LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 12, 1999
TO: Honorable John Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB476 by Chavez (Relating to motor vehicle insurance
coverage requirements for operation of certain motor
vehicles; providing a penalty.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB476, As Introduced: negative impact of $(22,482,363) through *
* the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(12,913,707) *
* 2001 (9,568,656) *
* 2002 (9,568,656) *
* 2003 (9,568,656) *
* 2004 (9,568,656) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* General Revenue Fund General Revenue Fund FY 1999 *
* 0001 0001 *
* 2000 $(7,913,707) $(5,000,000) 79.0 *
* 2001 (4,568,656) (5,000,000) 79.0 *
* 2002 (4,568,656) (5,000,000) 79.0 *
* 2003 (4,568,656) (5,000,000) 79.0 *
* 2004 (4,568,656) (5,000,000) 79.0 *
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Technology Impact
It is estimated that the Technology Impact for the bill would be
$3,436,602 for Fiscal Year 2000 and $386,591 for each year thereafter.
Fiscal Analysis
The bill would amend the Insurance Code and the Transportation Code by
removing "passenger vehicles" (Class C and Class M vehicles) from the
Safety Responsibility Act, establish new liability insurance coverage
requirements for passenger vehicles, create guidelines for the premium
rates for that coverage, and set new penalties (Class A misdemeanor for
first offense and State Jail Felony for any subsequent offense) for the
operation of a passenger vehicle without prescribed liability insurance
coverage.
The bill would require all companies that write passenger vehicle
liability insurance policies in Texas to provide information to the
Department of Public Safety (DPS) regarding the issuance of policies,
the termination of policies, and the claims made under those policies.
The bill prescribes conditions, time limits, and procedures for the
suspension (including hearing and appeal) of driver s licenses for
persons failing to comply with the new statutes.
Methodology
DPS accident records indicate that approximately 21 percent of the
13,419,288 licensed drivers in Texas are uninsured. Therefore, it is
estimated that the Department would be required to take action against
some 2.8 million licensees as a result of the bill. Those drivers would
only come to the attention of the Department when required to purchase
liability insurance in order to renew a driver s license. Texas driver s
licenses are currently issued for 4, 5, or 6 years. Using a median of 5
years, it is estimated that one-fifth of the uninsured drivers would
renew a license each year, resulting in 560,000 suspension notices,
annually, the Department's Driver Improvement and Control Bureau would
have to process, requiring 15 additional employees. DPS would also need
additional FTE's in its Safety Responsibility Bureau to receive and
evaluate 560,000 policies annually, as part of the license suspension
clearance procedure; Driver Records Bureau to provide data entry and
microfilming for the estimated 560,000 Departmental actions; and Customer
Service Bureau (CSB) to receive 46,700 additional telephone calls each
year from licensees attempting to obtain information about DPS
suspension actions.
New programming would be needed to create a database to store information
and possibly receive information electronically from insurance firms,
which would have an impact on the Department's Information Management
Services (IMS). IMS would incur contract programming costs at an
estimated $2,880,000.
DPS estimates that the bill would result in 56,000 additional
administrative hearings per year. Including case preparation, review of
files to return to DIC, and actual time for hearings, the DPS' Driver
License Division Field Service would need 23 additional Examiners. It is
estimated that DPS' headquarters would need as many personnel for
processing paperwork and handling other work associated with setting
cases for hearings.
In addition, in each of the last two years, DPS collected approximately
$5,000,000 in reinstatement fees as compliance with the Safety
Responsibility Act. The Department expects that with the exclusion of
"passenger vehicles" from Safety Responsibility sanctions, there would
no longer be an incentive for operators of "passenger vehicles" to
comply and pay associated fees, resulting in an estimated loss of $5
million per year.
Local Government Impact
Reclassifying offense of failure to maintain liability insurance from a
Class C to A misdemeanor, would likely result in a loss of fine revenues
to municipal and justice of the peace courts, since all cases would shift
to county courts-at-law and district courts. The loss could be somewhat
offset by a reduced workload justice and municipal courts. The City of
Grand Prairie estimates a loss of revenues of approximately $450,000 per
year.
Since county and district courts would absorb additional cases, it is
expected that counties would incur additional costs associated with jail
time for the Class A offense and increased administrative duties of the
courts. Montgomerie County estimates $248,000 additional inmate housing
costs and $170,000 additional administrative costs per year. This
estimate is based on 8,000 annual convictions.
There could be two areas of significant fiscal implication to local
government related to this bill. The projected 56,000 administrative
hearings would have to be absorbed by the state s Municipal and Justice
court system. That fact could place an extra burden on those courts.
Also, county courts and state district courts could be effected
substantially.
Source Agencies: 454 Department Of Insurance, 405 Department of
Public Safety
LBB Staff: JK, TH, MD, DP