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F I S C A L I M P A C T R E P O R T

SPONSOR Rodella

ORIGINAL DATE

LAST UPDATED

2/9/07

2/10/07 HB

SHORT TITLE Fire Protection Grant Fund Transfers

SB 515

ANALYST Earnest

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

($4,920.0)

($7,380.0)

($9,840.0) Recurring General Fund

$4,920.0

$7,380.0

$9,840.0 Recurring Fire Protection

Grant Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates House Bill 466

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

Senate Bill 515 would phase-out over nine years the transfer of balances in the fire protection

fund (FPF) to the general fund. SB 515 would distribute annually increasing amounts of the Fire

Protection Fund balances to the non-reverting, income-retaining fire protection grant fund,

created in the 2006 session. The Fire Protection Grant Council would allocate money in the fund

to fire districts through criteria they establish.

The bill also repeals section 59A-53-15, effectively changing the calculation of the fund balance.

FISCAL IMPLICATIONS

SB 515 proposes to eliminate the general fund reversion of the fire protection fund by fiscal year

2015. Over the years, the bill increases distributions to the fire protection grant fund to be

distributed to fire districts by the grant council. Laws 2006, Chapter 103 (HB 497) set aside all

Senate Bill 515 – Page

2

growth in the fire protection fund for distribution to fire districts. Thus, under current law, the

maximum that can revert to the general fund is $24.6 million as set in FY06. By fiscal year

2015, the grant council will be allocating this $24.6 million to fire districts to improve fire

protection. The following table shows the increase in the distribution to the grant fund and

decrease in the general fund reversion.

Fund Balance after

Distributions and

Appropriations

Percent Grant Fund

Distribution

General Fund

Reversion

FY06 Actual Rev

$ 24,600,000

FY07

$ 24,600,000 20% $ 4,920,000 $ 19,680,000

FY08

$ 24,600,000 30% $ 7,380,000 $ 17,220,000

FY09

$ 24,600,000 40% $ 9,840,000 $ 14,760,000

FY10

$ 24,600,000 50% $ 12,300,000 $ 12,300,000

FY11

$ 24,600,000 60% $ 14,760,000 $ 9,840,000

FY12

$ 24,600,000 70% $ 17,220,000 $ 7,380,000

FY13

$ 24,600,000 80% $ 19,680,000 $ 4,920,000

FY14

$ 24,600,000 90% $ 22,140,000 $ 2,460,000

FY15

$ 24,600,000 100% $ 24,600,000 $ -

FY16

$ 24,600,000 100% $ 24,600,000 $ -

Current Law

Reversions to General Fund

(FY07-FY15)

Proposed Law

Reversions to General Fund

(FY07-FY15)

Difference

$ 221,400,00

$ 88,560,000

$ 132,840,000

Distributions to the grant council will not be subject to legislative appropriation.

SIGNIFICANT ISSUES

The Fire Protection Fund receives insurance premium taxes paid to the state for property and

vehicle insurance. Distributions to county and municipal fire districts are made from the fund by

formula based on districts’ Insurance Service Office (ISO) ratings. In the 2006 session, those

distributions were increased by about 40 percent. Any growth in the fund will be dedicated to

distributions to county and municipal fire districts. The total amount collected for the fire

protection fund in FY06 was about $60 million. Assuming 2 percent growth in the fund, by

FY15 the state will be distributing more than $70 million per year to fire districts.

The 2003 Legislature approved a needs assessment study for the State Fire Marshal's Office

which was completed in December 2005. The study is extensive and comprehensive and

recommends an emphasis be placed on bringing ISO rated 9 and 10 county and city districts up

to an 8 rating. According to DFA, the study found it would require $56 million to accomplish

this improvement. The reduction of the transfer to the general fund is about $133 million over

nine years, which may be more than required

Laws 2006, Chapter 103 (HB 497), created the Fire Protection Grant Fund. Due to a technical

error in the bill, the section distributing monies to the grant fund was vetoed. This bill would

make law the vetoed section.

Senate Bill 515 – Page

3

According to PRC, the new fund is intended to make allocations approved by the grant fund

council for the critical needs of municipal and county fire departments. The council would

develop criteria for assessing the critical needs of the departments for fire apparatus and

equipment, communications equipment, equipment for wildfires, fire station construction or

expansion or equipment for hazardous material response.

Applications for grant assistance from the Fire Protection Grant Fund would be made by fire

departments to the council in accordance with the requirements of the council. The council

would develop needs criteria. It was anticipated that the priority needs would include those

items that would assist fire departments in ISO classes 9 and 10 improve their community fire

protection rating per the needs assessment conducted by the State Fire Marshal’s Office.

The anticipated benefits include better equipped fire departments, replacement of old apparatus

and lower ISO ratings. Some rate payers should qualify for reduced insurance rates if their local

community ISO rating is lowered.

ADMINISTRATIVE IMPLICATIONS

PRC does not identify any administrative implications. However, making allocations from the

grant fund and participating in the grant council would increase workload.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 515 duplicates House Bill 466.

TECHNICAL ISSUSES

There is no requirement to report on the activities of the grant council or on the benefits of the

increased distributions.

ALTERNATIVES

Instead of setting up the distribution to the fund, the Legislature could appropriate the needed

annual amount to the fire grant fund for awards to districts with critical needs.

BE/mt:csd