Update: 10 Year Analysis Complete for House Bill 1666

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UPDATE: The 10 year analysis for HB 1666, titled AN ACT Relating to making changes to certain fee and debt collection practices, has been completed. The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

Fiscal Year		Business and Professions	Transaction fee	Total
2024		$15,000	$4,320	$19,320
2025		$0	$4,320	$4,320
2026		$0	$4,320	$4,320
2027		$0	$4,320	$4,320
2028		$0	$4,320	$4,320
2029		$0	$4,320	$4,320
2030		$0	$4,320	$4,320
2031		$0	$4,320	$4,320
2032		$0	$4,320	$4,320
2033		$0	$4,320	$4,320
Total:		$15,000	$43,200	$58,200

Western Washington University:

New Section 4: Allows businesses whose fees or charges are regulated in Washington state to charge a transaction fee for processing a credit card payment provided there is a no-cost option available which must be disclosed at time of payment. The transaction fee cannot exceed the actual cost incurred (credit card processor fees) or 3%, whichever is less. 

Analysis: If debtors are charged a 3% transaction fee on an estimated $144,000 in annual outstanding accounts receivable, we estimate fee revenue would total about $4,320 per year. However, this fee revenue would be used to off-set the credit card processing fees imposed by the issuing banks.

We have indicated partially indeterminate cash receipt impact because we do not know the exact amount of future outstanding debts which would be subject to the 3% processing fee.

A 9% cap on the contingency collection fee would likely lead to an inability of Western to collect most of its otherwise uncollectible debt (outstanding student tuition and fee revenue and loans receivable), resulting in a substantial loss to the university and the state. Western will likely be writing-off to uncollectible debt, a significant portion of the $144,000 annual revenue (on average) recovered by our collection agencies (which are currently compensated by 20-30% contingency collection fees). Estimated lost revenue is incremented by 3% annually to account for anticipated tuition and fee increases, enrollment fluctuations, and other economic factors that impact the ability to pay.

Washington State University:

WSU assumes that limiting the collection fee to 9% and the requirements on credit card transaction fees may affect the amount of debts that are successfully collected. The effects are not possible to estimate at this time.

University of Washington:

SECTION 3

Section 3 limits the collection agency fee, to 9 percent, which government entities are permitted to add to outstanding debts. The collection agencies that the UW contracts with provide quality service and significant recovery rates. However, none of the UW’s current collection agencies will accept a contract capped at 9 percent, and it is unknown if there are agencies that will accept contracts with such a cap as current negotiated contracts require a 21-23 percent contingency collection fee. In order to implement such legislation, the UW SFS would pursue collections internally, only sending extenuating cases to third-party collections. 

With the passage of this bill, it is possible that UW SFS would collect fees on unpaid debt. This could occur if debt was paid after a set due date, or if legal action was pursued against a debtor. There are too many unknowns to accurately calculate the total amount of fees that SFS may collect in any given fiscal year. Fee collection is not expected to surpass or offset any expense detailed in the expenditures section.

Ten-year projection prepared in consultation with the following agencies:

Department of Licensing
University of Washington
Washington State University
Western Washington University


Bill sponsors and contact information:

Representative Kristine Reeves, Prime Sponsor
Democrat
(360) 786-7830
kristine.reeves@leg.wa.gov




Legislative Bill Information Website: http://apps.leg.wa.gov/billinfo/

Initiative 960 Website: http://www.ofm.wa.gov/tax/default.asp