LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 30, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB317 by Sibley (Relating to continuation and functions
of the Office of Consumer Credit Commissioner and the
regulation of certain financial businesses.), Committee
Report 1st House, Substituted
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB317, Committee Report 1st House, Substituted: positive impact *
* of $0 through the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
**************************************************************************
*Fiscal Probable Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* General Revenue Fund General Revenue Fund FY 2001 *
* 0001 0001 *
* 2002 $(1,029,478) $1,029,478 6.0 *
* 2003 (535,411) 535,411 6.0 *
* 2004 (535,411) 535,411 6.0 *
* 2005 (535,411) 535,411 6.0 *
* 2006 (535,411) 535,411 6.0 *
**************************************************************************
Technology Impact
Additional computers and software for six Full-time Equivalent positions
(FTEs) and database enhancements would be needed for the Office of
Consumer Credit Commissioner (OCCC) for coordination with the Texas
Department of Transportation (TXDOT) totaling $57,000 in fiscal year
2002.
Fiscal Analysis
The bill would authorize the Finance Commission (FC) to set annual
license fees for regulated lenders and pawnshops to include the cost of
examinations, and it would repeal the stated annual license fees for
regulated lenders and pawnshops. The bill would allow the FC to base
fees on a licensee's loan volume.
The OCCC would have to license rather than register the financing
activities of motor vehicle dealers and third-party contract holders.
The bill would authorize fees for these entities to cover initial
investigation, annual license, and examination and administrative costs.
The bill would authorize criminal background checks of motor vehicle
dealers and third-party contract holders.
The bill would continue the OCCC until September 1, 2013.
The bill would take effect September 1, 2001.
Methodology
It is estimated that the OCCC would need six additional FTEs to implement
the provisions of the bill. Car dealers and third-party contract
holders would be required to obtain a license from the OCCC which
requires an FBI criminal background check. The total cost for the
criminal history background check for each applicant is $39. The OCCC
anticipates fingerprinting approximately 4 principals from each of the
5,700 car dealer and third-party holder businesses in fiscal year 2002.
The cost in fiscal year 2002 for 22,800 individuals is $889,200 and the
OCCC estimates future costs for fingerprinting to be about $100,000 per
year.
The bill also requires the OCCC to do periodic on-site examinations of
licensees. With a total of 5,700 businesses and an examination cycle of
approximately four years, about 1,425 examinations would be conducted
every year. Five examiners would be required each year for a total cost
of $60,000 per year beginning in fiscal year 2003.
The new licensing and examination activity would also require the
addition of an attorney for review of contracts, rules, and contested
cases and other expenses for an administrative law judge and court
reporter services.
The estimated cost of regulation is $1,029,478 in fiscal year 2002, with
almost $900,000 of that being fingerprint costs to DPS. OCCC will
recover these costs from fingerprint fees submitted by applicants. The
cost of regulation in fiscal year 2003 and each year thereafter is
$535,411.
It is assumed the OCCC would adjust its fees to offset the cost of the
regulation of financing activities and third party holders from
registration to licensure and the periodic on-site inspections.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, JO, DE