Honorable DeWayne Burns, Chair, House Committee on Land & Resource Management
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB5067 by Bhojani (Relating to the establishment and implementation by the General Land Office of a distributed ledger-based title registry pilot program.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB5067, As Introduced : a negative impact of ($1,134,903) through the biennium ending August 31, 2025.
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
2024
($1,018,559)
2025
($116,344)
2026
$0
2027
$0
2028
$0
All Funds, Five-Year Impact:
Fiscal Year
Probable (Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2023
2024
($1,018,559)
1.0
2025
($116,344)
1.0
2026
$0
0.0
2027
$0
0.0
2028
$0
0.0
Fiscal Analysis
The bill would add Chapter 16, Distributed Ledger-Based Title Registry Pilot Program, to Title 3 of the Property Code. The bill would require the General Land Office and Veterans' Land Board (GLO) to establish and implement a distributed ledger-based title registry pilot program per identified goals and requirements in partnership with a working group consisting of representatives from counties, title insurance agents, title insurance companies, the banking industry, appropriate regulators, and the Texas Blockchain Council.
The agency would be required to identify counties to be included the pilot program; ensure that at least two counties are included in the pilot program, one rural and one urban as defined by provisions of the bill; and train, educate, and collaborate with these counties to implement the program. The bill would also require the agency to partner with a software company to create an interface to integrate existing systems with the distributed ledger system.
The GLO would be required to adopt rules necessary to administer the pilot program no later than October 1, 2023, and to submit a report to the Legislature on the findings of the program and any recommendations no later than January 1, 2025.
Chapter 16 would expire on September 1, 2025.
Methodology
Based upon information provided by the GLO, this analysis assumes the cost for implementing provisions of the bill would include $1,134,903 over the 2024-25 biennium, one additional FTE each fiscal year in the Asset Management Division, and three contracted staff in fiscal year 2024 in the Information Technology Services Division. It is assumed that the new FTE, a Program Specialist III, would establish protocol for implementation of the program, liaise with the working group, recruit counties to participate in the pilot program, train and educate county representatives, assist with coordinating the creation of the application programming interface described by the bill, evaluate the migration to a distributed ledger-based title registry, and develop the required report. Estimated salary, benefit, and payroll contribution expenses would total $95,455 each fiscal year. Operating expenses for this FTE would total $6,104 each fiscal year.
The GLO reports that its Information Services Division does not have expertise in the newer technologies encompassed by the bill. To create the distributed ledger per provisions of the bill, the agency anticipates needing to contract three staff members, a Project Manager, a Business Analyst, and a Software Developer, through an appropriate vendor. The cost estimate included above in the table reflects the estimated cost of $900,0000 in fiscal year 2024 for these contracted staff at a blended rate of $200 per hour for 4,500 hours. The estimated cost to host the distributed ledger in a cloud-based environment is $17,000 per fiscal year.
Technology
The technology-related costs to the GLO are estimated to total $917,000 in fiscal year 2024 and $17,000 in fiscal year 2025. It is assumed that GLO would contract for staff resources to develop the distributed ledger identified in the bill. The estimated costs include $900,000 for contract costs for staff in fiscal year 2024 and $17,000 each fiscal year to host the ledger in a cloud-based environment.
Local Government Impact
This analysis assumes that there would be an indeterminate negative fiscal impact to participating counties as a result of the dedication of staff resources necessary to participate in and implement the pilot program.