TO: | Honorable John Carona, Chair, Senate Committee on Business & Commerce |
FROM: | John S O'Brien, Director, Legislative Budget Board |
IN RE: | HB272 by Smithee (Relating to the operation of the Texas Windstorm Insurance Association and to the resolution of certain disputes concerning claims made to that association; providing penalties.), Committee Report 2nd House, Substituted |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2012 | $0 |
2013 | $0 |
2014 | $0 |
2015 | $0 |
2016 | $0 |
Fiscal Year | Probable Revenue Gain from Insurance Maint Tax Fees 8042 |
Probable (Cost) from Insurance Maint Tax Fees 8042 |
Probable Revenue Gain from Appropriated Receipts 666 |
Probable (Cost) from Appropriated Receipts 666 |
---|---|---|---|---|
2012 | $164,563 | ($164,563) | $750,000 | ($750,000) |
2013 | $154,960 | ($154,960) | $0 | $0 |
2014 | $154,960 | ($154,960) | $0 | $0 |
2015 | $154,960 | ($154,960) | $0 | $0 |
2016 | $154,960 | ($154,960) | $0 | $0 |
Fiscal Year | Change in Number of State Employees from FY 2011 |
---|---|
2012 | 2.0 |
2013 | 2.0 |
2014 | 2.0 |
2015 | 2.0 |
2016 | 2.0 |
Based on the analysis provided by TDI, the bill would create new procedures and processes for TWIA policyholders to obtain a review of a loss claim, request appraisal and the review by an independent review panel and judicial review. The bill requires the Commissioner of Insurance to appoint the independent review panel, review the panel’s recommendations, and publish the panel’s recommendations. Additionally, the bill requires the Commissioner to review the qualifications of presiding officers upon objection and to replace those who are determined to have a direct financial or personal interest in the case. The bill further provides that the Commissioner may initiate cease and desist actions against appointed qualified inspectors who perform building code inspections on structures in the catastrophe area. Based on the analysis provided by TDI, the agency will require 2.0 FTEs, an Attorney III and a Program Specialist II, for the processes for finalizing the reviews and gathering of information for executions of the reviews during a year without significant storms. The 2.0 FTEs would cost $119,142 in salaries and wages with benefits cost of $33,193, other operating expenses of $225, and telephone costs of $2,400 each fiscal year of 2012 through 2016. Additional one-time equipment costs would be $9,603 in fiscal year 2012. These costs would be funded by General Revenue – Insurance Maintenance Tax. Since insurance maintenance tax is self-leveling, this analysis assumes that the costs to implement this bill would come from fund balances or the maintenance tax would be set to recover a higher level of revenue.
Based on the analysis provided by the Sunset Advisory Commission, it is assumed that all duties and responsibilities associated with implementing the provisions of the bill could be accomplished by utilizing existing agency resources. TWIA is scheduled in statute for Sunset review in the 2014-15 biennium, depending on the Legislature's determination of agencies scheduled for Sunset review for that biennium and subsequent biennia. According to current statute, the Association would be responsible for paying the costs incurred by the Sunset Commission in performing the review, meaning the review would not have a fiscal impact to the State.
The changes to the Insurance Code regarding the issuance of public securities will require the Texas Public Finance Authority (TPFA) to revise the commercial paper program documents prepared for the sale of Class I public securities. Additionally, revisions to the source of revenue for repayments of all classes of public securities will require TPFA to obtain a new opinion from bond counsel on whether debt can be issued as taxable or tax exempt. Based on the analysis provided by TPFA, implementation of the bill will cost $750,000 in fiscal year 2012 for professional services to revise the commercial paper program documents and to obtain a new opinion from bond counsel on all classes of public securities. If debt is issued, the cost would be reimbursed by proceeds for costs of the issuance. Since the timing of a natural disaster that would require the issuance cannot be predicted, it is assumed that TWIA will fund this cost in fiscal year 2012 and recoup the expense from a future debt issuance.
Based on the analysis by the Bond Review Board, the public securities are obligations solely of TWIA and do not create a pledge, gift, or loan of the faith, credit, or taxing authority of this state. Since the issuance of TWIA debt is not and may not constitute a legal or moral obligation of the state, it should have no direct impact on the fiscal health of the state.
Based on the analysis provided by the State Auditor’s Office (SAO), the bill would require TWIA to be subject to an audit by the SAO and pay for the costs incurred by the SAO in performing the audit. According to the bill, TWIA would be responsible for paying the costs incurred by the SAO in performing the audit, meaning the review would not have a fiscal impact to the State. Based on the analysis provided by the SAO, any audit of TWIA would be subject to the SAO’s risk assessment process for inclusion in the SAO’s annual audit plan. In accordance with Section 321.013, Government Code, all additional duties and responsibilities prescribed by the bill would be evaluated for inclusion in the SAO’s annual audit plan for Legislative Audit Committee approval.
The bill creates new funds, the Premium Surcharge Trust Fund and the Member Assessment Trust Fund, to be held outside the Treasury. This analysis does not consider fiscal impacts for these funds since they are held outside the treasury. Based on the analysis by the Comptroller of Public Accounts, this legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. Legislative policy, implemented as Government Code 403.094, consolidated special funds (except those affected by constitutional, federal, or other restrictions) into the General Revenue Fund as of August 31, 1993 and eliminated all applicable statutory revenue dedications as of August 31, 1995. Each subsequent Legislature has reviewed bills that affect funds consolidation. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
Source Agencies: | 116 Sunset Advisory Commission, 304 Comptroller of Public Accounts, 308 State Auditor's Office, 347 Public Finance Authority, 352 Bond Review Board, 454 Department of Insurance
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LBB Staff: | JOB, AG, MW, CH, KJG, JJO
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