Honorable Charles Schwertner, Chair, Senate Committee on Business & Commerce
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB2530 by Middleton (Relating to the Texas Windstorm Insurance Association.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB2530, As Introduced: a negative impact of ($27,744,000) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($12,787,000)
2027
($14,957,000)
2028
($16,452,000)
2029
($18,097,000)
2030
($19,908,000)
All Funds, Five-Year Impact:
Fiscal Year
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Savings/(Cost) from Foundation School Fund 193
2026
($9,590,000)
($3,197,000)
2027
($11,218,000)
($3,739,000)
2028
($12,339,000)
($4,113,000)
2029
($13,573,000)
($4,524,000)
2030
($14,931,000)
($4,977,000)
Fiscal Analysis
The bill would amend the Texas Insurance Code to exempt Texas Windstorm Insurance Association (TWIA) insurance premiums from insurance premium and insurance maintenance taxes, change the maximum amounts of member assessments charged by TWIA, and reduce the available loss funding requirement that TWIA must maintain.
The bill would take effect immediately if it receives a two-thirds majority vote in both houses of the Legislature. Otherwise it would take effect September 1, 2025.
Methodology
Based on analysis provided by the Comptroller of Public Accounts, TWIA collected $757.8 million in insurance premiums in calendar year 2024. These premiums were subject to an insurance premium tax of 1.6 percent, resulting in a premium tax liability of $12.1 million to the credit of the General Revenue Fund. This estimate assumes an increase of 10% in premiums each year, resulting in total premium tax loss of $12,787,000 in fiscal year 2026, $14,957,000 in fiscal year 2027, $16,452,000 in fiscal year 2028, $18,097,000 in fiscal year 2029, and $19,908,000 in fiscal year 2030.
Of the amount credited to the General Revenue Fund, 25% is allocated to the Foundation School Fund. However, this analysis assumes any revenue losses to the Foundation School Fund would be made up with an equal amount of General Revenue to fund the Foundation School Program.
This estimate assumes that the provisions of the bill will have no effect on aggregate maintenance tax collections as maintenance tax rates are set in amounts to be sufficient to fund operations, and any reduction in the amount of maintenance tax paid by TWIA and TFPA would result in a corresponding increase in the amount paid by other entities.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 454 Department of Insurance