LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 27, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1329 by Bivins (Relating to the regulation of
insurance and to requirements regarding motor vehicle
insurance; providing penalties.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1329, As Introduced: negative impact of $(6,666,666) 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. *
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General Revenue-Related Funds, Five-Year Net Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(5,000,000) *
* 2003 (1,666,666) *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Savings/ Savings/ Revenue Revenue Number of *
* (Cost) from (Cost) from Gain/(Loss) Gain/(Loss) State *
* State State from to Counties Employees *
* Highway Highway General from FY 2001 *
* Fund Fund Revenue *
* 0006 0006 Fund *
* 0001 *
* 2002 $757,938 $(281,466) $0 (21.0) *
* $(5,000,000) *
* 2003 757,938 (1,930,751) (1,666,666) (220,000) (22.0) *
* 2004 757,938 (1,930,751) 0 (120,000) (22.0) *
* 2005 757,938 (1,930,751) 0 (110,000) (22.0) *
* 2006 757,938 (1,930,751) 0 (100,000) (22.0) *
***********************************************************************
Technology Impact
The Department of Transportation (TxDOT) estimates that it will require
approximately $281,466 for programming costs in FY 2002 to modify the
TxDOT's computer systems to implement the bill.
Fiscal Analysis
The bill requires TxDOT to conduct random sampling of vehicle
registrations for verifying proof of insurance. TxDOT may also request
proof of insurance from persons whose driver's license or registration
have been suspended within the preceding four years or an owner who has
been convicted of offenses found in Chapter 601 of the Transportation
Code. Vehicle owners deemed in violation of this section would have
their vehicle registration suspended until specific requirements outlined
in the bill are met. The bill requires TxDOT to ensure that at least
500,000 samples are selected on or before September 1, 2003 and report
the results not later than February 1, 2009.
An owner may reinstate the vehicle's registration by paying a $100
reinstatement fee and providing proof of current insurance. For a second
or subsequent violation, the owner must complete a four-month suspension
period, provide proof of current insurance, and pay the $100 fee. If an
owner is convicted of providing false proof of insurance, the
registration is suspended for a six-month period. After the suspension
for providing false proof, an owner may provide proof of insurance and
pay a $200 reinstatement fee. It is assumed that only 1% of the
suspensions will require the $200 reinstatement fee.
The Department of Public Safety (DPS) will no longer have the authority
to suspend a driver's license or motor vehicle registration for failing
to maintain evidence of financial responsibility. Under the authority of
the Texas Motor Vehicle Responsibility Act, DPS's Safety Responsibility
Bureau (SRB), during fiscal year 2000 recorded 100,000 suspensions for
failure to maintain financial responsibility.
Article 5.06-1, Insurance Code, as amended by the bill, applies only to a
motor vehicle liability insurance policy that is delivered, issued for
delivery, or renewed on or after January 1, 2002. Except as provided by
Subsection (b) of section 7.03, the bill takes effect September 1, 2001.
(b) Article 1 of this Act takes effect January 1, 2003.
Methodology
DPS projects 50% of the persons suspended will comply with the suspension
requirements to have their driver's license reinstated. With
approximately one-half of the compliance requirements currently received
for evaluation being eliminated, less FTE's would be needed. DPS
projects 50% of the persons suspended comply with the suspension
requirements to have their driver's license reinstated. The bill would
generate a loss of $5,000,000 in reinstatement fees to the General
Revenue Fund (100,000 x 50% = 50,000 persons complying with their
suspension, the reinstatement fee is $100 x 50,000 = $5,000,000) in
fiscal year 2002 and $1,666,666 in fiscal year 2003 for a third of the
year the reinstatement fee is not in effect. A total of 22 FTE's would no
longer be needed to process and evaluate 50,000 suspensions. (18
positions in the Safety Responsibility Bureau, 1 position in the License
Issuance Bureau (LIB), and 3 positions in the Driver Records Bureau (2
would be lost the first year and 1 in the following year).
Currently the DPS contracts with a vendor to enter no insurance tickets
and new Safety Responsibility suspension cases. With the reduction in
the number of suspensions to be processed, the fee paid to the vendor
will be reduced, resulting in a fiscal reduction of $38,889.
TxDOT estimates that each year 568,750 letters would be mailed (500,000
questionnaire letters would be mailed to the two sample categories and an
average of 68,750 warning notices would be mailed to owners subject to
possible suspension). In addition, Vehicle Title Registration estimates
that approximately 34,375 (average per year) certified suspension notices
and 6,000 certified court supervision letters will be mailed by
certified mail each year.
TxDOT would outsource the primary day-to-day administrative functions and
responsibilities to conduct random sampling of vehicle registrations for
verifying proof of insurance to a private vendor. The vendor would be
responsible for all aspects of this program, with the exception of
analysis of responses from registrants and verification results to
determine the need for suspension or other action, coordination of
needed actions with the vendor, and adding/removing suspension
notations. The estimated cost of an outsourcing contract is $1,950,941
per year beginning in fiscal year 2003.
Local Government Impact
According to TxDOT, counties will experience a revenue loss due to the
denial/delay/evasion of registration issuance because of suspensions
placed on motor vehicle records. TxDOT estimates that 10% of owners
whose registrations are suspended will not come into compliance at any
point in a given fiscal year.
Source Agencies: 405 Texas Department of Public Safety, 302 Office
of the Attorney General, 601 Texas Department of
Transportation, 454 Texas Department of Insurance
LBB Staff: JK, JO, RT, DE