Honorable Angie Chen Button, Chair, House Committee on Trade, Workforce & Economic Development
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB5567 by DeAyala (Relating to the methods of submission of business filings; increasing the amount of certain fees.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB5567, As Introduced: a negative impact of ($4,419,479) through the biennium ending August 31, 2027.
The extent to which costs related to the new expedited business filing process would be offset by anticipated fee increases cannot be determined at this time because revenue gained would be dependent on the specific fee structure implemented by the Secretary of State.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($2,857,650)
2027
($1,561,829)
2028
($1,561,829)
2029
($1,561,829)
2030
($1,561,829)
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2025
2026
($2,857,650)
12.0
2027
($1,561,829)
12.0
2028
($1,561,829)
12.0
2029
($1,561,829)
12.0
2030
($1,561,829)
12.0
Fiscal Analysis
The bill would permit the Secretary of State (SOS) to set a fee not to exceed $5,000 for expedited handling or processing of certain business filings and other services. Under current law and regulation, SOS charges a rate for business filings of either $15 for normal filings or $25 for expedited filings. The agency anticipates creating a multi-tier fee schedule for expedited review and expects that such a program would lead to an increase in the volume of filings requiring rapid processing.
Methodology
According to SOS, based on an anticipated increase in complex expedited filings and other submissions, the agency's experience with processing business filings, and its existing workload, 12 additional FTEs would be required to implement the new expedited filing program.
The agency estimates that these new duties would require 12.0 FTEs: five Program Specialist V ($70,662 per position per year), two Program Specialist VI ($80,421 per position per year), three Attorney IV ($124,606 per position per year), and two Attorney V ($150,773 per position per year). Associated benefits and other costs for these positions would be $372,313 per year and there would be an additional one-time set up cost of $95,820 in fiscal year 2026.
According to the Comptroller of Public Accounts (CPA), the range between the current fee maximum ($15 or $25) and the proposed maximum amount ($5,000) is significant and the actual fee amount SOS would set is unknown. As a result, according to the CPA, the revenue impact cannot be determined.
Technology
The SOS is currently implementing a redesign of the business transaction system with an estimated completion date of Summer 2026. The agency assumes that the change in business processes related to the bill would be implemented only in the modernized system. The new expedited filing procedure would require SOS to amend the scope of work on this existing modernization project.
SOS estimates that it would take two months for discovery to evaluate the building of the new expedited handling of business filings, three months to develop and test the application, and one month to support the functionality of the system once it is released to the public. The agency anticipates a cost of $200,000 per month based on currently contracted rates for these modifications for a total technology cost of $1,200,000.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 307 Secretary of State