The Montana Legislature Looks to Use Insurance Fees for Property Tax Relief

The Montana Legislature is looking at two bills that will send the approximately $10 million a year collected from the insurance premium tax to offset property taxes. If passed, SB90 creates a the new State Property Tax Assistance Account that will receive the money allocated from a companion bill in the House, LC4443.

The idea is to change the current fee structure for insurers and producers, adjusters, consultants, settlement brokers and rental car business producers. Those funds currently — and historically — support insurance regulatory functions and some other general fund priorities.

PIA Montana Immediate Past Chair Don Williams of Missoula’s D.L. Williams Agency viewed the public hearing on SB90 earlier this week. Oddly — or maybe not so oddly — the bill ended up on a taxation committee and not a committee involved with insurance. “In my opinion this is a pretty sneaky way to get this bill through,” Williams said. “The bill is 27 pages so I doubt if most of the people have read it.”

Williams said the companion legislation, LC4443 is worrisome.

He said it “mandates that at the end of each fiscal year $10 million collected under the existing premium tax provisions will be transferred to the newly designated State Property Tax Assistance Account created by SB90. The bill, LC4443 is the enacting legislation for the transfer of the funds from the current  insurance premium tax revenue to the newly created State Property Tax Assistance Account.”

Williams’ first worry is SB90. It had a lot of support at the hearing.

“The Montana Chamber of Commerce, Montana Coal Council, Montana Travel Association, Montana Economic Developers, the Billings Chamber, the City of Missoula and the City of Bozeman all testified in favor of the bill,” Williams told Weekly Industry News. “There were no opponents to the bill that spoke at the committee hearing.”

Here’s the mostly negative bottom line.

“The bill is not supposed to introduce new taxes or fees on insurers,” Williams told Weekly Industry News. “It reallocates existing revenue to the property tax relief account.  The current concern is that it will create uncertainty for insurers in the future. I also think it opens the door for legislators to gradually increase the fees on the producers and agencies through increased licensing fees for the insurance industry.”

Williams and the PIA Montana’s position are not alone in criticism of the bill. An anonymous insurance association agrees and said the diversion of $10 million each year could cause issues with the regulatory environment year-to-year.

"Redirecting funds away from the general pool supporting insurance regulation may affect long-term investments in oversight, consumer protection, and innovation in Montana's insurance marketplace,” the anonymous spokesperson said.

If SB90 fails, then LC4443 becomes void.

Source link: Insurance Business America — https://bit.ly/4iGr9nZ