Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 ² Phone: (614) 466-3615

² Internet Web Site: http://www.lsc.state.oh.us/

BILL:

S.B. 185

DATE:

November 1, 2005

STATUS:

As Introduced

SPONSOR:

Sen. Padgett

LOCAL IMPACT STATEMENT REQUIRED:

No —

Minimal cost

 


CONTENTS:

Expands the Consumer Sales Practices Act to cover transactions between two businesses

 

State Fiscal Highlights

 

STATE FUND

FY 2006*

FY 2007

FUTURE YEARS

General Revenue Fund

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

- 0 -

Potential increase,

possibly exceeding minimal

Potential increase,

possibly exceeding minimal

Consumer Protection Enforcement Fund (Fund 631)

     Revenues

- 0 -

Potential gain,

magnitude uncertain

Potential gain,

magnitude uncertain

     Expenditures

- 0 -

Potential increase,

possibly exceeding minimal

Potential increase,

possibly exceeding minimal

Note:  The state fiscal year is July 1 through June 30.  For example, FY 2006 is July 1, 2005 – June 30, 2006.

*It is assumed herein that any fiscal effects created by the bill will occur no earlier than the start of FY 2007 (July 1, 2006).

 

·        Office of the Attorney General workload.  As a result of the bill, the number of transactions handled by the Office of the Attorney General’s Consumer Protection Section is likely to increase. However, as this is an area of sales practices in which the Attorney General does not currently have jurisdiction, estimating the number and magnitude of related complaints filed, and investigations and enforcement actions taken, is problematic.  Thus, whether the bill will create additional ongoing operating expenses to the Consumer Protection Section, as well as the amount of those potential costs, is uncertain.

·        Civil penalties.  As of this writing, it is uncertain as to how much civil penalty revenue may be collected annually from persons in violation of the bill’s transactions prohibition and subsequently deposited to the credit of the Attorney General’s Consumer Protection Enforcement Fund (Fund 631).


Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

Counties

     Revenues

Potential gain,

magnitude uncertain

Potential gain,

magnitude uncertain

Potential gain,

magnitude uncertain

     Expenditures

Potential increase, not likely to exceed minimal

Potential increase, not likely to exceed minimal

Potential increase, not likely
to exceed minimal annually

Note:  For most local governments, the fiscal year is the calendar year.  The school district fiscal year is July 1 through June 30.

 

·        Courts of common pleas.  Presumably, as a result of the bill, the Attorney General may in fact file additional civil actions in various common pleas, county, and municipal courts around the state.  Thus, additional cases may be added to the civil docket of some local courts, which creates the possibility of jury trials.  Generally, an increase in the number of cases brought before common pleas, municipal, and county courts is very difficult to quantify in terms of traditional budgets and dollars.  These costs are instead probably best seen as potentially causing a decrease in the administrative efficiency of any affected court.  That said, LSC fiscal staff has not gathered any information suggesting that such a civil case will create costs for any affected local court exceeding minimal.  In this context, “minimal” means an estimated expenditure increase of no more than $5,000 for any affected local court per year.

·        Civil penalty revenues.  As of this writing, it is uncertain as to how much civil penalty revenue may be generated annually as a result of the bill for any of the state’s 88 counties.

 


 


 

 

Detailed Fiscal Analysis

 

Overview

 

The bill

 

The bill expands the Consumer Sales Practices Act (CSPA) by:

 

·        Including the sale of goods and services not for resale in the ordinary course of a person’s business or trade.

·        Eliminating the exemption under the CSPA for “dealers in intangibles.”

 

Current law

 

Under current law, unchanged by the bill, a dealer in intangibles is defined as a business entity whose business consists primarily of lending money, or discounting, buying, or selling bills of exchange, drafts, acceptances, notes, mortgages, or other evidences of indebtedness, or of buying or selling bonds, stocks, or other investment securities.

 

State fiscal effects

 

Office of the Attorney General workload

Under current law, the Office of the Attorney General is authorized to investigate, and bring action against, alleged violators of the Consumer Sales Practices Act (CSPA).  The Attorney General’s Consumer Protection Section, whose funding is split between the Consumer Protection Enforcement Fund (Fund 631) and the General Revenue Fund (GRF), performs these investigative and enforcement duties. 

As noted, the bill essentially expands the types of transactions that are covered under the CSPA and are thus subject to the Attorney General’s existing investigative and enforcement authority.  Staff of the Attorney General’s Office of Policy and Legislative Affairs has informed LSC fiscal staff that, as a result of the bill, the number of transactions handled by the Consumer Protection Section is likely to increase.  However, as this is an area of sales practices in which the Attorney General does not currently have jurisdiction, estimating the number and magnitude of related complaints filed, and investigations and enforcement actions taken, is problematic.  Thus, whether the bill will create additional ongoing operating expenses to the Consumer Protection Section, as well as the amount of those potential costs, is uncertain.

Civil penalties

 

Current law permits the Attorney General to request, and permits the court to impose, a civil penalty of not more than $25,000 against a person found to have violated the CSPA.  Any civil penalties so imposed are divided between the treasurer of the county in which the action is brought and the Attorney General:  one-fourth is disbursed to the county treasurer and three-fourths is deposited in the state treasury to the credit of the Attorney General’s Fund 631.  As of this writing, it is uncertain as to how much civil penalty revenue may be credited to the fund annually, or, if any such revenue will cover all or some portion of the Attorney General’s investigative and enforcement costs.

 

Local fiscal effects

 

Under current law, unchanged by the bill, the Attorney General has authority to file a civil action against a person who has allegedly violated the CSPA.  Presumably, as a result of the bill, the Attorney General may in fact file additional civil actions in various common pleas, county, and municipal courts around the state.  Thus, additional cases may be added to the civil docket of some local courts, which creates the possibility of jury trials. 

Given that the Office of the Attorney General is unable to estimate the extent to which new cases will be brought before local courts, LSC fiscal staff is unable to precisely determine the fiscal effect to such courts.   In addition, more generally, an increase in the number of cases brought before common pleas, municipal, and county courts is very difficult to quantify in terms of traditional budgets and dollars.  These costs are instead probably best seen as potentially causing a decrease in the administrative efficiency of any affected court.  That said, LSC fiscal staff has not gathered any information suggesting that such a civil case will create costs for any affected local court exceeding minimal.  In this context, “minimal” means an estimated expenditure increase of no more than $5,000 for any affected local court per year.

As discussed above, any civil penalties ordered against a person found guilty of violating the CSPA will be split between the county treasurer where the case was heard and the Attorney General, with the county treasurer receiving one-fourth of the civil penalty amount.  As of this writing, it is uncertain as to how much civil penalty revenue may be generated as a result of the bill for any of the state’s 88 counties.

 

 

 

LSC fiscal staff:  Sarkis Mahdasian, Budget Analyst

 

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