LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 12, 1997 TO: Honorable Kenny Marchant, Chair IN RE: Senate Bill No. 1781, Committee Report 2nd House, as amended Committee on Financial Institutions By: Ellis House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB1781 ( Relating to deliquency charges in retail charge agreements.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB1781-Committee Report 2nd House, as amended Implementing the provisions of the bill would result in a net impact of $0 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 This bill would allow the Consumer Credit Commissioner to accept financial contributions from a seller or creditor licensed, by the Commissioner, who charges a delinquency charge in excess of $10 for the purpose of conducting research conducted by the Finance Commission. Also, such creditors would be required to provide financial support to private credit counseling institutions. If the Consumer Credit Commissioner determines that such a creditor moves its credit operations out of this state in such a manner that results in the seller's retail installment contracts not being subject to these provisions, the creditor would pay a fee equivalent to 25 cents per delinquency charge collected by the creditor during the previous 12 months. Methodolgy According to the agency, the cost to complete the research and private counseling projects would be borne by a funding formula to be determined by an agency workgroup. Preliminary costs of each project is estimated at $100,000 each, which would be raised through assessments on licensees. The Office of the Consumer Credit Commissioner estimates that two Consumer Education Specialists would be required to administer provisions related to credit counseling. 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 Change in Number Savings/(Cost) Savings/(Cost) of State from General from General Employees from Revenue Fund Revenue Fund FY 1997 0001 0001 1998 $200,000 ($200,000) 1.0 1998 200,000 (200,000) 1.0 2000 200,000 (200,000) 1.0 2001 200,000 (200,000) 1.0 2002 200,000 (200,000) 1.0 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 $0 1999 0 2000 0 2001 0 2002 0 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: JK ,TH ,JA