LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION March 13, 2013 TO: Honorable John Davis, Chair, House Committee On Economic & Small Business Development FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB983 by Elkins (Relating to the eligibility of temporary election officers for unemployment compensation.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB983, As Introduced: a negative impact of ($260,472,853) through the biennium ending August 31, 2015.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
March 13, 2013
TO: Honorable John Davis, Chair, House Committee On Economic & Small Business Development FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB983 by Elkins (Relating to the eligibility of temporary election officers for unemployment compensation.), As Introduced
TO: Honorable John Davis, Chair, House Committee On Economic & Small Business Development
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB983 by Elkins (Relating to the eligibility of temporary election officers for unemployment compensation.), As Introduced
Honorable John Davis, Chair, House Committee On Economic & Small Business Development
Honorable John Davis, Chair, House Committee On Economic & Small Business Development
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB983 by Elkins (Relating to the eligibility of temporary election officers for unemployment compensation.), As Introduced
HB983 by Elkins (Relating to the eligibility of temporary election officers for unemployment compensation.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB983, As Introduced: a negative impact of ($260,472,853) through the biennium ending August 31, 2015.
Estimated Two-year Net Impact to General Revenue Related Funds for HB983, As Introduced: a negative impact of ($260,472,853) through the biennium ending August 31, 2015.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2014 ($131,654,885) 2015 ($128,817,968) 2016 ($127,270,961) 2017 ($126,156,192) 2018 ($126,156,192)
2014 ($131,654,885)
2015 ($128,817,968)
2016 ($127,270,961)
2017 ($126,156,192)
2018 ($126,156,192)
All Funds, Five-Year Impact: Fiscal Year Probable (Cost) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromWrkforce Commission Fed5026 2014 ($131,654,885) ($131,654,885) 2015 ($128,817,968) ($128,817,968) 2016 ($127,270,961) ($127,270,961) 2017 ($126,156,192) ($126,156,192) 2018 ($126,156,192) ($126,156,192)
Fiscal Year Probable (Cost) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromWrkforce Commission Fed5026 2014 ($131,654,885) ($131,654,885) 2015 ($128,817,968) ($128,817,968) 2016 ($127,270,961) ($127,270,961) 2017 ($126,156,192) ($126,156,192) 2018 ($126,156,192) ($126,156,192)
2014 ($131,654,885) ($131,654,885)
2015 ($128,817,968) ($128,817,968)
2016 ($127,270,961) ($127,270,961)
2017 ($126,156,192) ($126,156,192)
2018 ($126,156,192) ($126,156,192)
Fiscal Analysis
The bill would amend the Labor Code relating to the eligibility of temporary election officers for unemployment compensation. Provisions of the bill add a subsection to exclude service in the employ of a political subdivision or of an instrumentality of a political subdivision that is wholly owned by one or more political subdivisions as a temporary election worker, officer, or official in conducting an election in the political subdivision from the definition of employment, making the individual ineligible to receive unemployment compensation benefits. The bill would take effect September 1, 2013.
The bill would amend the Labor Code relating to the eligibility of temporary election officers for unemployment compensation. Provisions of the bill add a subsection to exclude service in the employ of a political subdivision or of an instrumentality of a political subdivision that is wholly owned by one or more political subdivisions as a temporary election worker, officer, or official in conducting an election in the political subdivision from the definition of employment, making the individual ineligible to receive unemployment compensation benefits.
The bill would take effect September 1, 2013.
Methodology
According to information provided by the Texas Workforce Commission (TWC), the Department of Labor (DOL) issued an informal opinion that the bill would not conform to the Federal Unemployment Tax Act (FUTA) Section 3309(b)(3)(F), and to FUTA Section 3304(a)(6)(A). Adoption of state legislation that the DOL determines to be non-conforming would make Texas employers ineligible for the 5.4 percent offset credit under FUTA Section 3304, effectively increasing the FUTA tax rate from 0.6 percent to 6.0 percent. Currently, because Texas law is conforming and certified by the Secretary of Labor, Texas' contributing employers receive the full 5.4 percent offset credit, making the effective FUTA tax rate 0.6 percent. If Texas' contributing employers lose the offset credit, the FUTA rate would increase to the maximum, 6.0 percent. For the purpose of this analysis, TWC estimates a five-year cost to Texas' contributing employers of approximately $22.8 billion. In addition, state law determined non-conforming to FUTA Section 3304 may not be certified by the Secretary of Labor under the Social Security Act. Such certification is required for the state to receive its Unemployment Insurance State Administrative Grant under Social Security Act Section 303. According to information provided by TWC, implementing the provisions of the bill would result in a loss in the Unemployment Insurance (UI) State Administration Grant. The fiscal impact of losing the grant is reflected in the table above and is based on projected unemployment compensation insurance administrative grant funding for state fiscal years 2014 through 2018 according to the analysis provided by TWC. TWC estimates a loss of approximately $131.6 million in fiscal year 2014; $128.8 million in 2015; $127.3 million in fiscal year 2016; and $126.2 million in fiscal years 2016-17, for a five-year loss of $640.1 million. In addition, this analysis assumes TWC would be unable to administer the UI Program due to the loss in staff and program administration federal funding if no other funding source was available to replace the lost funds. TWC estimates a loss of 1,731 Full-Time-Equivalents (FTEs) in fiscal year 2014; 1,606 FTEs in fiscal year 2015; 1,589 FTEs in fiscal year 2016; and 1,535 FTEs in fiscal years 2017-2018 for staff working to assist with claims, appeals and in the tax department. Accordingly, this analysis assumes that costs for implementing the provisions of the bill would be funded with General Revenue funds instead of Federal Funds. This analysis also assumes the same administrative costs to operate the program would be necessary despite the anticipated decrease in individuals that would be eligible for unemployment compensation benefits under the provision of the bill. This analysis does not reflect or consider any savings to the UI Compensation Trust Fund because that fund is outside the Treasury.
According to information provided by the Texas Workforce Commission (TWC), the Department of Labor (DOL) issued an informal opinion that the bill would not conform to the Federal Unemployment Tax Act (FUTA) Section 3309(b)(3)(F), and to FUTA Section 3304(a)(6)(A). Adoption of state legislation that the DOL determines to be non-conforming would make Texas employers ineligible for the 5.4 percent offset credit under FUTA Section 3304, effectively increasing the FUTA tax rate from 0.6 percent to 6.0 percent. Currently, because Texas law is conforming and certified by the Secretary of Labor, Texas' contributing employers receive the full 5.4 percent offset credit, making the effective FUTA tax rate 0.6 percent. If Texas' contributing employers lose the offset credit, the FUTA rate would increase to the maximum, 6.0 percent. For the purpose of this analysis, TWC estimates a five-year cost to Texas' contributing employers of approximately $22.8 billion. In addition, state law determined non-conforming to FUTA Section 3304 may not be certified by the Secretary of Labor under the Social Security Act. Such certification is required for the state to receive its Unemployment Insurance State Administrative Grant under Social Security Act Section 303.
According to information provided by TWC, implementing the provisions of the bill would result in a loss in the Unemployment Insurance (UI) State Administration Grant. The fiscal impact of losing the grant is reflected in the table above and is based on projected unemployment compensation insurance administrative grant funding for state fiscal years 2014 through 2018 according to the analysis provided by TWC. TWC estimates a loss of approximately $131.6 million in fiscal year 2014; $128.8 million in 2015; $127.3 million in fiscal year 2016; and $126.2 million in fiscal years 2016-17, for a five-year loss of $640.1 million.
In addition, this analysis assumes TWC would be unable to administer the UI Program due to the loss in staff and program administration federal funding if no other funding source was available to replace the lost funds. TWC estimates a loss of 1,731 Full-Time-Equivalents (FTEs) in fiscal year 2014; 1,606 FTEs in fiscal year 2015; 1,589 FTEs in fiscal year 2016; and 1,535 FTEs in fiscal years 2017-2018 for staff working to assist with claims, appeals and in the tax department. Accordingly, this analysis assumes that costs for implementing the provisions of the bill would be funded with General Revenue funds instead of Federal Funds. This analysis also assumes the same administrative costs to operate the program would be necessary despite the anticipated decrease in individuals that would be eligible for unemployment compensation benefits under the provision of the bill. This analysis does not reflect or consider any savings to the UI Compensation Trust Fund because that fund is outside the Treasury.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 320 Texas Workforce Commission
320 Texas Workforce Commission
LBB Staff: UP, RB, MW, NV
UP, RB, MW, NV