FISCAL NOTE
Date Requested: February 13, 2019
Time Requested: 09:54 AM |
| Agency: |
Financial Institutions, West Virginia Division of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3159 |
Introduced |
SB583 |
|
|---|
| CBD Subject: |
Banking and Finance |
|---|
|
FUND(S):
Special
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Revenue, Creates New Expense, Creates New Program, Creates New Fund: Financial Technology Innovation Account
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill as written will create a new program within the Division of Financial Institutions to review and approve applications for a waiver of some provisions of existing law to provide entities with the ability to test certain innovative financial products and services in West Virginia for a limited time period without first obtaining a license to engage in the activity.
The provisions of the bill are very broadly written and open-ended. The volume of potential waiver applications and the level of resources and expertise necessary to review and investigate these applications and administer the new program will place additional demands on the agency.
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 |
24,500 |
234,400 |
184,400 |
| Personal Services |
14,500 |
169,400 |
169,400 |
| Current Expenses |
10,000 |
65,000 |
35,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
5,000 |
5,000 |
Explanation of above estimates (including long-range effect):
The above estimates assume that four individuals will work on this program at varying levels of time. A new financial institutions examiner chief will devote 100% of his or her time to this program at an estimated salary of $65,000 per year, an administrative services assistant at an annual salary of $42,000 will use 50% of time for this program at $21,000 per year, the Director of Non Depository Institutions would devote 10% of his or her time at $7,000 per year (assuming a $70,000 annual salary), and a paralegal or equivalent would devote 70% of his or her time at $28,000 per year (assuming a $40,000 annual salary.) On top of the total annual salary of $121,000, the Division applied a benefit multiplier of 40% for a total of $169,400 annually for salary and benefits. Assuming the bill is made effective 90 days from passage and the positions could be posted and filled before June, the FY2019 amount is 1/12 of the annual cost.
The current expense line item includes a database to manage the program by either expanding a current database with a new module or purchasing an off the shelf product. This cost is not included in FY2019 given the short time frames, but a $50,000 cost is included for the system acquisition in FY2020. The expenses listed for FY2019 include equipment purchases for employees as well as training, travel, and supplies. Ongoing costs include maintenance on the database of approximately $20,000 annually and equipment costs only. Finally, for FY2020 and beyond, an annual expense of $15,000 is included for travel, training, supplies and other expenses for employees.
The bill as introduced includes an application fee of $500. Based upon limited research, it appears that Arizona is the only state currently operating an active regulatory sandbox. The sandbox became active in August 2018, so it has been in existence for only six month. The sandbox website in Arizona lists three applications that have been approved. When contacted about how many applications have been received and considered, the Arizona Attorney General's office shared that it is not releasing how many applications have actually been received. The Division has no basis upon which to base a revenue estimate but anticipates it to be less than $5,000 annually.
Memorandum
The Division of Financial Institutions is supportive of the concept behind a regulatory sandbox to test innovation and bring new financial products to West Virginia.
The bill as introduced, however, is open-ended, and adequate information does not exist to determine its full impact. In practice, the bill could place a considerable regulatory and personnel demand on a small agency if a significant number of waiver applications is received. In addition, a timeline for effectiveness of 90 days from passage does not allow an adequate timeline for the creation of a new program.
Person submitting Fiscal Note: Kathy Lawson
Email Address: klawson@wvdob.org