HBA-SEP H.B. 2604 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 2604 By: McReynolds Agriculture & Livestock 7/11/2001 Enrolled BACKGROUND AND PURPOSE Prior to the 77th Legislature, fund-raisers and donations supplied the primary source of revenue for volunteer fire departments (departments) that generally received less than $5,000 per year from the county. Although many of the 1,800 fire departments in the state operate with little or no reserve personnel funds, they respond to over 90 percent of the wildland fires. A new stream of revenue was necessary. House Bill 2604 requires the comptroller of public accounts to assess all insurers in an amount that totals $15 million for each 12-month period. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts and the commissioner of insurance in SECTION 2 (Article 5.102, Insurance Code) of this bill. ANALYSIS House Bill 2604 amends the Government and Insurance codes relating to assistance to certain volunteer fire departments and to the imposition of an insurance premium surcharge to finance that assistance. The bill amends the Government Code to require the Texas Forest Service of The Texas A&M University System (service) to administer the Rural Volunteer Fire Department Assistance Program (program) and to authorize the director of the service (director) to adopt rules necessary to assist volunteer fire departments in paying for equipment and training of personnel. The bill requires the director to determine reasonable criteria and qualifications for the distribution of money from the volunteer fire department assistance fund (fund) and to establish a procedure for reporting and processing requests for money from the fund. In response to requests for assistance, a written copy of the decision to provide or deny assistance is required to be sent to the requestor. The bill also requires the director to prepare an annual written report on the activity, status, and effectiveness of the fund and to submit the report before November 1 of each year to the lieutenant governor, the speaker of the house of representatives, and the comptroller of public accounts. Any assistance or benefits provided to a volunteer fire department or firefighter under the program are prohibited from being considered compensation. The bill prohibits the director from granting a request for assistance before September 1, 2002. Administration costs associated with the program during a state fiscal year are prohibited from exceeding seven percent of the total revenue collected from the premium surcharge assessed during the previous fiscal year. The bill amends the Insurance Code to require the comptroller of public accounts (comptroller) to assess all insurers in an amount that totals $15 million for each 12-month period. Each insurer is required to 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 this state for that period. The bill requires the comptroller to assess, beginning in the year 2002, the insurers on or before September 1 of each year and an insurer to pay the amount assessed on or after the 60th day after the date the comptroller assesses the insurer. The insurer is authorized to recover an assessment either by reflecting the assessment as an expense in a required rate of filing or by charging the insurer's policy holders. An insurer that recovers an assessment from the insurer's policy holders is required to provide a notice to each policyholder of the amount being recovered. The commissioner is authorized, by rule, to adopt a form for providing such notice. The comptroller is required to credit collected assessments to the fund and the comptroller and the commissioner of insurance are required to adopt rules as necessary to implement this Act. These provisions expire September 1, 2011. EFFECTIVE DATE September 1, 2001.