LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION March 30, 2009 TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:SB14 by Fraser (Relating to the operation of the Texas Windstorm Insurance Association and the Texas FAIR Plan Association.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB14, As Introduced: an impact of $0 through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
March 30, 2009
TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:SB14 by Fraser (Relating to the operation of the Texas Windstorm Insurance Association and the Texas FAIR Plan Association.), As Introduced
TO: Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: SB14 by Fraser (Relating to the operation of the Texas Windstorm Insurance Association and the Texas FAIR Plan Association.), As Introduced
Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
Honorable Troy Fraser, Chair, Senate Committee on Business & Commerce
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
SB14 by Fraser (Relating to the operation of the Texas Windstorm Insurance Association and the Texas FAIR Plan Association.), As Introduced
SB14 by Fraser (Relating to the operation of the Texas Windstorm Insurance Association and the Texas FAIR Plan Association.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB14, As Introduced: an impact of $0 through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for SB14, As Introduced: an impact of $0 through the biennium ending August 31, 2011.
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 2010 $0 2011 $0 2012 $0 2013 $0 2014 $0
2010 $0
2011 $0
2012 $0
2013 $0
2014 $0
All Funds, Five-Year Impact: Fiscal Year Probable Savings fromDept Ins Operating Acct36 Probable Revenue (Loss) fromDept Ins Operating Acct36 Probable Savings fromInsurance Maint Tax Fees8042 Probable Revenue (Loss) fromInsurance Maint Tax Fees8042 2010 $1,000,000 ($1,000,000) $610,740 ($610,740) 2011 $1,000,000 ($1,000,000) $610,740 ($610,740) 2012 $1,000,000 ($1,000,000) $610,740 ($610,740) 2013 $1,000,000 ($1,000,000) $610,740 ($610,740) 2014 $1,000,000 ($1,000,000) $610,740 ($610,740) Fiscal Year Probable Revenue Gain fromGeneral Revenue Fund1 Probable (Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 2009 2010 $0 $0 (28.0) 2011 $0 $0 (28.0) 2012 $0 $0 (28.0) 2013 $0 $0 (28.0) 2014 $198,569 ($198,569) (25.0)
Fiscal Year Probable Savings fromDept Ins Operating Acct36 Probable Revenue (Loss) fromDept Ins Operating Acct36 Probable Savings fromInsurance Maint Tax Fees8042 Probable Revenue (Loss) fromInsurance Maint Tax Fees8042 2010 $1,000,000 ($1,000,000) $610,740 ($610,740) 2011 $1,000,000 ($1,000,000) $610,740 ($610,740) 2012 $1,000,000 ($1,000,000) $610,740 ($610,740) 2013 $1,000,000 ($1,000,000) $610,740 ($610,740) 2014 $1,000,000 ($1,000,000) $610,740 ($610,740)
2010 $1,000,000 ($1,000,000) $610,740 ($610,740)
2011 $1,000,000 ($1,000,000) $610,740 ($610,740)
2012 $1,000,000 ($1,000,000) $610,740 ($610,740)
2013 $1,000,000 ($1,000,000) $610,740 ($610,740)
2014 $1,000,000 ($1,000,000) $610,740 ($610,740)
Fiscal Year Probable Revenue Gain fromGeneral Revenue Fund1 Probable (Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 2009 2010 $0 $0 (28.0) 2011 $0 $0 (28.0) 2012 $0 $0 (28.0) 2013 $0 $0 (28.0) 2014 $198,569 ($198,569) (25.0)
2010 $0 $0 (28.0)
2011 $0 $0 (28.0)
2012 $0 $0 (28.0)
2013 $0 $0 (28.0)
2014 $198,569 ($198,569) (25.0)
Fiscal Analysis
The bill would amend the Insurance Code relating to the operations of the Texas Windstorm Insurance Association (TWIA) and the Texas FAIR Plan Association. The bill would transfer the windstorm inspection program from TDI to the TWIA, which would result in a reduction of $1,610,740, due to staffing reductions of 28 FTEs and the elimination of the windstorm field offices. This program is partially funded from approximately $1 million deposited in Fund 36 annually in investment income from the Catastrophe Reserve Trust Fund (CRTF) to subsidize inspections. The bill would eliminate the transfer, leaving the funding in the CRTF. The bill would require TDI to adopt rules relating to the implementation of the bill. The bill would restructure the revenues collected and deposited into the CRTF, which is held outside the Treasury and therefore was not included in this analysis. The bill would eliminate insurance companies' premium insurance tax credits from TWIA assessments. This bill would require the Sunset Advisory Commission (SAC) to review TWIA, but does not subject the entity to abolishment. The bill would require that the review be conducted as if the association were scheduled to be abolished September 1, 2015. The bill would require TWIA to pay the costs incurred by the Sunset Commission upon receipt of a statement from the Sunset Commission. The bill would take effect immediately if it receives a vote of two-thirds of all members of each house, or September 1, 2009 if it does not receive the two-thirds vote.
The bill would amend the Insurance Code relating to the operations of the Texas Windstorm Insurance Association (TWIA) and the Texas FAIR Plan Association.
The bill would transfer the windstorm inspection program from TDI to the TWIA, which would result in a reduction of $1,610,740, due to staffing reductions of 28 FTEs and the elimination of the windstorm field offices. This program is partially funded from approximately $1 million deposited in Fund 36 annually in investment income from the Catastrophe Reserve Trust Fund (CRTF) to subsidize inspections. The bill would eliminate the transfer, leaving the funding in the CRTF. The bill would require TDI to adopt rules relating to the implementation of the bill.
The bill would restructure the revenues collected and deposited into the CRTF, which is held outside the Treasury and therefore was not included in this analysis.
The bill would eliminate insurance companies' premium insurance tax credits from TWIA assessments.
This bill would require the Sunset Advisory Commission (SAC) to review TWIA, but does not subject the entity to abolishment. The bill would require that the review be conducted as if the association were scheduled to be abolished September 1, 2015. The bill would require TWIA to pay the costs incurred by the Sunset Commission upon receipt of a statement from the Sunset Commission.
The bill would take effect immediately if it receives a vote of two-thirds of all members of each house, or September 1, 2009 if it does not receive the two-thirds vote.
Methodology
Based on analysis from TDI, the reduction of 28 FTEs in FY 2010-2014 would decrease costs to TDI in the amount of $1,297,573 for salaries and associated costs. Additionally, the reduction in FTEs would decrease benefits costs to the state by $313,167 in FY2010-2014. Since TDI is required to generate revenues equivalent to its costs of operation under current law, this analysis assumes that any savings realized would remain in the fund or the maintenance tax would be set to recover a lower level of revenue the following year. Based on the analysis from the SAC, implementation of this legislation would require 3 new FTEs for FY 2014-15 at a cost to General Revenue of $194,319 each year for salaries and benefits and additional travel costs of $4,000 in FY2014. TWIA would reimburse the SAC for these costs. Based on the analysis from the Comptroller of Public Accounts, elimination of the premium tax credits would result in a potential positive fiscal impact to General Revenue. Due to the nature of the current assessments and the unpredictability of hurricanes and hailstorms, the specific positive impact could not be determined.
Based on analysis from TDI, the reduction of 28 FTEs in FY 2010-2014 would decrease costs to TDI in the amount of $1,297,573 for salaries and associated costs. Additionally, the reduction in FTEs would decrease benefits costs to the state by $313,167 in FY2010-2014. Since TDI is required to generate revenues equivalent to its costs of operation under current law, this analysis assumes that any savings realized would remain in the fund or the maintenance tax would be set to recover a lower level of revenue the following year.
Based on the analysis from the SAC, implementation of this legislation would require 3 new FTEs for FY 2014-15 at a cost to General Revenue of $194,319 each year for salaries and benefits and additional travel costs of $4,000 in FY2014. TWIA would reimburse the SAC for these costs.
Based on the analysis from the Comptroller of Public Accounts, elimination of the premium tax credits would result in a potential positive fiscal impact to General Revenue. Due to the nature of the current assessments and the unpredictability of hurricanes and hailstorms, the specific positive impact could not be determined.
Technology
No technology impact is anticipated.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 116 Sunset Advisory Commission, 303 Facilities Commission, 304 Comptroller of Public Accounts, 454 Department of Insurance, 479 State Office of Risk Management
116 Sunset Advisory Commission, 303 Facilities Commission, 304 Comptroller of Public Accounts, 454 Department of Insurance, 479 State Office of Risk Management
LBB Staff: JOB, JRO, MW, CH, KK
JOB, JRO, MW, CH, KK