LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 9, 2001 TO: Honorable John T. Smithee, Chair, House Committee on Insurance FROM: John Keel, Director, Legislative Budget Board IN RE: HB718 by Chavez (Relating to a motor vehicle liability insurance database.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB718, As Introduced: positive impact of $0 through the biennium * * ending August 31, 2003. * * * * 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 * * 2002 $0 * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Revenue Probable Change in Number of * * Year Gain/(Loss) from New Savings/(Cost) from State Employees from * * General Revenue New General Revenue FY 2001 * * Dedicated Motor Dedicated Motor * * Vehicle Liability Vehicle Liability * * account account * * 2002 $(4,983,103) $(1,073,080) 3.0 * * 2003 (4,983,103) (218,496) 3.0 * * 2004 (4,983,103) (218,496) 3.0 * * 2005 (4,983,103) (218,496) 3.0 * * 2006 (4,983,103) (218,496) 3.0 * ************************************************************************** Fiscal Analysis The bill would require the Department of Public Safety (DPS) to create and maintain a motor vehicle liability database. The bill would establish the Motor Vehicle Liability account in the General Revenue Fund which could only be used for maintaining the database. The bill would fund this new account through an annual assessment imposed on each motor vehicle insurer of $0.50 on each motor vehicle liability policy issued, delivered or renewed by the insurer to a resident of this state. The bill would take effect September 1, 2001. Methodology Information from the Department of Insurance indicates that as of December 31, 1999, there were 9,966,207 personal auto liability insurance policies in force. This figure treats a policy renewed semiannually as 0.5 of a policy, quarterly as 0.25 of a policy, and monthly as 0.83 of a policy. Thus, there are well in excess of 9.9 million individual liability policies. Auto policies may be renewed on a monthly, quarterly, semiannual and annual basis generating by means of the assessment a minimum revenue gain of $0.50 on each policy renewed annually up to a maximum gain of $6.00 on any policy renewed monthly. Due to the unavailability of information that breaks down the number of policies by renewal period, this fiscal note assumes all policies renewed are renewed annually and that the number of policies issued will remain constant. Assuming this, it is estimated that the annual assessment will generate $4,983,103 annually, however this estimate represents the absolute minimum revenue gain possible. Should the bill take effect, the amount generated is likely to be far in excess of $4.98 million. DPS estimates that implementing this bill would require 3,696 hours of contract programming at $120 per hour for a total cost of $443,520. An additional $400,000 would be required to purchase mainframe disk storage. These costs would occur in fiscal year 2002 only. DPS estimates that the maintenance and upkeep of the database would require one Program Analyst IV, one Programmer V, and one Database Administrator IV. Salaries for these personnel are estimated to be $158,562 with associated personnel benefits of $44,841 each fiscal year. Annual operating expenses are estimated to be $15,093. There would be one time capital costs related to these employees of $11,064 related to computer hardware and software and furniture. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 454 Texas Department of Insurance, 601 Texas Department of Transportation, 304 Comptroller of Public Accounts, 405 Texas Department of Public Safety LBB Staff: JK, JO, JN, DG