COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 0383-01
Bill No.: SB 8
Subject: Insurance-General; Insurance Dept.; Taxation and Revenue-General
Type: #Corrected
Date: January 22, 2001
#Corrected assumptions and revenue impact in FY2002.
FISCAL SUMMARY
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| General Revenue# | $0 | ($964,504) | ($964,504) |
| Insurance Dedicated# | $0 | ($95,000) | $0 |
| County Foreign Insurance# | $0 | $0 | $0 |
| Total Estimated
Net Effect on All State Funds |
$0 | ($1,059,504) | ($964,504) |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| Local Government# | $0 | ($964,504) | ($964,504) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Officials from the Department of Revenue assume this proposal would not fiscally impact their agency.
Department of Insurance (INS) officials state that in 1997 examination fees exceeding tax liability was $2,014,964 and was $1,843,054 for 1998. INS states that using this information they estimate that $1,929,009 in examination fees would be carried forward each year split between the General Revenue Fund and the County Foreign Insurance Fund. INS would need to re-write the premium tax credit sub-system using a relational database system to allow for accounting of the tax credits and carryover from year to year. INS estimates this would require approximately 760 hours of contract programming to implement. INS estimates that contract programming costs would be $125 per hour. INS states this would be a one-time cost to the Insurance Dedicated Fund.
#INS officials state the examination fee carryforward would not impact revenues until FY 2003. The first year of carryforward would be for 2001 taxes which would be filed by March, 2002. Carryforward would impact revenues in 2002 which would be filed in March, 2003.
Officials from the Office of Administration - Division of Budget and Planning did not respond to our fiscal impact request.
| FISCAL IMPACT - State Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| GENERAL REVENUE FUND | |||
| Loss - Department of Insurance | |||
| Premium taxes# | $0 | ($964,504) | ($964,504) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUND |
$0 |
($964,504) |
($964,501) |
| INSURANCE DEDICATED FUND | |||
| Cost - Department of Insurance | |||
| Contract programming# | $0 | ($95,000) | $0 |
| ESTIMATED NET EFFECT ON INSURANCE DEDICATED FUND |
$0 |
($95,000) |
$0 |
| COUNTY FOREIGN INSURANCE FUND | |||
| Savings - Department of Insurance | |||
| Less distributions to local political subdivisions# |
$0 |
$964,504 |
$964,504 |
| Loss - Department of Insurance | |||
| Premium taxes# | $0 | ($964,504) | ($964,504) |
| ESTIMATED NET EFFECT ON COUNTY FOREIGN INSURANCE FUND |
$0 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| LOCAL POLITICAL SUBDIVISIONS | |||
| Loss - Local Political Subdivisions | |||
| Less distributions# | $0 | ($964,504) | ($964,504) |
| ESTIMATED NET EFFECT ON LOCAL POLITICAL SUBDIVISIONS |
$0 |
($964,504) |
($964,504) |
FISCAL IMPACT - Small Business
Small insurance companies that have excess examination fees would be fiscally impacted to the extent they could be use the carryforward in future years.
DESCRIPTION
Current law allows insurance companies to deduct certain taxes and fees from premium taxes payable to the State. This proposal, for all tax years beginning on or after January 1, 2001, would prohibit refunding any amount deducted for examination fees which exceeds an insurance company's or association's premium tax liability for the same tax year. However, such amount
may be carried forward to subsequent tax years until the full deduction is claimed.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Revenue
Office of Administration
Division of Budget and Planning
Department of Insurance
Jeanne Jarrett, CPA
Director
January 22, 2001