FISCAL NOTE

Date Requested: January 16, 2019
Time Requested: 09:24 AM
Agency: Auditor, State of WV
CBD Number: Version: Bill Number: Resolution Number:
1206 Introduced HB2145
CBD Subject: Finance and Administration


FUND(S):

STATE FUNDS

Sources of Revenue:

Special Fund

Legislation creates:

Creates New Revenue, Creates New Expense



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The purpose of proposed House Bill 2145 is to establish dates for the processing of paper checks. The proposed legislation also authorizes a fee for processing of checks outside the scheduled dates.



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 0 15,000,000 15,000,000
Personal Services 0 0 0
Current Expenses 0 15,000,000 15,000,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 15,000,000 15,000,000


Explanation of above estimates (including long-range effect):


As we understand the provisions of the proposed Bill, effective July 1, 2019, any State agency requesting payment by the use of a paper State warrant (State Check) will pay a processing fee of $50 per payment payable to the Enterprise Resource Planning Board. Provided further, that effective July 1, 2019, any State agency desiring payment outside of the normal schedule established by the State Auditor (emergency basis payments) will pay a processing fee of $100 per payment to the Enterprise Resource Planning Board. In preparing our estimates of the likely potential future numbers of such paper State warrants likely to be requested, we reviewed the records concerning the number of paper State warrants issued during Fiscal Years 2016 – 2018, as well as, the numbers of such disbursements which have been occurring weekly during Calendar Year 2019 thus far and we also gave weight to ongoing efforts to reduce the numbers and frequency of paper State warrants going forward. The historical trend over the last decade has been for the number of paper State checks issued to State vendors to decrease over time, as more and more State vendors move to electronic payment. The State Auditor’s Office and the Enterprise Resource Planning Board staff have been moving forward beginning in the Summer of 2018 with an aggressive agenda of initiatives to move State agencies and our State vendors to payment through the Automated Clearing House (ACH). Based on those efforts, we anticipate the number of State payments to vendors made on an annual basis by use of paper checks will shortly fall to around 300,000 such payments per year. We further anticipate that the number of emergency payments, historically referred to as “walk-throughs” will be statistically insignificant going forward.



Memorandum


Accordingly, our estimate is predicated on the assumption that a total of 300,000 State vendor payments would be subject to the $50 processing fee called for in the proposed Bill. Our estimates exclude any emergency State Payroll checks which may need to be issued from time to time to correct payroll errors, as well as, State Income Tax refund checks where the refund was requested by the taxpayer to be issued as a paper check. Therefore, we estimate the proposed Bill would result in $15,000,000 in annual processing fees being paid by State agencies to the Enterprise Resource Planning (ERP) Board and an equal amount of revenues being transferred to the ERP Board.



    Person submitting Fiscal Note: Michael E. Sizemore, CPA
    Email Address: Mike.Sizemore@wvsao.gov