LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 22, 1997
TO: Honorable Kenny Marchant, Chair IN RE: House Joint Resolution
No. 31, Committee Report 1st House, Substituted
Committee on Financial Institutions By: Patterson, L.P. "Pete"
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HJR31 ( Proposing
a constitutional amendment permitting an encumbrance to be fixed
on a homestead for certain extensions of credit.) this office
has detemined the following:
Biennial Net Impact to General Revenue Funds by HJR31-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $357,000 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 and create a division within the Office of the Consumer
Credit Commissioner for the purpose of licensing, examining
and verifying compliance of lenders with the provisions of the
bill. 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.
Methodolgy
The Office of the Consumer Credit Commissioner's projected revenues
of $1.3 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 22 additional full
time equivalents (FTEs), including 5 examiners, 2 assistant
examiners, 3 financial analysts, 2 attorneys, 1 consumer education
specialist, and 9 administrative technicians. Salaries are
projected at $740,000 per year. With additional travel and
related operating costs, the total costs of operation and staffing
is estimated at slightly over $1 million dollars per year.
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 ($1,148,000) $1,256,000 22.0
1998 (1,012,000) 1,261,000 22.0
2000 (1,023,000) 1,261,000 22.0
2001 (1,043,000) 1,261,000 22.0
2002 (1,090,000) 1,316,000 22.0
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $108,000
1999 249,000
2000 238,000
2001 218,000
2002 226,000
Similar annual fiscal implications These impacts 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:
LBB Staff: TH ,JA