|Date Requested:February 22, 2011
Time Requested:10:43 AM
| FUND(S) |
Sources of Revenue
Legislation creates:A New Fund
Effect this measure will have on costs and revenues of state government.
| SB 583 proposes raising the surcharge policyholders pay on their property and casualty insurance policies from 0.55% to 1.0%
It is projected that this increased assessment will generate an additional $10,000,000 annually.
The costs to the state is projected at $5,000 during the implementation year to provide for updating tax forms, instructions, remitter notices and systems programming for the new rate.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||5,000||0||0|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||5,000,000||10,000,000|
3. Explanation of above estimates (including long-range effect):
Tax forms, instructions and systems would need updated to incorporate the new surcharge rate. Additionally, notices to insurers and surplus lines licensees will need to be made to ensure they collect the new rate from the policyholder. Total implementation costs for the state are estimated at $5,000.
For FY 2010 the state collected $12,170,000 from the 0.55% surcharge. The premium base is calculated at $2,200,000,000. A 1% surcharge is projected to total $22,000,000 or approximately an additional $10,000,000.
The FY 2012 increase in revenue is estimated at $5,000,000 (half of the $10,000,000 annual increase) as result of the timing of collections, during the first year it is estimated that half of the surcharges collected by the state will be for annual policies issued prior to the rate change and funds remitted at the current 0.55% rate.
| An effective date allowing systems changes by the state and insurers responsible for notifying their policyholders needs included.
Insurance taxes and surcharge assessments currently generate $18 to $19 million annually for funding support to volunteer fire departments. These funds are distributed equally to each department which averages $45,000 per department.
Relevant tax and surcharge code sections 33-3-14d, 33-3-33, 33-12c-7.