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


Office of House Bill AnalysisH.B. 2604
By: McReynolds
Agriculture & Livestock
3/21/2001
Introduced

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, and the creation of  a $1 surcharge
on certain insurance policies could provide up to $23 million a year for
these departments.  House Bill 2604 assesses a $1 surcharge on certain
insurance policies relating to a structure within an area served by a
volunteer fire department.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 2 (Article 5.44, 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.   

The bill amends the Insurance Code to assess, in addition to premium taxes,
a $1  nonrefundable surcharge on certain insurance policies relating to a
structure located within an area served by a volunteer fire department for
each month or part of a month of coverage provided under the policy.  The
surcharge is payable at the time the insurance policy is issued or renewed
and an insurer is prohibited from issuing or renewing a policy before the
surcharge is paid in full.  The insurer is then required to send collected
surcharges to the comptroller of public accounts.  The bill requires the
comptroller of public accounts to credit the revenue from the surcharge to
the fund.   

The commissioner of insurance is required to adopt rules as necessary to
implement this Act.    

EFFECTIVE DATE

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