LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION May 4, 2009 TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:SB248 by Shapleigh (Relating to the interest and fees that may be charged for certain consumer loans; providing a criminal penalty.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB248, As Introduced: an impact of $0 through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
May 4, 2009
TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:SB248 by Shapleigh (Relating to the interest and fees that may be charged for certain consumer loans; providing a criminal penalty.), As Introduced
TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: SB248 by Shapleigh (Relating to the interest and fees that may be charged for certain consumer loans; providing a criminal penalty.), As Introduced
Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
SB248 by Shapleigh (Relating to the interest and fees that may be charged for certain consumer loans; providing a criminal penalty.), As Introduced
SB248 by Shapleigh (Relating to the interest and fees that may be charged for certain consumer loans; providing a criminal penalty.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB248, As Introduced: an impact of $0 through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for SB248, As Introduced: an impact of $0 through the biennium ending August 31, 2011.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 $0 2011 $0 2012 $0 2013 $0 2014 $0
2010 $0
2011 $0
2012 $0
2013 $0
2014 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Savings fromGeneral Revenue Fund1 Change in Number of State Employees from FY 2009 2010 ($1,200,000) $1,200,000 (15.0) 2011 ($1,200,000) $1,200,000 (15.0) 2012 ($1,200,000) $1,200,000 (15.0) 2013 ($1,200,000) $1,200,000 (15.0) 2014 ($1,200,000) $1,200,000 (15.0)
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Savings fromGeneral Revenue Fund1 Change in Number of State Employees from FY 2009 2010 ($1,200,000) $1,200,000 (15.0) 2011 ($1,200,000) $1,200,000 (15.0) 2012 ($1,200,000) $1,200,000 (15.0) 2013 ($1,200,000) $1,200,000 (15.0) 2014 ($1,200,000) $1,200,000 (15.0)
2010 ($1,200,000) $1,200,000 (15.0)
2011 ($1,200,000) $1,200,000 (15.0)
2012 ($1,200,000) $1,200,000 (15.0)
2013 ($1,200,000) $1,200,000 (15.0)
2014 ($1,200,000) $1,200,000 (15.0)
Fiscal Analysis
The bill would amend the Finance Code to limit the amount of interest charged on certain consumer loans to a maximum of 36 percent. Additionally, if the loan contract is prepaid in full, the lender would refund or credit the borrower for unearned interest charges the borrower has already paid. An administrative fee not to exceed $5 can be provided for deferred presentment transactions. A lender may charge a maximum fee of $15 for a returned check. The bill would take effect September 1, 2009.
The bill would amend the Finance Code to limit the amount of interest charged on certain consumer loans to a maximum of 36 percent. Additionally, if the loan contract is prepaid in full, the lender would refund or credit the borrower for unearned interest charges the borrower has already paid. An administrative fee not to exceed $5 can be provided for deferred presentment transactions. A lender may charge a maximum fee of $15 for a returned check.
The bill would take effect September 1, 2009.
Methodology
The analysis is based on information provided by the Office of Consumer Credit Commissioner (OCCC) and includes the following assumptions: The OCCC licenses approximately 2,600 small loan lenders. Based on information provided by OCCC, it is estimated that limiting the interest rate charged on a consumer loan to a maximum of 36 percent would cause a reduction in the licensee population which would reduce the need for FTE positions. It is assumed that the OCCC would reduce its number of FTEs by 15.0 each year, which would equate to a savings of $1.2 million each year. This includes salary, benefits, travel, operating expenses, and other costs for each FTE. Since the OCCC is a self-leveling agency and is statutorily required to generate revenues sufficient to cover all of the agency's direct and indirect costs, this analysis assumes the estimated savings would be offset by a similar reduction in revenues collected.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 450 Department of Savings and Mortgage Lending, 451 Department of Banking, 466 Office of Consumer Credit Commissioner, 469 Credit Union Department
450 Department of Savings and Mortgage Lending, 451 Department of Banking, 466 Office of Consumer Credit Commissioner, 469 Credit Union Department
LBB Staff: JOB, ACa, JRO, MW
JOB, ACa, JRO, MW