LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 3, 2001 TO: Honorable David Swinford, Chair, House Committee on Agriculture & Livestock FROM: John Keel, Director, Legislative Budget Board IN RE: HB2604 by McReynolds (Relating to assistance to certain volunteer fire departments and to the imposition of an assessment on certain insurers to finance that assistance.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2604, Committee Report 1st House, Substituted: 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 Probable Probable Change in * * Year Revenue Savings/(Cost) Savings/(Cost) Number of State * * Gain/(Loss) from New from New Employees from * * from New General Revenue General Revenue FY 2001 * * General Revenue Dedicated-- Dedicated--- * * Dedicated-- Volunteer Fire Volunteer Fire * * Volunteer Fire Department Department * * Department Assistance Fund Assistance Fund * * Assistance Fund for Grants for * * Administration * * 2002 $0 $0 $0 0.0 * * 2003 15,000,000 0 0 0.0 * * 2004 15,000,000 (13,950,000) (1,050,000) 20.0 * * 2005 15,000,000 (13,950,000) (1,050,000) 20.0 * * 2006 15,000,000 (13,950,000) (1,050,000) 20.0 * *************************************************************************** Fiscal Analysis The bill would add a new article to the Insurance Code establishing a yearly $15 million assessment on all insurers to finance the volunteer fire department assistance fund. Each insurer would pay a portion of the assessment in the proportion that the insurer's net direct premiums for the period for which the assessment is made bear to the aggregate net direct premiums written in the state for that period. The comptroller would assess the insurers on or before September 1 of each year. On or after the 60th day of being assessed, the insurer would remit the amount assessed to the comptroller for deposit to the credit of the newly-created volunteer fire department assistance fund account. NOTE: The bill's language could be interpreted to imply no amounts need ever be remitted in any fiscal year. The bill would establish GR Account-Volunteer Fire Department Assistance as a dedicated account that only could be used for the purposes of this bill. The account would consist of assessments collected under the provisions of the bill. The bill would also amend the Government Code to create the rural volunteer fire department program administered by the Texas Forest Service of the Texas A&M University System. The director of the Texas Forest Service would be authorized to adopt the rules necessary to assist volunteer fire departments in paying for equipment and training personnel, to establish criteria and qualifications for the distribution of program funds to volunteer fire departments and to establish a procedure for reporting and processing requests for assistance. The bill would require the director to submit an activity, status and effectiveness report to the Lieutenant Governor, the Speaker of the House of Representatives and the Comptroller of Public Accounts before November 1 of each year. The bill would take effect July 1, 2001, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2001. The director of the Texas Forest Service could not grant a request for assistance under this bill before September 1, 2002. Methodology Since the initial assessment would not be payable until on or after the 60th day of being assessed, there would be no fiscal impact in FY 2002. Also, since the bill would limit administration costs to seven percent per fiscal year of the total revenue collected from the insurer's assessment during the previous fiscal year, there would be no administrative costs for FY 2003. The bill would authorize the Texas Forest Service to employ an undetermined number of staff to administer the program. The Texas Forest Service estimates it will need 20 FTEs to administer the program. Local Government Impact Upon successful grant petition of the Texas Forest Service, local volunteer fire departments would gain additional funding resources for equipment costs and personnel training out of the volunteer fire department assistance fund. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, CL, JW