TO: | Honorable Tom Craddick, Speaker of the House, House of Representatives |
FROM: | John Keel, Director, Legislative Budget Board |
IN RE: | HB3324 by Keffer, Jim (Relating to the issuance of certain obligations and the imposition of assessments for the unemployment compensation system. ), As Passed 2nd House |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2004 | $0 |
2005 | $0 |
2006 | $0 |
2007 | $0 |
2008 | $0 |
Fiscal Year | Probable Revenue Gain from Borrowing Proceeds - UC Obligation Trust Fund |
Probable (Cost) from Borrowing Proceeds - UC Obligation Trust Fund |
Probable (Cost) from Administrative Costs - UC Obligation Trust Fund |
Probable Revenue Gain from Administrative Costs - UC Obligation Trust Fund |
---|---|---|---|---|
2004 | $800,000,000 | ($800,000,000) | ($7,333,333) | $7,333,333 |
2005 | $0 | $0 | $0 | $0 |
2006 | $0 | $0 | $0 | $0 |
2007 | $0 | $0 | $0 | $0 |
2008 | $0 | $0 | $0 | $0 |
The bill would amend Chapter 203 of the Labor Code to provide TWC with authority to ask the Texas Public Finance Authority (TPFA) to issue up to $2 billion in bonds or other obligations for the unemployment insurance program. The obligations would not constitute a debt of the state and would not be backed by the full faith and credit or taxing power of the state. The obligations would be free from taxation by the state and its political subdivisions.
Proceeds from the obligations would be held in a dedicated trust fund outside the state treasury but in the custody of the Comptroller of Public Accounts (CPA). The proceeds could be used for repayment of principal and interest on advances from the federal trust fund, payment of unemployment benefits, payment of costs associated with issuance of the obligations, for provision of a bond reserve, or for payment of capitalized interest for up to two years.
TWC would be required to make an assessment on employers in the state at a rate sufficient to cover bond obligations and the estimated amount of bond administrative expenses each year. These assessments would be calculated with the same wage base used to calculate the unemployment tax.
The bill would take effect immediately if it received a vote of two-thirds of all the members elected to each house of the Legislature, otherwise it would take effect September 1, 2003.
Based on current unemployment rate projections from CPA, TWC estimates it would seek $800 million in obligations from TPFA in 2004. The obligation assessment on employers would generate sufficient funds to repay the principal and interest on the obligation during 2004, assuming a 2.75% interest rate for commercial paper issuances. TWC further assumes there would be no additional need to borrow in the credit markets through fiscal year 2008.
Source Agencies: | 320 Texas Workforce Commission
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LBB Staff: | JK, EB, JRO, JO, WP, GO, RT, JC
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