LEGISLATIVE BUDGET BOARD
Austin, Texas
 
DYNAMIC ECONOMIC IMPACT STATEMENT
 
83RD LEGISLATIVE REGULAR SESSION
 
March 22, 2013

TO:
Honorable Jim Pitts, Chair, House Committee on Appropriations
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
SB1 by Williams (General Appropriations Bill. ), Committee Report 2nd House, Substituted

SB 1, Committee Report, 2nd House, Substituted (CSSB 1) would appropriate $193,819.7 million from All Funds sources during the 2014-15 biennium.  This represents an increase of $3,932.0 million, or 1.5 percent, from the 2012-13 All Funds estimated/budgeted level.   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 CSSB1, 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 CSSB1 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 CSSB 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 analysis 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.  The employment concept used in the table 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. House CSSB 1 limits state FTEs to 217,626 in FY14 and 217,534 in FY15. Once adjusted for the patient income issue discussed above, state FTEs are increased by 807 when comparing 2013 to 2015, which will effectively constrain the growth in state employees relative to the figures stated below.

 

The increased state expenditures over the previous biennium are expected to avoid employment reductions and increase private sector employment levels by 70,100 in 2014 and 76,800 in 2015 over the no spending growth scenario, while simultaneously avoiding employment reductions and increasing state employment by 91,300 in 2014 and 92,100 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, SB 1, Committee Report, 2nd House Substituted

State of Texas, Calendar Year 2014-15

Level Changes

Category

Units

2014

2015

Gross Domestic Product

Billions of Fixed (2005) Dollars

13.2

14.2

 

% change

1.04%

1.07%

Personal Income

Billions of Current Dollars

12.0

14.1

 

% change

1.00%

1.12%

CPI-U

1982-84=100 Level

236.7

240.8

 

% change

0.04%

0.09%



Source Agencies:
LBB Staff:
UP, KK, SD