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February 13, 2023 HB 23-1162
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0703
Rep. Woodrow
Sen. Rodriguez
Date:
Bill Status:
Fiscal Analyst:
February 13, 2023
House Business Affairs & Labor
John Armstrong | 303-866-6289
john.armstrong@coleg.gov
Bill Topic: CONSUMER LEGAL FUNDING TRANSACTIONS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill requires companies offering consumer legal funding to register with the
Attorney General. The bill will increase state revenue and expenditures on an ongoing
basis.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $94,141 to multiple state
agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 23-1162
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue Cash Funds $46,500 -
Total Revenue $46,500 -
Expenditures General Fund $73,991 $21,671
Cash Funds $20,150 $20,150
Centrally Appropriated $16,897 $8,326
Total Expenditures $111,038 $50,147
Total FTE 0.8 FTE 0.4 FTE
Transfers - -
Other Budget Impacts General Fund Reserve $11,099 $3,251
TABOR Refund $46,500 - Page 2
February 13, 2023 HB 23-1162
Summary of Legislation
Consumer legal funding (CLF) is an agreement between a person with a pending legal claim and a
company that offers the person cash assistance in exchange for a percentage of the settlement or
award. If the person loses their lawsuit and does not receive a settlement, the person does not have to
pay back the company.
Effective February 1, 2024, the bill requires companies that offer CLF to register with the Attorney
General’s office and pay a $1,500 registration fee. Of this fee, $200 goes to the Identify Theft and
Financial Fraud Cash Fund and the remainder goes to a new Consumer Legal Funding Cash Fund
which is used to partially offset administration costs for the Attorney General’s office.
The bill requires certain disclosures in CLF agreements, limits the funding fee amount in the CLF
contract, and sets rules and prohibitions for companies, which the Attorney General is granted
authority to enforce the provisions of the Act.
Background and Assumptions
Currently there are four companies registered with the Department of Law as supervised lenders
within the Uniform Consumer Credit Code regulatory program. A review of trade association lists
suggests that a total of 31 companies may register with the Attorney General’s office to offer CLF to
consumers.
State Revenue
Colorado law requires legislative service agency review of measures which create or increase any fee
collected by a state agency. This fiscal note assumes that 31 companies will register with the Attorney
General’s office in FY 2023-24. As outlined in the bill, each registration will generate $1,500 in revenue,
with the $200 surcharge going to the Identity Theft and Financial Fraud Cash Fund in the Department
of Public Safety and the remaining fee going to the new Consumer Legal Funding Cash Fund in the
Department of Law. Revenue to the state cash funds are shown in Table 2 below. Revenues in the
CLF Cash Fund will be used to reduce the General Fund appropriations described in the State
Expenditures section.
Table 2
Cash Fund Revenue Under HB 23-1162
Fee Fee Split Registrants Total
CLF Cash Fund $1,300 31 $40,300
Identity Theft CF $200 31 $6,200
FY 2023-24 Total $46,500
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February 13, 2023 HB 23-1162
State Expenditures
The bill increases state expenditures in the Departments of Law and Public Safety by $111,038 in
FY 2023-24 and $50,147 in FY 2024-25, paid first from the CLF Cash Fund and the remainder paid from
the General Fund and various cash funds. Expenditures are shown in Table 2 and detailed below.
Table 3
Expenditures Under HB 23-1162
FY 2023-24 FY 2024-25
Department of Law
Personal Services $86,256 $41,821
Operating Expenses $1,215 -
Capital Outlay Costs $6,670 -
Centrally Appropriated Costs
1
$16,897 $8,326
FTE – Personal Services 0.8 FTE 0.4 FTE
Total $111,038 $50,147
Total FTE 0.8 FTE 0.4 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Law. This fiscal note assumes that the Attorney General’s office will receive 27 new
applications in FY 2023-24, with each application requiring roughly 40 hours of review and 4 new
applications from entities already licensed requiring 20 hours of review. Application review will be
completed by a Financial Credit Examiner, who will also spend approximately 300 hours responding
to industry questions, 300 hours to complete rulemaking and 200 hours to review appeals for any
denied applications. In 2024-25, this Financial Credit Examiner will provide approximately 600 hours
of ongoing advice and guidance to CLF providers and their consumers. Costs are prorated for the
General Fund Paydate shift in the first year and operating expenses and capital outlay expenses are
included in the first year only. Revenue from the CLF Cash Fund is assumed to be spent over the
two-year application cycle.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
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February 13, 2023 HB 23-1162
Other Budget Impacts
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve. Based on this fiscal note, the
bill is expected to increase the amount of General Fund held in reserve by the amounts shown in
Table 1, decreasing the amount of General Fund available for other purposes.
TABOR refunds. The bill is expected to increase the amount of state revenue required to be refunded
to taxpayers by the amounts shown in the State Revenue section above. This estimate assumes the
December 2022 LCS revenue forecast. A forecast of state revenue subject to TABOR is not available
beyond FY 2024-25. Because TABOR refunds are paid from the General Fund, increased cash fund
revenue will reduce the amount of General Fund available to spend or save.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State Appropriations
For FY 2023-24, the bill requires a total appropriation of $94,141 including:
$73,991 from the General Fund to the Department of Law and 0.8 FTE; and
$20,150 from the Consumer Legal Funding to the Department of Law
State and Local Government Contacts
Information Technology Judicial Law
Personnel Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.