LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 14, 2025 TO: Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB2221 by Parker (Relating to the filing of a fraudulent financing statement in relation to certain secured transactions; authorizing the imposition of a fee.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB2221, As Introduced: a negative impact of ($2,607,626) through the biennium ending August 31, 2027. 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 toGeneral Revenue Related Funds2026($1,927,768)2027($679,858)2028($679,858)2029($679,858)2030($679,858)All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20252026($1,927,768)6.02027($679,858)6.02028($679,858)6.02029($679,858)6.02030($679,858)6.0 Fiscal AnalysisThe bill would amend the Business & Commerce Code related to fraudulent Uniform Commercial Code (UCC) financing statements filed with the Secretary of State (SOS) and county clerk offices. The bill would permit a debtor named in a UCC financing statement that the debtor believes was impermissibly or fraudulently filed to submit an affidavit to that effect.The bill requires the office in which an affidavit is filed to review whether the affidavit was submitted without a reasonable basis or with the intent to harass or defraud. For valid affidavits, the filing office would be required to issue a termination statement regarding the applicable financing statement and send notice to each secured party of record by certified mail.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 14, 2025
TO: Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB2221 by Parker (Relating to the filing of a fraudulent financing statement in relation to certain secured transactions; authorizing the imposition of a fee.), As Introduced
TO: Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB2221 by Parker (Relating to the filing of a fraudulent financing statement in relation to certain secured transactions; authorizing the imposition of a fee.), As Introduced
Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce
Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB2221 by Parker (Relating to the filing of a fraudulent financing statement in relation to certain secured transactions; authorizing the imposition of a fee.), As Introduced
SB2221 by Parker (Relating to the filing of a fraudulent financing statement in relation to certain secured transactions; authorizing the imposition of a fee.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB2221, As Introduced: a negative impact of ($2,607,626) through the biennium ending August 31, 2027. 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 SB2221, As Introduced: a negative impact of ($2,607,626) through the biennium ending August 31, 2027. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
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:
2026 ($1,927,768)
2027 ($679,858)
2028 ($679,858)
2029 ($679,858)
2030 ($679,858)
All Funds, Five-Year Impact:
2026 ($1,927,768) 6.0
2027 ($679,858) 6.0
2028 ($679,858) 6.0
2029 ($679,858) 6.0
2030 ($679,858) 6.0
Fiscal Analysis
The bill would amend the Business & Commerce Code related to fraudulent Uniform Commercial Code (UCC) financing statements filed with the Secretary of State (SOS) and county clerk offices. The bill would permit a debtor named in a UCC financing statement that the debtor believes was impermissibly or fraudulently filed to submit an affidavit to that effect.The bill requires the office in which an affidavit is filed to review whether the affidavit was submitted without a reasonable basis or with the intent to harass or defraud. For valid affidavits, the filing office would be required to issue a termination statement regarding the applicable financing statement and send notice to each secured party of record by certified mail.
Methodology
Based on the agency's experience with processing UCC financing statements, the SOS estimates that it will receive at least 600 affidavits each year as well as experience an increase in public inquiries regarding procedures for UCC submissions and challenges of fraudulent filings. The SOS estimates that the agency would require 6 new FTEs to carry out the provisions of this bill related to administrative review and notification and providing additional information to inquiries.According to the agency, these new statutory responsibilities would require the following positions: three Program Specialist III ($62,136 per year), one Attorney IV ($124,606) per year, and two Attorney II ($102,980). Benefits and associated expenses for these positions would be $162,884 per fiscal year with an additional $47,910 in setup expenses in fiscal year 2026.According to the Office of Court Administration, no significant fiscal impact to the state court system is anticipated.According to the Office of the Attorney General, any costs incurred by the agency could be absorbed within existing resources.According to the Comptroller of Public Accounts, the number and amount of fees that could be collected as a result of the bill are unknown; therefore, the fiscal implications cannot be determined.It is assumed that any impact on state correctional populations or on the demand for state correctional resources would not be significant.
Technology
According to the SOS, modifications to the UCC information management system required by the bill would take one to two months for discovery to evaluate the scope of the required modifications, three months to develop and test system changes, and one month to support the modified system upon release. The agency estimates a total cost of $1,200,000 for these modifications.
Local Government Impact
In certain cases, the bill would result in fraudulent UCC affidavits being filed in county clerk offices. These requirements are not expected to have a significant impact to local jurisdictions.It is assumed that any fiscal impact to units of local government associated with enforcement, prosecution, supervision, or confinement would not be significant.
Source Agencies: b > td > 212 Office of Court Administration, Texas Judicial Council, 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 307 Secretary of State
212 Office of Court Administration, Texas Judicial Council, 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 307 Secretary of State
LBB Staff: b > td > JMc, RStu, LCO, GP
JMc, RStu, LCO, GP