TO: | Honorable Joe Deshotel, Chair, House Committee on Economic Development |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | HB262 by Coleman (Relating to the minimum wage.), As Introduced |
The bill would amend Section 62.051 of the Labor Code to increase the state minimum wage from the current federal minimum wage to the greater of: 1) $6.65 per hour on or after September 1, 2007, and $7.65 per hour on or after September 1, 2008; or 2) the federal minimum wage.
Beginning October 1, 2008, and October 1 of each subsequent year, the Texas Workforce Commission would increase the minimum wage by the inflation rate, based on the Consumer Price Index for urban wage earners and clerical workers (CPI-W). The minimum wage established by TWC each October would go into effect January 1 of the next year. Under Section 62.057 of the Labor Code, the new minimum wage would not apply to residents of state schools and patients of state hospitals who are compensated for work at departments' facilities (former Texas Department of Mental Health and Mental Retardation).
The bill would repeal Section 62.151 of the Labor Code which specifies that state and municipal minimum wage laws do not apply to workers covered by the federal minimum wage in the Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.). The bill would take effect September 1, 2007.
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2008 | ($128,906,144) |
2009 | ($296,186,653) |
2010 | ($368,905,636) |
2011 | ($374,563,304) |
2012 | ($380,311,871) |
Fiscal Year | Probable (Cost) from GENERAL REVENUE FUND 1 |
Probable (Cost) from GR MATCH FOR MEDICAID 758 |
Probable (Cost) from FEDERAL FUNDS 555 |
---|---|---|---|
2008 | ($253,578) | ($128,652,566) | ($180,534,864) |
2009 | ($605,813) | ($295,580,840) | ($410,161,929) |
2010 | ($605,813) | ($368,299,823) | ($510,313,059) |
2011 | ($605,813) | ($373,957,491) | ($518,187,129) |
2012 | ($605,813) | ($379,706,058) | ($526,132,793) |
The fiscal impact of the bill results from both the direct impact of an increase in the minimum wage, as well as the "ripple effect," which is the expected rise in wages that are currently above the minimum wage, but less than $9 per hour. The health and human services agencies, including the Health and Human Services Commission, Department of Family and Protective Services, and Department of Aging and Disability Services all assume the impact of both the direct and ripple effect on wages. The Building and Procurement Commission estimates an increase in rates paid to its contracted custodial vendors. The Texas Department of Transportation (TXDOT) assumes an increase in cost for highway maintenance contracts.
There is no impact from state full-time-equivalents included in this estimate, as the minimum classification schedule results in an hourly wage that is currently above minimum wage. However, the HHS agencies estimate an increase in the rates paid to contracted service providers, and this expense makes up the majority of the fiscal impact. The increased cost is $309.2 million in 2008, $705.7 million in 2009, $878.6 million in 2010, $892.1 million in 2011, and $905.8 million in 2012. The General Revenue share of this cost is approximately 42% of the total cost.
The Building and Procurement Commission estimates an increased General Revenue cost of $254,000 in 2008 and $605,000 in 2009 through 2012, for providing custodial services through contracted vendors at the increased minimum wage rate.
TXDOT estimates an increased cost of $21.2 million in 2008 and $35.3 million in 2009 through 2012. However, since these estimates are approximately 1% of TXDOT's annual average maintenance budget, it is assumed that the increased cost can be absorbed.
Source Agencies: | 303 Building and Procurement Commission, 304 Comptroller of Public Accounts, 308 State Auditor's Office, 320 Texas Workforce Commission, 529 Health and Human Services Commission, 539 Aging and Disability Services, Department of, 601 Department of Transportation
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LBB Staff: | JOB, JRO, ES, PP, NV, MB
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