FISCAL NOTE
FUND(S):
All
Sources of Revenue:
General Fund,Special Fund,Other Fund All w/ personal services
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to provide salary increases for state employees based on residential housing prices. The annual increases are two percent of the employee's regular salary for every ten percent that residential home prices in the employee's county of residence exceed the statewide average for residential homes.
Based on the U.S. Census Bureau "2005-2009 American Community Survey - 5-Year Estimates" for "Median Housing Value of Owner-Occupied Housing Units (Dollars)," median residential housing values for seventeen counties exceed the state median of $91,400. Of those seventeen counties, the median values for nine counties (Berkeley, Hampshire, Hardy, Jefferson, Mineral, Monongalia, Morgan, Pendleton, and Putnam) exceed the the state median by at least ten percent. Using data from the WorkForce West Virginia report of "West Virginia Employment and Wages - 2nd Quarter 2010," it is estimated that the proposed legislation would cost $100,979,517 in the first year (FY 2012), $115,856,822 for the second year (FY 2013) and $134,229,779 for the third year (FY 2014). Since this is an annual increase, the increase for each subsequent year builds on the previous year's increase. While these calculations are based on the information cited, the increase per fiscal year must be based on the current wages for affected employees as well as the most current information regarding residential housing values.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2011
Increase/Decrease
(use"-") |
2012
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
100,979,517 |
115,856,822 |
| Personal Services |
0 |
84,149,597 |
96,547,352 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
16,829,919 |
19,309,470 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The above estimate is based on the following data and assumptions.
► Information on residential housing values was obtained from the U.S. Census Bureau "2005-2009 American Community Survey - 5-Year Estimates" for "Median Housing Value of Owner-Occupied Housing Units (Dollars)" and the "West Virginia Fact Sheet" (for state median).
► Information on state wages paid by county was obtained from the WorkForce West Virginia report of "West Virginia Employment and Wages - 2nd Quarter 2010."
► The proposed legislation calls for the increases to be given to employees with three or more years of service. Detailed salary information relative to years of service was not available by county. Consequently, this estimate includes state wages paid by county for all state employees in the county.
► The proposed legislation calls for the increases to be given based on the county in which an employee resides. Detailed information regarding county of residence and wages was not available. Consequently, the estimate uses state wages paid in the county (i.e., assumes work county = county of residence).
► Benefits are estimated at 20% due to the different retirement systems in which affected employees participate (e.g., PERS, TIAA-CREF, etc.).
► The "Fiscal Year (Upon Full Implementation)" figures are for the second year (FY 2013). There is no mechanism or benchmark for determining when full implementation is reached.
Memorandum
This purpose of this proposed legislation is to address differences in costs of living among the various counties of the State using residential housing costs to determine such differences. However, the method proposed to address these differences has no mechanism for determining if/when those differences have been addressed. That is, the increases continue to be given as long as there are differences in the residential housing costs, with no regard for the cumulative amount of the increases nor for the actual salaries of the affected employees.
Some other states which have wide variations in costs of living for certain cities/counties (e.g., resort areas such as Lake Tahoe, Jackson Hole, or large cities such as New York City, etc.) use a housing allowance to address those situations. Such an allowance is not part of base pay, uses a formula and current data for determining amounts for various locations, and is only paid to employees working/living in the targeted locations (i.e., it doesn't continue if the employee leaves the location).
Person submitting Fiscal Note: Tari Crouse
Email Address: tari.m.crouse@wv.gov