HBA-SEP C.S.H.B. 2604 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2604
By: McReynolds
Agriculture & Livestock
4/3/2001
Committee Report (Substituted)

BACKGROUND AND PURPOSE 

Currently, fund-raisers and donations supply the primary source of revenue
for volunteer fire departments (departments) that generally receive 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.  It is apparent that
a new stream of revenue is necessary.  C.S.H.B. 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

C.S.H.B. 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.  An insurer is authorized to reflect an assessment as
an expense in any required rate filing.  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

July 1, 2001, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2604 modifies the original by funding the Rural Fire Department
Assistance Program with  a proportional assessment on insurers rather than
by a $1 surcharge on certain insurance policies relating to a structure
within an area served by a volunteer fire department.  The substitute
provides that 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.