FISCAL NOTE
Date Requested: January 16, 2019
Time Requested: 10:50 AM |
| Agency: |
Public Defender Services |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1206 |
Introduced |
HB2145 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
0226 - Public Defender Services
Sources of Revenue:
General Fund
Legislation creates:
Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The legislation mandates, effectively, electronic transfers by agencies in payment of obligations by limiting the dates on which paper warrants will be prepared and imposing a fee on the agency requesting payment of an obligation by paper warrant.
The impact on Public Defender Services, an executive agency, would be an increase in operating expenses in the amount of $667,400 and would necessitate an additional appropriation in this amount to the agency’s current operating budget.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
667,400 |
0 |
667,400 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
667,400 |
0 |
667,400 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Public Defender Services, an executive agency (“PDS”), processes payments for the legal services of, and reimbursement of the expenses incurred by, court appointed counsel throughout the state in response to court orders requiring payment. In Fiscal Year 2017, PDS processed 37,504 claims for payment or reimbursement of expenses in the total amount of $26,055,050. See Public Defender Services, Annual Report FY2017, p. 5.
PDS has encouraged attorneys to authorize receipt of payment by electronic means. In FY2018, however, 220 attorneys, which is 37.5% of the attorneys requesting payment, “sold” their “vouchers” to entities such as Attorney Finance, Creed Capital, and Daniels Corporation so that funds could be received in advance of court approval and PDS’ processing. The cost to the attorney is typically between 10% and 20% of the claim for payment from the State of West Virginia. The financial entity involved in such a transaction “secures” its interests in the state’s eventual payment to the attorney by requiring all resulting warrants in the name of the attorney to be remitted to the address of the financial entity which, presumably, holds power of attorney to negotiate the warrant made payable to the attorney. Various state offices have not been able to resolve how this payment can be done through an electronic transfer or direct deposit because the payee, i.e., the attorney, cannot receive the payment pursuant to his or her financing agreement. And, in fact, any payment to the attorney would likely expose the State of West Virginia to legal liability to the financial entity under the provisions of the State’s Uniform Commercial Code.
For these reasons, PDS has caused 6,674 paper warrants to issue to date in FY2018. Multiplying this by two provides an estimate of the total number of such warrants in a fiscal year, i.e., 13,348.
A fifty (50) dollar fee for each such warrant would require, therefore, an additional appropriation of $667,400 to PDS for the expenses of its day to day operation.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The fee for issuing paper warrants increases to $100 if variation from the scheduled dates is requested. By statute, PDS is required to cause payment to issue within 90 days. Otherwise, the State of West Virginia is obligated to pay interest. The resulting paradox may be that PDS would require an immediate processing of the paper warrant to avoid paying interest, but the resulting fee of $100 for the paper warrant would be more than the interest to be paid.
Also, PDS may be forced to pass this cost through to the attorneys whose rate of compensation has remained the same for 30 years. The impact would be significant, resulting, perhaps, in an increased inability to find counsel to voluntarily take appointments.
Person submitting Fiscal Note: Dana F. Eddy
Email Address: Dana.F.Eddy@wv.gov