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F I S C A L I M P A C T R E P O R T

SPONSOR Luciano “Lucky” Varela DATE TYPED 02/04/05 HB 48

SHORT TITLE Public Employee Cost of Living Increases

SB

ANALYST Moser

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$73,179.7

Recurring General Fund

$13,375.7

Recurring

Various

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: HB 7, SB 222, and SB 263

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

Report of the Legislative Finance Committee to the Forty-seventh Legislature, First Session,

January 2005 for Fiscal Year 2005 – 2006, Volume I, pp. 96 – 101.

Responses Received From

Department of Transportation

Department of Corrections

NM State Personnel Office

SUMMARY

Synopsis of Bill

House Bill 48 appropriates $73,179.7 million from the general fund and at least $13,375.7 mil-

lion from various other agency funds to the department of finance and administration for the

purpose of providing a 3% salary increase to public employees. The salary increases apply to

public school employees (with the exception of teachers receiving a three tier increase), faculty

and staff at public post-secondary educational institutions, executive classified employees, ex-

ecutive exempt employees, legislative permanent employees, judicial employees and district at-

torney employees. Contingent upon presentation to the LFC of acceptable personnel policies

House Bill 48 -- Page 2

that address disciplinary actions and overtime the department of public safety would be appro-

priated an additional 2% salary adjustment of $640 thousand. The bill contains language to en-

sure employees whose salaries are funded from non-general fund appropriations will be covered

by the same salary increase provision provided in the bill.

The salary increase would be effective the first pay period after July 1, 2005.

Significant Issues

The salary increase is important to help offset rising expenses, such as the increases in health in-

surance premiums and general cost of living issues as evidenced by increases in the consumer

price index growth.. The increase would also assist all agencies and public school and higher

education institutions to recruit and retain employees and help maintain equity and remain com-

petitive with comparator markets.

According to the State Personnel Office combined with the net result of the increase in benefits

to come in July 2005 for the health insurance (1.47%), the 3% COLA proposed actually results

in a 4.47% increase for classified service employees.

FISCAL IMPLICATIONS

The appropriation of $73,179.7 million from the general fund and at least $13,125,644 from vari-

ous other agency funds contained in this bill is a recurring expense to the respective funds. Any

unexpended or unencumbered balances remaining at the end of fiscal year 2006 shall revert to

the general fund or other designated fund.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

This bill relates to the compensation increase in the General Appropriation Act, as introduced,

which included a 2.0 % compensation increase for faculty and staff at public post-secondary

educational institutions and a 1.25 % compensation increase for all other public employees as

referenced above.

OTHER SUBSTANTIVE ISSUES

This bill provides for a cost-of-living increase. Each employee would receive a salary increase,

even those who have unacceptable performance.

EM/lg