LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION April 19, 2011 TO: Honorable John T. Smithee, Chair, House Committee on Insurance FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB2319 by Smithee (Relating to premium tax credits for examination and evaluation fees paid by insurers.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2319, As Introduced: a positive impact of $14,584,000 through the biennium ending August 31, 2013.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
April 19, 2011
TO: Honorable John T. Smithee, Chair, House Committee on Insurance FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB2319 by Smithee (Relating to premium tax credits for examination and evaluation fees paid by insurers.), As Introduced
TO: Honorable John T. Smithee, Chair, House Committee on Insurance
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: HB2319 by Smithee (Relating to premium tax credits for examination and evaluation fees paid by insurers.), As Introduced
Honorable John T. Smithee, Chair, House Committee on Insurance
Honorable John T. Smithee, Chair, House Committee on Insurance
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB2319 by Smithee (Relating to premium tax credits for examination and evaluation fees paid by insurers.), As Introduced
HB2319 by Smithee (Relating to premium tax credits for examination and evaluation fees paid by insurers.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2319, As Introduced: a positive impact of $14,584,000 through the biennium ending August 31, 2013.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2319, As Introduced: a positive impact of $14,584,000 through the biennium ending August 31, 2013.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2012 $7,151,000 2013 $7,433,000 2014 $9,152,000 2015 $7,819,000 2016 $7,819,000
2012 $7,151,000
2013 $7,433,000
2014 $9,152,000
2015 $7,819,000
2016 $7,819,000
All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain fromGeneral Revenue Fund1 Probable Revenue Gain fromFoundation School Fund193 2012 $5,363,000 $1,788,000 2013 $5,575,000 $1,858,000 2014 $6,864,000 $2,288,000 2015 $5,864,000 $1,955,000 2016 $5,864,000 $1,955,000
Fiscal Year Probable Revenue Gain fromGeneral Revenue Fund1 Probable Revenue Gain fromFoundation School Fund193 2012 $5,363,000 $1,788,000 2013 $5,575,000 $1,858,000 2014 $6,864,000 $2,288,000 2015 $5,864,000 $1,955,000 2016 $5,864,000 $1,955,000
2012 $5,363,000 $1,788,000
2013 $5,575,000 $1,858,000
2014 $6,864,000 $2,288,000
2015 $5,864,000 $1,955,000
2016 $5,864,000 $1,955,000
Fiscal Analysis
The bill would implement a recommendation from the report, "End the Use of General Revenue Funds to Pay for Insurance Company Examinations," in the Legislative Budget Board's Government Effectiveness and Efficiency Report submitted to the Eighty-Second Texas Legislature, 2011. The Texas Department of Insurance conducts periodic examinations of insurance carriers based in the state. Insurers pay examination fees to cover the costs of the examination and assessments to cover the overhead costs. Revenue from the fees and assessment are deposited to the Department of Insurance Operating Account. Insurers are allowed to take a tax credits against their insurance premium taxes, which are General Revenue Funds. The bill would repeal insurance premium tax credits for insurance company examination fees and overhead assessments.
The bill would implement a recommendation from the report, "End the Use of General Revenue Funds to Pay for Insurance Company Examinations," in the Legislative Budget Board's Government Effectiveness and Efficiency Report submitted to the Eighty-Second Texas Legislature, 2011.
The Texas Department of Insurance conducts periodic examinations of insurance carriers based in the state. Insurers pay examination fees to cover the costs of the examination and assessments to cover the overhead costs. Revenue from the fees and assessment are deposited to the Department of Insurance Operating Account. Insurers are allowed to take a tax credits against their insurance premium taxes, which are General Revenue Funds.
The bill would repeal insurance premium tax credits for insurance company examination fees and overhead assessments.
Methodology
Data from the Texas Department of Insurance and the Comptroller of Public Accounts were used to estimate the amount of examination fee and overhead assessment credits that would be available. These estimates were adjusted to reflect the historical percentage of examination fee credits that have been applied towards premium tax liability and the extent to which the repeal of these credits would marginally increase the use of other types of premium tax credits. The estimate assumes that no credits for examination fees and overhead assessments would be allowed in fiscal year 2012.
Data from the Texas Department of Insurance and the Comptroller of Public Accounts were used to estimate the amount of examination fee and overhead assessment credits that would be available. These estimates were adjusted to reflect the historical percentage of examination fee credits that have been applied towards premium tax liability and the extent to which the repeal of these credits would marginally increase the use of other types of premium tax credits. The estimate assumes that no credits for examination fees and overhead assessments would be allowed in fiscal year 2012.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts, 454 Department of Insurance
304 Comptroller of Public Accounts, 454 Department of Insurance
LBB Staff: JOB, KJG, JI, RS
JOB, KJG, JI, RS