FISCAL NOTE
FUND(S):
7155, 7158, New
Sources of Revenue:
Special Fund
Legislation creates:
A New Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
This fiscal note response is limited to the revenues and costs administered by the Offices of the Insurance Commissioner.
HB 3158 proposes an increase of 20 one hundredths of one percent to the current 1% additional tax. It is projected the additional assessment will generate an additional $3,944,000 annually. This additional revenue will be dedicated to the Municipal Fire & Police Pensions fund.
In addition the bill proposes increasing the WV Fire & Casualty surcharge by 25 one hundredths of one percent to 0.80%. This increase is projected to generate an additional $5,250,000.
Lastly the bill proposes a new property and casualty surcharge of 30 one hundredths of one percent which is projected to generate an additional $6,300,000 annually.
Costs to implement the new taxes and surcharges are projected at $10,000. Costs are needed to cover the expenditures necessary to adjust premium tax forms and instructions, provide notification of the new taxes/surcharges to insurers, and to modify the remittance processing and tax data systems.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
10,000 |
0 |
0 |
| Personal Services |
8,000 |
0 |
0 |
| Current Expenses |
2,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
11,620,500 |
15,494,000 |
Explanation of above estimates (including long-range effect):
Personal Services of $8,000 to modify tax forms, data systems and remittance processing.
Current Expenses of $2,000 to notify insurers of the new tax rates and surcharge.
Revenues -
Additional Tax (Municipal Pension acct)
Taxable premium base for insurers is projected at $1,972,000,000.
$1,972,000,000 X .0020 (tax increase) = $3,944,000 (annually).
WV Fire & Casualty Surcharge (Vol Fire)
Taxable premium base for insurers and surplus lines is projected at $2,100,000,000.
$2,100,000,000 X .0025 (surcharge increase) = $5,250,000 (annually).
New Surcharge (Vol Fire Length of Service Award)
Taxable premium base for insurers and surplus lines is projected at $2,100,000,000.
$2,100,000,000 X .0030 (new surcharge) = $6,300,000 (annually).
Total additional annual revenue.
$3,944,000 + $5,250,000 + $6,300,000 = $15,494,000 (total annual increase).
Fiscal Year 2010 increased revenues reflect three quarters of collections at the higher rates. The timing of collections 25 days after the close of the quarter will result in the June 30, 2010 close be received in the following fiscal year (July 25, 2010).
Memorandum
The proposed effective date for the new taxes and surcharges is July 1, 2009. It is expected that this 90 day implementation date may be a concern to insurers which will need to quickly implement the adjustments to their billing and accounting systems implementing the new and increased assessments.
The proposal eliminates $2,500,000 annual revenue currently dedicated to Teachers Retirement (33-3-14d Additional Tax).
The bill requires the Offices of the Insurance Commissioner to consult in the Length of Service Awards Program, clarity of the scope of the OIC's involvement is needed to reasonably project personnel costs. Should the OIC be asked to administer the plans, additional staff and expenditures will be necessary to adequately implement, continue to operate and audit. No projections have been included for these costs based on the current "consultation" language of the bill.
Person submitting Fiscal Note: Michael D. Riley
Email Address: Michael.Riley@wvinsurance.gov