HB 1, As Introduced (HB 1) would appropriate $187,703.3 million from All Funds sources during the 2014-15 biennium.  This represents a decrease of $2,184.9 million, or 1.2 percent, from the 2012-13 All Funds estimated/budgeted levels.   As required under House Rule 4, Section 34 (a-1), the Legislative Budget Board has analyzed the dynamic economic impact of the bill.  The effects on employment, personal income, GSP, and other economic variables, assuming appropriation levels under HB1, were analyzed using the REMI Policy Insight Model, a dynamic forecasting and policy analysis tool that applies a combination of econometric, input-output, and computable general equilibrium methodologies.  The forecasted changes in several economic indicators for the state of Texas, as a result of HB1 spending relative to a baseline scenario, are displayed in Table 1.  The All-Funds appropriation levels analyzed in the model are adjusted to include Patient Income that is no longer appropriated to the health-related institutions.  This $6.1 billion of income and 16,068 FTEs remains available to the institutions.

The analysis reflects the predicted effects on the number of state employees and the impact on private sector employment as a result of the adjusted appropriation levels in HB 1 relative to a baseline scenario where 2014-15 appropriations were held constant at the 2012-13 levels.  It is important to note that the numbers in the tables are not all new jobs, rather they are changes in employment levels relative to a scenario where government spending remained constant from the 2012-13 to the 2014-15 biennium, a scenario in which the reduced employment levels would have been achieved through some combination of attrition, cancellation of intended hiring, and layoffs. Further, note that the employment concept used in the analysis is non-farm payroll employment calculated by the U.S. Bureau of Labor Statistics from the Current Employment Survey and differs from state FTE levels used in the General Appropriations Act.  For instance, two halftime workers would be counted as 1 FTE in the GAA, but two jobs in the CES. HB 1 as Introduced limits state FTEs to 215,700 in FY14 and 215,575 in FY15. Once adjusted for the patient income issue discussed above, state FTEs are reduced by 1,152 when comparing FY 2013 to 2015.

The increased state expenditures over the previous biennium are expected to avoid employment reductions and increase private sector employment levels by 34,000 in 2014 and 37,400 in 2015 over the no spending growth scenario, while simultaneously avoiding employment reductions and increasing state employment by 44,300 in 2014 and 44,900 in 2015 over the no spending growth scenario, subject to the caveats identified above.  In addition, Table 1 displays the corresponding effect on Gross State Product, Personal Income, and inflation.

Table 1
Dynamic Economic Impact, HB 1, As Introduced
State of Texas, Calendar Year 2014-15
Level Changes
Category	Units	2014	2015
Gross Domestic Product	Billions of Fixed (2005) Dollars	6.4	6.9
	% change	0.50%	0.52%
Personal Income	Billions of Current Dollars	5.8	6.9
	% change	0.49%	0.55%
CPI-U	1982-84=100 Level	236.6	240.7
	% change	0.02%	0.04%