LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
Revision 1
May 15, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2139 by Marchant (Relating to certain agreements under
a retail installment contract for the purchase of a motor
vehicle.), Committee Report 2nd House, as amended
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2139, Committee Report 2nd House, as amended: negative impact of *
* $(64,650,000) through the biennium ending August 31, 2003, if the *
* effective date is July 1, 2001; and a negative impact of *
* $(62,090,000) throught the biennium ending August 31, 2003, if the *
* effective date is September 1, 2001. *
**************************************************************************
The following table assumes an effective date of July 1, 2001:
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2001 $(2,560,000) *
* 2002 (30,700,000) *
* 2003 (31,390,000) *
* 2004 (32,250,000) *
* 2005 (33,220,000) *
* 2006 (34,240,000) *
*****************************************************
The following table assumes an effective date of September 1, 2001:
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $(30,700,000) *
* 2003 (31,390,000) *
* 2004 (32,250,000) *
* 2005 (33,220,000) *
* 2006 (34,240,000) *
*****************************************************
Fiscal Analysis
The bill would amend the Finance Code as it relates to charges for other
insurance and forms of protection included in retail installment
contracts.
The bill would take effect immediately, assuming that it received the
requisite two-thirds majority voted in both houses of the Legislature.
Otherwise, it would take effect September 1, 2001.
Methodology
The Office of Consumer Credit Commissioner (OCCC) estimates that the
provisions of the bill will result in an increase in complaints to its
consumer helpline and that those costs could be absorbed by the agency.
In addition, the OCCC estimates that there could be potential litigation
costs.
Further, the bill would entitle a lender, or affiliate, to recover motor
vehicle sales tax paid on the sale of a motor vehicle which was subject
to a debt cancellation agreement. The bill also would entitle the
dealer to recover the motor vehicle sales tax paid on a bad debt or when
the dealer repossessed the vehicle. Nationally, dealers that finance
sales sell 39 percent of their loans to retail buyers to third parties.
Approximately 13.5 percent of these result in repossessions by the third
party, while 19.1 percent of a dealer's notes result in repossessions.
Based on the motor vehicle sales tax reported by seller-financed
dealers, the loss from entitlements to dealers and affiliates would be
approximately $21.7 million for fiscal year 2002. The loss from other
dealers and affiliates selling used cars and entering into retail
installment agreements is estimated to be $9.53 million for fiscal 2002,
for a combined estimated loss of $30.7 million; figures for succeeeding
years were extrapolated upward based on the expected rate of growth.
Local Government Impact
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 Consumer Credit
Commissioner
LBB Staff: JK, JO, DE, WP