Form revised February 12March 16, 2004

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
City Council	Amy Weissman, Central Staff 206-615-1675

Legislation Title:

AN ORDINANCE requiring posting and disclosure of certain information related to income tax refund anticipation loans, refund anticipation checks, and similar refund-related bank products; prohibiting certain practices related to income tax refund anticipation loans, refund anticipation checks, and other similar refund-related bank products; adding a new chapter to Title 7 of the Seattle Municipal Code;, and amending Chapter 3.02 of the Seattle Municipal Code.

· Summary of the Legislation:

This legislation requires entities that provide tax preparation services and facilitate or offer products that allow taxpayers to get their refunds from an entity other than sooner than they could from the Internal Revenue Service to make certain disclosures of important information related to those products. In addition, it vests the Department of Executive Administration with authority to enforce and administer the law, and allows taxpayers to file complaints with the Office of the Hearing Examiner.

· Background: (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

Taxpayers use refund anticipation loans (“RALs”) to get fast access to money they expect to receive from the IRS. RALs are short-term loans secured by expected tax refunds and typically offered by commercial tax preparers working in partnership with banks. A close cousin of the RAL is the refund anticipation check (“RAC”), which is offered to consumers who do not have bank accounts. RACs involve setting up a temporary bank account to receive the direct deposited refund from the IRS, and then issuing the consumer check from that temporary account after the refund is deposited. Other similar bank products also exist.

RALs and their kin may be beneficial to some consumers who understand the nature and cost of such productsthe loan, but in many instances RALs appear to be targeted at low-income citizens, particularly recipients of the Earned Income Tax Credit (“EITC”), through aggressive and questionable marketing practices combined with high fees and interest rates (e.g., APRs ranging from 70% to 700%). In recognition of this problem, states, counties, and cities have adopted regulations or issued warnings regarding RALs. This legislation would follow that regulatory trend, using a consumer protection-oriented approach to require certain disclosures and practices to help consumers make informed choices about RALs and related products.

· Please check one of the following:

____ This legislation does not have any financial implications. (Stop here and delete the remainder of this document prior to saving and printing.)

__X__ This legislation has de minimis financial implications. (Please complete all relevant sections that follow.)

Appropriations: This table should reflect appropriations that are a direct result of this legislation. In the event that the project/ programs associated with this ordinance have appropriations that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below.

Fund Name and Number	Department	Budget Control Level*	2004 Appropriation	2005 Anticipated Appropriation
TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Notes: No appropriations result from this legislation. Some staff resources may be expended to enforce and hear complaints related to this legislation, and there may be small administrative costs such as copying charges and other incidental costs. A $5 filing fee per complaint with the Office of the Hearing Examiner and small civil infraction fines may offset any small administrative costs. The total financial impact should be de minimis.

Anticipated Revenue/Reimbursement: Resulting From This Legislation: This table should reflect revenues/reimbursements that are a direct result of this legislation. In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Fund Name and Number	Department	Revenue Source	2004 Revenue	2005 Revenue
TOTAL

Notes: see above

No appropriations result from this legislation. Some staff resources may be expended to enforce and hear complaints related to this legislation, and there may be small administrative costs such as copying charges and other incidental costs. A $5 filing fee per complaint with the Office of the Hearing Examiner and small civil infraction fines may offset any small administrative costs. The total financial impact is expected to be de minimis.

Total Regular Positions Created Or Abrogated Through This Legislation, Including FTE Impact: This table should only reflect the actual number of positions created by this legislation In the event that positions have been, or will be, created as a result of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Position Title and Department*		Fund Name	Fund Number	Part-Time/ Full Time	2004 Positions	2004 FTE	2005 Positions**	2005 FTE**
	TOTAL

* List each position separately

** 2005 positions and FTE are total 2005 position changes resulting from this legislation, not incremental changes. Therefore, under 2005, please be sure to include any continuing positions from 2004

Notes: None

· Do positions sunset in the future? (If yes, identify sunset date):

Spending/Cash Flow: This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects). Details surrounding spending that will occur in future years should be provided in the Notes section below the table.

Fund Name and Number	Department	Budget Control Level*	2004 Expenditures	2005 Anticipated Expenditures
TOTAL

* See budget book to obtain the appropriate Budget Control Level for your department.

Notes: N/A

· What is the financial cost of not implementing the legislation? (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented.)

If this legislation is not implemented, the citizens of Seattle will continue to be exploited by entities that offer RALs and related products, and a significant portion of the Earned Income Tax Credit that helps working families will be diverted from those families to the hands of commercial tax preparers.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives? (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

An education campaign to alert the public to RALs and similar products will be undertaken, whether or not this legislation proceeds. Council could wait for state or federal legislation to achieve a similar objective, although it is not clear if or when such legislation might be enacted.

· Is the legislation subject to public hearing requirements: (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future.)

A public hearing was held on August 12, 2004.

· Other Issues (including long-term implications of the legislation):

Please list attachments to the fiscal note below:

None.