FISCAL NOTE
Date Requested: February 13, 2024
Time Requested: 03:42 PM |
| Agency: |
Treasurer's Office, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3715 |
Introduced |
HB5649 |
|
|---|
| CBD Subject: |
Banking and Finance |
|---|
|
FUND(S):
New
Sources of Revenue:
Special Fund
Legislation creates:
Creates New Expense, Creates New Program, Creates New Fund: West Virginia Bullion Administrative Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill would authorize the Treasurer to establish the West Virginia Bullion Depository to serve as the custodian, guardian, and administrator of all bullion and specie deposited with the State. The Treasurer would ensure that specie holders can use the specie as legal tender in the payment of debt and readily transfer the specie to another person.
The bill would also authorizes the Treasurer to establish and issue transactional currency based on gold and silver that can be used as legal tender in the payment of debt and can be transferred electronically. The Treasurer would be authorized to contract with a private vendor to establish the transactional currency.
The bill would require the Treasurer to hold all gold and silver specie and bullion for the purpose of issuing transactional currency. The Treasurer would issue the transactional currency to any person who makes a payment or designates gold or silver specie or bullion already held at the Depository to be transferred to the depositor's account.
The bill would require the Treasurer to determine the value of the transactional currency at the time of each transaction based on the value of the appropriate fraction of a troy ounce of gold or silver and permits the promulgation of legislative rules to establish such transactional currency. The bill would authorize the Treasurer to establish a fee for the issuance or redemption of the transactional currency at a rate necessary to cover administrative costs.
Finally, the bill establishes that bullion and specie held in the depository do not constitute personal property and is not subject to personal property taxation and makes any bullion or specie accepted for deposit but the Depository to be legal tender.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
41,310,250 |
1,310,250 |
| Personal Services |
0 |
560,250 |
560,250 |
| Current Expenses |
0 |
40,750,000 |
750,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The Treasurer would need additional staff to implement the provisions of the bill. The Treasurer's Office estimates that two Program Specialists, two Security Officers, one Cybersecurity Analyst, one Customer Service Representative, and one Attorney would be required to ensure all purchases and redemptions of transactional currency are handled timely, as the spot price of gold fluctuates constantly. The above analysis includes total salaries and benefits for 7 FTE's in the amount of approximately $560,250 annually.
This analysis also includes the funds necessary to contract with a third-party vendor, which would be needed to establish the digital currency and a user-driven platform for the transactions. After discussions with states that manage a similar program, it is estimated that approximately $25 million would be the minimum cost for limited functionality. True costs for expanded technology and options could be up to $100 million. The Treasurer's Office estimates annual hardware, software, and security maintenance costs in the amount of approximately $750,000 annually.
Finally, after discussions with states that manage a similar program, the Treasurer's Office estimates that utilizing an existing structure to serve as the depository could cost anywhere from $2 million to $10 million to provide the necessary state of the art security upgrades and expand the office's current operating network system. If a new structure would be required to be built, the Treasurer's Office estimates the cost could be between $20 million to $35 million.
Memorandum
Person submitting Fiscal Note: James Fuerhoff
Email Address: james.fuerhoff@wvsto.gov