HBA-SEP H.B. 2604 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2604 By: McReynolds Agriculture & Livestock 3/21/2001 Introduced BACKGROUND AND PURPOSE Currently, fund-raisers and donations supply the primary source of revenue for volunteer fire departments (departments) that generally receive less than $5,000 per year from the county. Although many of the 1,800 fire departments in the state operate with little or no reserve personnel funds, they respond to over 90 percent of the wildland fires. It is apparent that a new stream of revenue is necessary, and the creation of a $1 surcharge on certain insurance policies could provide up to $23 million a year for these departments. House Bill 2604 assesses a $1 surcharge on certain insurance policies relating to a structure within an area served by a volunteer fire department. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 2 (Article 5.44, Insurance Code) of this bill. ANALYSIS House Bill 2604 amends the Government and Insurance codes relating to assistance to certain volunteer fire departments and to the imposition of an insurance premium surcharge to finance that assistance. The bill amends the Government Code to require the Texas Forest Service of the Texas A&M University System (service) to administer the Rural Volunteer Fire Department Assistance Program (program) and to authorize the director of the service (director) to adopt rules necessary to assist volunteer fire departments in paying for equipment and training of personnel. The bill requires the director to determine reasonable criteria and qualifications for the distribution of money from the volunteer fire department assistance fund (fund) and to establish a procedure for reporting and processing requests for money from the fund. In response to requests for assistance, a written copy of the decision to provide or deny assistance is required to be sent to the requestor. The bill also requires the director to prepare an annual written report on the activity, status, and effectiveness of the fund and to submit the report before November 1 of each year to the lieutenant governor, the speaker of the house of representatives, and the comptroller of public accounts. Any assistance or benefits provided to a volunteer fire department or firefighter under the program are prohibited from being considered compensation. The bill prohibits the director from granting a request for assistance before September 1, 2002. The bill amends the Insurance Code to assess, in addition to premium taxes, a $1 nonrefundable surcharge on certain insurance policies relating to a structure located within an area served by a volunteer fire department for each month or part of a month of coverage provided under the policy. The surcharge is payable at the time the insurance policy is issued or renewed and an insurer is prohibited from issuing or renewing a policy before the surcharge is paid in full. The insurer is then required to send collected surcharges to the comptroller of public accounts. The bill requires the comptroller of public accounts to credit the revenue from the surcharge to the fund. The commissioner of insurance is required to adopt rules as necessary to implement this Act. EFFECTIVE DATE July 1, 2001, or if the Act does not receive the necessary vote, the Act takes effect October 1, 2001.