FISCAL NOTE
Date Requested: February 10, 2021
Time Requested: 04:37 PM |
| Agency: |
Attorney General, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1147 |
Introduced |
HB2185 |
|
|---|
| CBD Subject: |
Actions, Suits and Liens |
|---|
|
FUND(S):
Consumer Protection Recovery Fund
Sources of Revenue:
Special Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The Consumer Protection Division of the Attorney General’s office (“AGO”) receives and investigates complaints of and brings civil actions in response to violations of the West Virginia Consumer Credit and Protection Act (“Consumer Credit and Protection Act”). The long-established funding mechanism for the Consumer Protection Division has been the retention of civil action recoveries. This has provided a reliable, self-perpetuating funding source to sustain the Division’s operations without need for additional appropriations from other sources. A rigid limit on the resources that may be maintained to fund the Division going forward will create new budgetary pressures directly impacting the Division’s capability to initiate, maintain, and resolve consumer protection operations year-on-year. This would seriously hamper the AGO’s ability to adapt to the changes in complaint and case volume going forward, reducing the ability of the AGO to protect West Virginia consumers. Also, the proposed new reporting requirements will increase operational burdens and costs on the AGO with virtually no benefit to the State.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
20,000 |
20,000 |
20,000 |
| 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 |
-10,000,000 |
-10,000,000 |
-50,000,000 |
Explanation of above estimates (including long-range effect):
Providing specific numerical projections on the future impacts of this bill is difficult because of the type of work performed by the Consumer Protection Division. The uncertain and protracted nature of litigation does not lend itself to focused budgetary projections. However, without having the certainty of available special revenue account monies proceeding forward into the future, the AGO would be forced to lay off significant numbers of personnel. This is the only prudent and responsible budgeting decision in the face of greatly reduced funds being available for staffing going forward. Also, because of this reduced staffing resulting from the proposed limit on this special revenue account, this bill would likely require the AGO to experience many more occasions when it must hire outside counsel to perform services presently provided by AGO personnel. While Attorney General Morrisey has been able to reduce rates of outside counsel compensation from the 33-40% range down to 13% and sometimes lower, the Attorney General’s efforts to bring most consumer fraud litigation into the AGO have resulted in even more financial benefit to the State. (E.g. a recent $10 million settlement was achieved using only AGO personnel; no money was paid to outside counsel, such that the entire settlement will come to the State.) With the depleted personnel and abilities that will necessarily result from this bill, the State stands to lose a tremendous amount of money.
The bill’s strictures regarding language that must be included in various agreements are likely to cost the State future settlement dollars, as well. The nature of such agreements, including but not limited to settlements in larger consumer protection matters involving multiple jurisdictions, are heavily influenced by presiding judges and other parties. The severity of the bill’s new limitations will likely result in the State not being able to enter settlements containing court-directed terms inconsistent with this bill. Consequently, this bill unavoidably imperils an unknown number of settlements of unknowable value to the State.
Also, there may be need to employ additional personnel to manage the reporting requirements, as well as new software engineering and implementation in the first year.
Memorandum
The AGO’s Consumer Protection Division operates on funding that originates from recoveries secured by that division. This dictates that the State’s prime consumer protection force can only continue to sustain this vital function by relying on a stable, sufficient source of funding. Because this bill would limit the amounts retained in the Consumer Protection Recovery Fund to the approximate present budget of the Consumer Protection Division, staffing will have to be reduced as dictated by prudent prospective budgeting, and the future capacity of that Division to fulfill its core function would become destabilized. By the nature of the Consumer Protection Division’s work, there can be no certainty that every successive fiscal year will assuredly generate adequate recoveries to fully fund the Division’s operations for the next upcoming year. This is compounded by the reality that, in any given year, the number of consumer protection cases may escalate dramatically relative to the prior year. Consequently, the proposed limits would effectively remove the AGO’s capacity to quickly adapt to the changing environment affecting the Consumer Protection Division’s responsibility to work for West Virginia consumers, result in hiring more outside counsel at much greater cost than current state personnel, and ultimately cost the State untold sums of money. These problem are unavoidable under the bill. The bill’s additional requirements regarding various litigation-related agreements are likely to cost the State future settlement dollars, as well. Additionally, the new proposed quarterly reporting requirements would result in an expanded administrative burden on the AGO personnel who must be involved in reporting. This includes multiple Consumer Protection Division personnel, financial support personnel, and main office personnel. The time and resources that would be expended preparing quarterly reports would further reduce the ability of those personnel to perform their core functions under the West Virginia Constitution and the West Virginia Code, including the Consumer Credit and Protection Act.
Person submitting Fiscal Note: Curtis R. A. Capehart
Email Address: curtis.r.a.capehart@wvago.gov