Honorable John Zerwas, Chair, House Committee on Appropriations
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB2 by Zerwas (relating to making supplemental appropriations and giving direction and adjustment authority regarding appropriations.), Committee Report 1st House, Substituted
HB 2, Committee Report 1st House, Substituted (CSHB 2) would make a net change in appropriations of $2.9 billion from All Funds sources during the 2016-17 biennium.
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 changes under CSHB 2 were analyzed using the REMI Tax-PI model, a dynamic forecasting and policy analysis tool that applies a combination of econometric, input-output, and computable general equilibrium methodologies.
The analysis estimated the predicted impact on the number of state employees and the impact on employment by the private sector and local governments in Texas as a result of the changes in state expenditures resulting from the appropriation adjustments in CSHB 2 relative to a baseline scenario where 2016-17 state expenditures were held constant at previously adopted 2016-17 levels. Several adjustments were made to the All Funds appropriations entered into the model to account for the fact that a change in appropriations is not necessarily an equal change in state spending. For instance, approximately $2.6 billion in CSHB 2 appropriation increases are to cover the Medicaid shortfall at HHSC, which are already built into the baseline spending levels in the model and thus, would have no effect on overall state spending. After other similar adjustments, the net increase in state spending from CSHB 2, As Introduced, analyzed in the model was $208.7 million.
It is important to note that the numbers are not all new jobs; rather they are changes in employment levels relative to a scenario where government spending remained constant at previously adopted 2016-17 levels. Further, note that the employment concept used in the analysis is non-farm payroll employment calculated using source data from the U.S. Bureau of Economic Analysis (BEA) and the Bureau of Labor Statistics (BLS), 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 REMI employment data. The increased state expenditures in the 2016-17 biennium are expected to increase private sector employment levels by 4,651 in 2017 over the constant spending growth scenario, while simultaneously increasing local government employment by 172 and state government employment by 47 in 2017 over the constant spending growth scenario.