HB2268 - 571R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 37, chapter 9, article 1, Arizona Revised Statutes, is amended by adding section 37-1311, to read:

START_STATUTE37-1311. Wildfire prevention authority; membership; terms; wildfire prevention authority fund; audit

A. The wildfire prevention authority is established in the department of forestry and fire management consisting of the following members:

1. Three members who are appointed by the governor and who are employed by an insurance company that writes homeowner's or commercial property insurance policies, with at least one of whom sells homeowner's or commercial insurance policies in wildland urban interface areas.

2. The director of the department of insurance and financial institutions or the director's designee.

3. The director of the Arizona department of forestry and fire management or the director's designee.

4. One member who is appointed by the governor and who represents a county that has a population of two hundred thousand persons or more and that experiences high fire risks.

5. One member who is appointed by the governor and who represents a county that has a population of less than two hundred thousand persons and that experiences high wildfire risks.

~~than two hundred thousand persons that experiences high wildfire risk.~~

6. One member who is appointed by the governor and who represents a city or town that has a population of fifty thousand persons or more and that experiences high wildfire risks.

7. One member who is appointed by the governor and who represents a city or town that has a population of less than fifty thousand persons and that experiences high wildfire risk.

8. ~~6. One member who is appointed by the governor and who represents a city or town that has a population of fifty thousand persons or more and that experiences high wildfire risks.~~

~~7. One member who is appointed by the governor and who represents a city or town that has a population of less than fifty thousand persons and that experiences high wildfire risk.~~

8. ONe fire chief who is appointed by the governor and who represents a fire district that primarily serves residents of a county that has a population of two hundred thousand persons or more and that experiences high wildfire risks.

9. One fire chief who is appointed by the governor and who represents a fire district that primarily serves residents of a county that has a population of less than two hundred thousand persons and that experiences high wildfire risks.

~~fifty thousand persons or more that experiences high wildfire risk.~~

~~7. ONe fire chief who represents a fire district that primarily serves residents of a county with a population of two hundred thousand persons or more that experience high wildfire risks.~~

~~8. One fire chief who represents a fire district that primarily serves residents of a county with a population of less than two hundred thousand persons that experience high wildfire risks.~~

10. Two members of the general public who are appointed by the governor.

B. Members shall serve staggered three-year terms beginning and ending on the third Monday in January. At the first meeting each year, the members shall select a chairperson from among the members. The authority shall meet at the call of the chairperson or on request of seven members of the authority.

C. The authority may:

1. Develop and implement a plan of operation.

2. Develop ~~. Develop~~ and implement a financial plan.

3. Solicit and accept gifts, grants and donations.

D. The authority shall:

1. Review fire risk data and tools to identify the areas in this state that are at the greatest risk of damage to or loss of real and personal property from wildfires.

~~1. Review fire risk data and tools to~~ [~~help~~] ~~identify~~ [~~communities at the greatest risk of wildfire damage~~] [~~the areas in this state that are at the greatest risk of damage to or loss of real and personal property from wildfires~~].

2. prioritize funding to counties, cities, towns and fire districts that have adopted building or land use codes that are reasonably demonstrated to reduce the risk of damage to or loss of real and personal property from wildfires.

3. Review publicly available insurance data to identify areas of this state that may be experiencing high levels of insurance policy nonrenewals or premium increases due to enhanced wildfire risk or damage to or loss of real and personal property from wildfires.

4. To the extent that the authority has available funding, make grants to cities, towns, counties, fire districts and nongovernmental organizations that are located in the areas~~eas~~ of this state identified pursuant to paragraph 1 or 3 of this subsection or that are impacted by elevated wildfire risks for the following purposes:

(a) To assist with vegetation management and community hardening projects, including retrofitting existing structures.

(b) To Aid in the removal of Brush and other fire fuel for property owners who are unable to create defensible spaces, including low-income and elderly residents. For the purposes of this subdivi~~divi~~sion, "defensible spaces" means the area surrounding a building or structure~~tructure~~ that has been cleared of combustible materials to slow the spread of fire.

(c) To help modify the infrastructure to improve the response capacity of the city, town, county or fire district to respond to wildfires, including to help decrease wildfire risk and improve The availability of property insurance to residents of the city, town, county or fire district.

(d) To provide technical assistance to develop ordinances and local policies to improve wildfire resilience.

(e) To provide technical assistance to residents of a city, town, county or fire district to renovate or improve their property to become more fire resistant.

E. The wildfire prevention authority fund is established consisting of $20,000,000 per year from premium tax from fire insurers collected pursuant to section 20-224, subsection E and any private and public monies received by the authority. The authority shall administer the fund. Monies in the fund shall be used only to pay the administrative expenses of the authority and to make grant awards to carry out the purposes of this section. Monies in the fund are subject to legislative appropriation and are exempt from the provisions of section 35-190 relating to lapsing of appropriations. On notice from the authority, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from the investment shall be credited to the fund. All monies appropriated to the department for the wildfire prevention authority shall be used by the department exclusively for the operation of the wildfire prevention authority. Monies appropriated from the fund that are included in the general appropriations act shall be included within the following separate line items:

1. The wildfire prevention authority operating lump sum appropriation.

2. Any local grants.

F. The authority may accept nonmonetary contributions, including the services of individuals, office and secretarial assistance, mailings, printing, office equipment, facilities and supplies that are necessary to carry out the authority's functions.

G. Monies from the wildfire prevention authority fund shall be used to supplement, not supplant, other monies that are available for wildfire prevention and mitigation.

H. The wildfire prevention authority shall cause an audit to be made of the wildfire prevention authority fund. The audit shall be conducted by a certified public accountant every two years. The authority shall file a certified copy of the audit with the auditor general within five days after completion of the audit. The auditor general may make further audits and examinations as the auditor general deems necessary and may take appropriate action relating to the audit pursuant to title 41, chapter 7, article 10.1.END_STATUTE

Sec. 2. Section 20-224, Arizona Revised Statutes, is amended to read:

START_STATUTE20-224. Premium tax; reports

A. On or before March 1 of each year, each authorized domestic insurer, each other insurer and each formerly authorized insurer referred to in section 20-206, subsection B shall file with the director a report in a form prescribed by the director showing total direct premium income including policy membership and other fees and all other considerations for insurance from all classes of business whether designated as a premium or otherwise received by it during the preceding calendar year on account of policies and contracts covering property, subjects or risks located, resident or to be performed in this state, after deducting from such total direct premium income applicable cancellations, returned premiums, the amount of reduction in or refund of premiums allowed to industrial life policyholders for payment of premiums direct to an office of the insurer and all policy dividends, refunds, savings coupons and other similar returns paid or credited to policyholders within this state and not reapplied as premiums for new, additional or extended insurance. No A deduction shall not be made of the cash surrender values of policies or contracts. Considerations received on annuity contracts, as well as the unabsorbed portion of any premium deposit, shall not be included in total direct premium income, and neither shall be subject to tax. The report shall separately indicate the total direct fire insurance premium income received from property located in the incorporated cities and towns certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company.

B. Coincident with the filing of the tax report, each insurer shall pay to the director for deposit, pursuant to sections 35-146 and 35-147, a tax on such net premiums at the following rates:

1. For fire insurance:

(a) On property located in a city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company, .66 percent.

(b) On all other property, 2.2 percent.

2. For disability insurance, 2.0 percent.

3. For health care service plans, the rates prescribed under sections 20-837, 20-1010 and 20-1060.

4. For other insurance:

(a) For premiums received in calendar year 2016, 1.95 percent.

(b) For premiums received in calendar year 2017, 1.90 percent.

(d) For premiums received in calendar year 2019, 1.80 percent.

(e) For premiums received in calendar year 2020, 1.75 percent.

(f) For premiums received in calendar year 2021 and for each subsequent calendar year, 1.70 percent.

C. Any payments of tax pursuant to subsection F G of this section shall be deducted from the tax payable pursuant to subsection B of this section. Each insurer shall reflect the cost savings attributable to the lower tax in fire insurance premiums charged on property located in an incorporated city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company. No An insurer shall be is not liable to the state or to any other person, or shall be and is not subject to regulatory action, relating to the calculation or submittal of fire insurance premium taxes based in good faith on the office of the state fire marshal's certification.

D. Eighty-five percent of the tax paid under this section by an insurer on account of premiums received for fire insurance shall be separately specified in the report and shall be apportioned in the manner provided by sections 9-951, 9-952 and 9-972, except that all of the tax so allocated to a fund of a municipality or fire district that has no volunteer firefighters or pension obligations to volunteer firefighters shall be appropriated to the account of the municipality or fire district in the public safety personnel retirement system and all of the tax so allocated to a fund of a municipality or fire district that has both full-time paid firefighters and volunteer firefighters or pension obligations to full-time paid firefighters or volunteer firefighters shall be appropriated to the account of the municipality or fire district in the public safety personnel retirement system where it shall be reallocated by actuarial procedures proportionately to the municipality or fire district for the account of the full-time paid firefighters and to the municipality or fire district for the account of the volunteer firefighters. A municipality or fire district shall provide to the public safety personnel retirement system all information that the system deems necessary to perform the reallocation prescribed by this section. A full accounting of the reallocation shall be forwarded to the municipality or fire district and its local boards.

E. Beginning in fiscal year 2025-2026 and Each fiscal year thereafter, $20,000,000 of the tax paid under this section by an insurer on account of premiums received shall be separately specified in the report and shall be distributed to the wildfire prevention authority fund established by section 37-1311.

E. F. This section does not apply to title insurance. Title insurers shall be taxed as provided in section 20-1566.

F. G. Any insurer that paid or is required to pay a tax of $50,000 or more on net premiums received during the preceding calendar year, pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07, shall file on or before the fifteenth day of each month from March through August a report for that month, on a form prescribed by the director, accompanied by a payment in an amount equal to fifteen percent of the amount paid or required to be paid during the preceding calendar year pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07. The payments are due and payable on or before the fifteenth day of each month and shall be made to the director for deposit, pursuant to sections 35-146 and 35-147.

G. H. Except for the tax paid on fire insurance premiums pursuant to subsections B and D of this section, an insurer may claim a premium tax credit if the insurer qualifies for a credit pursuant to section 20-224.03, 20-224.04, 20-224.06 or 20-224.07.

H. I. On receipt of a properly documented claim, a refund shall be provided to an insurer from available funds monies for the excess amount of any fire insurance premium improperly paid by the insurer. The insurer shall reflect the refund in the fire insurance premiums charged on the property that was charged the excessive amount.

I. j. On or before September 30 of each year, the director of the department of insurance and financial institutions shall report to the directors of the joint legislative budget committee and the governor's office of strategic planning and budgeting on the amount of insurance premium tax credits established by sections 20-224.03, 20-224.04, 20-224.05, 20-224.06 and 20-224.07 that were used during the previous fiscal year.

J. K. For the purposes of:

1. Subsection B of this section, fire insurance is one hundred percent of fire lines, forty percent of commercial multiple peril nonliability lines, thirty-five percent of homeowners' multiple peril lines, twenty-five percent of farm owners' multiple peril lines and twenty percent of allied lines.

2. Section 20-416, fire insurance is eighty-five percent of fire and allied lines.

K. L. From and after December 31, 2017, The director may require that reports and payments under this section be submitted electronically. If the director requires electronic submission, the director shall include on the department's official website a list of one or more acceptable third-party services through which an insurer must submit reports and payments.END_STATUTE

Sec. 3. Section 20-224.02, Arizona Revised Statutes, is amended to read:

START_STATUTE20-224.02. Credit for overpayment of tax

If an overpayment of the taxes imposed by sections 20-224, 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07 results from payments made pursuant to the method prescribed in section 20-224, subsection F G, the director shall within three months after the due date refund the overpayment without interest.END_STATUTE

Sec. 4. Section 20-225, Arizona Revised Statutes, is amended to read:

START_STATUTE20-225. Failure to pay tax; penalty; exception

A. Any insurer failing to pay the tax prescribed by sections 20-224, 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07 is subject to a civil penalty not to exceed the greater of twenty-five dollars $25 or five percent of the amount due plus interest at the rate of one percent per month from the date the tax was due.

B. The director may refuse to renew the certificate of authority of any insurer failing to pay the tax on or before the date it is due. The director shall revoke the certificate of authority of any insurer failing to pay the tax for more than thirty days after it was due.

C. If the director requires the tax to be paid electronically through a designated third-party service pursuant to section 20-224, subsection K L, no penalty accrues with respect to any payment of tax or interest that is late due to delays caused by the third-party service.END_STATUTE

Sec. 5. Section 20-227, Arizona Revised Statutes, is amended to read:

START_STATUTE20-227. Disposition of tax proceeds

The purpose of the taxes provided by this title is to assist in defraying the cost of state government and to lessen the tax burden upon on tangible property. All taxes collected under this title shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund and shall be used, together with the revenue from other sources, to pay appropriations for the maintenance of state government, except as provided in subsection C of section 20-224, (firemen's relief and pension fund) subsections D and E and in section 20-224.01 (highway patrol account of the public safety personnel retirement system) and other <<~~Sec.~~ ~~2. Section 20-224, Arizona Revised Statutes, is amended to read:~~

~~20-224.~~ ~~Premium tax; reports~~

A. On or before March 1 of each year, each authorized domestic insurer, each other insurer and each formerly authorized insurer referred to in section 20-206, subsection B shall file with the director a report in a form prescribed by the director showing total direct premium income including policy membership and other fees and all other considerations for insurance from all classes of business whether designated as a premium or otherwise received by it during the preceding calendar year on account of policies and contracts covering property, subjects or risks located, resident or to be performed in this state, after deducting from such total direct premium income applicable cancellations, returned premiums, the amount of reduction in or refund of premiums allowed to industrial life policyholders for payment of premiums direct to an office of the insurer and all policy dividends, refunds, savings coupons and other similar returns paid or credited to policyholders within this state and not reapplied as premiums for new, additional or extended insurance. [No] [A] ~~deduction shall~~ [~~not~~] be made of the cash surrender values of policies or contracts. Considerations received on annuity contracts, as well as the unabsorbed portion of any premium deposit, shall not be included in total direct premium income, and neither shall be subject to tax. The report shall separately indicate the total direct fire insurance premium income received from property located in the incorporated cities and towns certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company.

~~B. Coincident with the filing of the tax report, each insurer shall pay to the director for deposit, pursuant to sections 35-146 and 35-147, a tax on such net premiums at the following rates:~~

~~1. For fire insurance:~~

~~(a) On property located in a city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company, .66 percent.~~

~~(b) On all other property, 2.2 percent.~~

~~2. For disability insurance, 2.0 percent.~~

~~3. For health care service plans, the rates prescribed under sections 20-837, 20-1010 and 20-1060.~~

~~4. For other insurance:~~

~~(a) For premiums received in calendar year 2016, 1.95 percent.~~

~~(b) For premiums received in calendar year 2017, 1.90 percent.~~

~~(c) For premiums received in calendar year 2018, 1.85 percent.~~

~~(d) For premiums received in calendar year 2019, 1.80 percent.~~

~~(e) For premiums received in calendar year 2020, 1.75 percent.~~

~~(f) For premiums received in calendar year 2021 and for each subsequent calendar year, 1.70 percent.~~

~~C. Any payments of tax pursuant to subsection~~ [F ] [G] of this section shall be deducted from the tax payable pursuant to subsection B of this section. Each insurer shall reflect the cost savings attributable to the lower tax in fire insurance premiums charged on property located in an incorporated city or town certified by the office of the state fire marshal pursuant to section 9-951, subsection B, as procuring the services of a private fire company. [No] [An] ~~insurer~~ [~~shall be~~] [~~is not~~] ~~liable to the state or to any other person~~ [~~, or shall be~~] [~~and is not~~] ~~subject to regulatory action~~[, ] ~~relating to the calculation or submittal of fire insurance premium taxes based in good faith on the office of the state fire marshal's certification.~~

[E. Beginning in fiscal year 2025-2026 and Each fiscal year thereafter, $20,000,000 of the tax paid under this section by an insurer on account of premiums received shall be separately specified in the report and shall be distributed to the wildfire prevention authority fund established by section 20-123.]

[E.] [F.] ~~This section does not apply to title insurance. Title insurers shall be taxed as provided in section 20-1566.~~

[F.] [G.] Any insurer that paid or is required to pay a tax of $50,000 or more on net premiums received during the preceding calendar year, pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07, shall file on or before the fifteenth day of each month from March through August a report for that month, on a form prescribed by the director, accompanied by a payment in an amount equal to fifteen percent of the amount paid or required to be paid during the preceding calendar year pursuant to subsection B of this section and sections 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07. The payments are due and payable on or before the fifteenth day of each month and shall be made to the director for deposit, pursuant to sections 35-146 and 35-147.

[G.] [H.] Except for the tax paid on fire insurance premiums pursuant to subsections B and D of this section, an insurer may claim a premium tax credit if the insurer qualifies for a credit pursuant to section 20-224.03, 20-224.04, 20-224.06 or 20-224.07.

[H.] [I.] ~~On receipt of a properly documented claim, a refund shall be provided to an insurer from available~~ [~~funds~~] [~~monies~~] for the excess amount of any fire insurance premium improperly paid by the insurer. The insurer shall reflect the refund in the fire insurance premiums charged on the property that was charged the excessive amount.

[I.] [j.] On or before September 30 of each year, the director of the department of insurance and financial institutions shall report to the directors of the joint legislative budget committee and the governor's office of strategic planning and budgeting on the amount of insurance premium tax credits established by sections 20-224.03, 20-224.04, 20-224.05, 20-224.06 and 20-224.07 that were used during the previous fiscal year.

[J.] [K.] ~~For the purposes of:~~

~~2. Section 20-416, fire insurance is eighty-five percent of fire and allied lines.~~

[K.] [L.] [~~From and after December 31, 2017,~~] The director may require that reports and payments under this section be submitted electronically. If the director requires electronic submission, the director shall include on the department's official website a list of one or more acceptable third-party services through which an insurer must submit reports and payments.>>

<<~~Sec.~~ ~~3. Section 20-224.02, Arizona Revised Statutes, is amended to read:~~

~~20-224.02. Credit for overpayment of tax~~

~~If an overpayment of the taxes imposed by sections 20-224, 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07 results from payments made pursuant to the method prescribed in section 20-224, subsection~~ [F ] [G]~~, the director shall within three months after the due date refund the overpayment without interest.~~ >>

<<~~Sec.~~ ~~4. Section 20-225, Arizona Revised Statutes, is amended to read:~~

~~20-225. Failure to pay tax; penalty; exception~~

~~A. Any insurer failing to pay the tax prescribed by sections 20-224, 20-224.01, 20-837, 20-1010, 20-1060 and 20-1097.07 is subject to a civil penalty not to exceed the greater of~~ [~~twenty-five dollars~~] [~~$25~~] ~~or five percent of the amount due plus interest at the rate of one percent per month from the date the tax was due.~~

~~C. If the director requires the tax to be paid electronically through a designated third-party service pursuant to section 20-224, subsection~~ [K ] [L]~~, no penalty accrues with respect to any payment of tax or interest that is late due to delays caused by the third-party service.~~ >>

<<~~Sec.~~ ~~5. Section 20-227, Arizona Revised Statutes, is amended to read:~~

~~20-227. Disposition of tax proceeds~~

~~The purpose of the taxes provided by this title is to assist in defraying the cost of state government and to lessen the tax burden~~ [~~upon~~] [on] tangible property. All taxes collected under this title shall be deposited, pursuant to sections 35-146 and 35-147, in the state general fund and shall be used, together with the revenue from other sources, to pay appropriations for the maintenance of state government, except as provided in [~~subsection C of~~] ~~section 20-224~~[,] [~~(firemen's relief and pension fund)~~] [~~subsections D and E~~] ~~and~~ [in] ~~section 20-224.01~~ [~~(highway patrol account of the public safety personnel retirement system)~~] ~~and other~~ applicable statutes.END_STATUTE