FISCAL NOTE
Date Requested: January 27, 2020
Time Requested: 11:31 AM |
| Agency: |
Auditor, State of WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2447 |
Introduced |
HB4552 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
FUND(S):
State Funds
Sources of Revenue:
Special Fund
Legislation creates:
Increases Revenue From Existing Sources, Decreases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of proposed House Bill 4552 is to remove the transaction fee charged to state spending units in the former statewide centralized accounting system, WVFIMS, and to increase the existing purchasing card penalty fee. The bill creates the Transparency and Oversight Fund to receive deposits for the purchasing card penalty fee and prescribes the billing and collection procedures for the fee.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
5,250,000 |
5,250,000 |
Explanation of above estimates (including long-range effect):
During the Fiscal Year Ended June 30, 2019, the Purchasing Card Program (P-Card Program) achieved about $635 Million in spending volume. After evaluation, the West Virginia State Auditor’s Purchasing Card Operations Section believes that the P-Card Program could realistically achieve a total spending volume of between $750 Million and $1 Billion per fiscal year, if State agencies fully utilized the State P-Card as a payment vehicle. Therefore, the State of West Virginia could reasonably expect to increase the spend volume with the State P-Card as the vehicle of payment by about $250 Million each fiscal year, if state agencies would effectively prioritize and promote the State Purchasing Card as a preferred method of payment. As the amount and percentage of total State expenditures made using the State P-Card increases, the State also receives some incremental cost savings compared to making such payments using more traditional methods of payment, such as State warrants.
Memorandum
Accordingly, the proposed Bill has two primary, potential avenues of impacting State finances. First, under the provisions of the Bill when a State agency makes a payment for goods or services and pays the vendor using any payment method, other than the State P-Card providing the vendor has agreed to accept the State P-Card, the Auditor is authorized to assess a penalty fee of up to three percent of the transaction amount, not to exceed $100 per transaction. In reality, the use of penalty fee provisions creates no new State revenues or expenses, it merely moves funds from the coffers of State agencies into the Transparency and Oversight Fund being created by the proposed Bill. The preferred solution by the State Auditor is to have state agencies to maximize the allowable use of the State P-Card. Since the current rebate being received by the State of West Virginia averages approximately 2.1%, an increase in spend volume of the State Purchasing Card totaling $250,000,000 annually would generate new revenues payable by the independent, Bank Provider of the State Purchasing Card Program totaling about $5,250,000 per fiscal year.
Person submitting Fiscal Note: Michael E. Sizemore, CPA
Email Address: Mike.Sizemore@wvsao.gov