The Senate Ways and Means Committee took executive action yesterday on SB 6871. Along with increasing court filing fees the proposal would also add a surcharge to car insurance policies to fight auto theft. According to the I-960 fiscal impact statement, the new charge is expected to collect $9.6 million annually from auto policyholders.
State insurers testified against the bill. According to the bill report:
Progressive Insurance recently implemented something similar to this bill in Arizona and found it to be complicated and costly to administer. They had to wait until they had a significant rate revision to incorporate into the fee and they didn't see a lot of results from the program. The current auto theft program has only been in place a few years and there hasn't made a measurable decrease in auto theft. If the committee does move forward with the bill, a sunset clause should be incorporated with reports back to the Legislature on the effectiveness of the auto theft program. Also, the bill should allow for any fee to be specifically called out in the insurance premium statements and the Insurance Commissioner should not receive any portion of the funds. The insurance industry already pays into the general fund and assessments to the Insurance Commissioner. This bill could make insurance companies subject to retaliatory taxes, where they will have to pay higher taxes in other states because of this fee. This fee was looked at before to fund auto theft prevention and it was decided at the time that law abiding citizens shouldn't have to pay for the actions of law breakers. Policy holders and insurance companies already pay taxes. Insurers have to pay a premium tax that is three times higher than the B&O tax rate. The bill is not clear regarding what policies are charged and some carriers have annual policies and the bill needs to be clarified.
Last year the Legislature raided millions from the state's "dedicated" auto theft account and changed the authorized use of the funds. Here are the details from the 2009-11 budget:
Section 128 (27) - $300,000 of the Washington auto theft prevention authority account--state appropriation is provided solely for a contract with a community group to build local community capacity and economic development within the state by strengthening political relationships between economically distressed communities and governmental institutions. The community group shall identify opportunities for collaboration and initiate activities and events that bring community organizations, local governments, and state agencies together to address the impacts of poverty, political disenfranchisement, and economic inequality on communities of color. These funds must be matched by other nonstate sources on an equal basis.
Section 203 (8) - $3,700,000 of the Washington auto theft prevention authority account--state appropriation is provided solely for competitive grants to community-based organizations to provide at-risk youth intervention services, including but not limited to, case management, employment services, educational services, and street outreach intervention programs. Projects funded should focus on preventing, intervening, and suppressing behavioral problems and violence while linking at-risk youth to pro-social activities. The department may not expend more than $1,850,000 per fiscal year. The costs of administration must not exceed four percent of appropriated funding for each grant recipient. Each entity receiving funds must report to the juvenile rehabilitation administration on the number and types of youth served, the services provided, and the impact of those services upon the youth and the community.
Section 945 - RCW 46.66.080 and 2007 c 199 s 27 are each amended to read as follows: (1) The Washington auto theft prevention authority account is created in the state treasury, subject to appropriation. All revenues from the traffic infraction surcharge in RCW 46.63.110(7)(b) and all receipts from gifts, grants, bequests, devises, or other funds from public and private sources to support the activities of the auto theft prevention authority must be deposited into the account. Expenditures from the account may be used only for activities relating to motor vehicle theft, including education, prevention, law enforcement, investigation, prosecution, and confinement. During the 2009-2011 fiscal biennium, the legislature may appropriate moneys from the Washington auto theft prevention authority account for criminal justice purposes and community building.
Perhaps if the Legislature hadn't raided the account the funds would be available for the use intended - preventing auto theft.
Jason Mercier is the director of the Center for Government Reform at the Washington Policy Center. He serves on the Executive Committee of the American Legislative Exchange Council's Tax and Fiscal Policy Task Force and is a contributing editor of the Heartland Institute's Budget & Tax News. Mercier also serves as treasurer on the board of the Washington Coalition for Open Government and was an adviser to the 2002 Washington State Tax Structure Committee.
