LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 27, 1997
TO: Honorable James E. "Pete" Laney IN RE: House Joint Resolution
No. 31, As Passed 2nd House
Speaker of the House Patterson L.P. "Pete"
House of Representatives
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HJR31 ( Proposing
a constitutional amendment permitting an encumbrance against
homestead property for certain extensions of equity credit.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HJR31-As Passed 2nd House
Implementing the provisions of the bill would result in a net
positive impact of $21,400 to General Revenue Related Funds
through the biennium ending August 31, 1999.
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
The proposed constitutional amendment would permit home equity
lending. The Office of the Consumer Credit Commissioner projects
that additional examiners will be required to examine an increased
number of licensed lenders at an increased cost per examination
as a result of the added complexity of the type of examinations
conducted. Collected revenues would increase due to the licensure
of more regulated lenders, and from fees collected as a result
of charges assessed to lenders for examinations.
The bill
would also require the Finance Commission to appoint a director
to conduct research and produce annual reports on the availability
of financial services and on the practices of businesses that
provide financial services in Texas.
Methodolgy
The Office of the Consumer Credit Commissioner's projected revenues
of $1.5 million during the first year of implementation include
increased licensing fees resulting from a projected increase
in the number of lenders, as well as revenues generated from
examinations. The agency will charge a $150 surcharge per visit,
plus $32 per hour of examination.
The agency projects that
the cost of the new division would include 28 additional full
time equivalents (FTEs), including 7 examiners, 4 assistant
examiners, 1 attorneys, 1 legal assistant, 4 consumer education
specialist, 1 personnel manager, and 10 administrative technicians.
Salaries are projected at $800,000 per year. With additional
travel and related operating costs, the total costs of operation
and staffing is estimated at slightly over $1.4 million dollars
per year.
The Finance Commission would need one additional
FTE to conduct research and produce the annual report. Salary,
operating, and other expenses and associated costs would total
$83,300 in FY 1998 and $78,300 every year thereafter.
In
fiscal year 1998, there would also be the cost of publication
for the constitutional amendment to be set before the voters.
The probable fiscal implications of Implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Probable Revenue Change in Number
Savings/(Cost) Gain/(Loss) from of State
from General General Revenue Employees from
Revenue Fund Fund FY 1997
0001 0001
1998 ($1,579,300) $1,540,000 29.0
1998 (1,503,300) 1,564,000 29.0
2000 (1,503,300) 1,545,000 29.0
2001 (1,503,300) 1,530,000 29.0
2002 (1,503,300) 1,661,000 29.0
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 ($39,300)
1999 60,700
2000 41,700
2001 26,700
2002 157,700
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
No fiscal implication to units of local government is anticipated.
Source: Agencies: 304 Comptroller of Public Accounts
449 Finance Commission of Texas
466 Office of the Consumer Credit Commissioner
LBB Staff: JK ,JD ,TH ,JA