 2003 50,400,000 2,779,293,627 (2,779,293,627) 9,100,000 *
* 2004 53,800,000 2,779,293,627 (2,779,293,627) 9,714,000 *
* 2005 57,400,000 2,779,293,627 (2,779,293,627) 10,364,000 *
* 2006 61,800,000 2,779,293,627 (2,779,293,627) 11,158,000 *
***************************************************************************
***************************************************************************
*Fiscal Probable Revenue Gain/(Loss) to Probable Revenue Gain/(Loss) to *
* Year Transit Authorities Counties/SPDs *
* 2002 $447,000 $10,000 *
* 2003 634,000 14,000 *
* 2004 677,000 14,000 *
* 2005 722,000 15,000 *
* 2006 777,000 17,000 *
***************************************************************************
Fiscal Analysis
The bill would add Chapter 94 to Title 2 of the Labor Code. It would
entitle temporary employees who use a temporary employment service to
equal compensation and employee benefits as other employees at the client
company who perform equivalent work, and it defines prohibited charges
and deductions from compensation. The bill would require temporary
employment services to provide notices and disclosure about all
employment openings it has available, to provide workers' compensation
insurance for each temporary employee, and to follow other requirements
stipulated in the bill, including forbidding temporary employment
services from sending workers to a site where a labor dispute is in
progress.
Gross receipts of temporary employment services would be subject to state
and local sales taxes under the bill. There would also be a
disqualification to unemployment benefits of temporary workers' claims
allowed under the bill.
The Attorney General, district attorneys, and city attorneys would be
provided with the authority to prosecute violations under the bill.
Although the bill does not state an effective date, it is assumed, for
the purposes of this fiscal note, that the bill would take effect on
September 1, 2001.
Methodology
The Texas Workforce Commission estimates the fiscal impact of the 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 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 $85,950,000 gain to the General Revenue Fund from the additional
sales tax revenue in the 2002-03 biennium is based on the estimates in
the Comptroller's Tax Exemption and Tax Incidence report in January 2001.
The tax revenue estimates were adjusted for pre-existing contracts and
adjusted for an effective date of September 1, 2001, and extrapolated
through fiscal 2006. The fiscal impacts on units of local government
were estimated proportionally. The benefits disqualification would make
the Texas unemployment compensation system out of conformance with the
Federal Unemployment Tax Act (FUTA), resulting in a loss of the deferred
tax credit. The loss of this tax credit would effectively increase the
unemployment insurance taxes that employers pay to the Unemployment
Compensation Fund.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
Source Agencies: 320 Texas Workforce Commission
LBB Staff: JK, JO, RT, HL, SM