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Committee approves PCS to scale down percentage fee for service-warranty sellers, raises flat fee over time
Summary
The committee approved a proposed committee substitute (PCS) for HB 1085 to change how service-warranty fees are collected, moving from a percentage-based scheme toward a phased increase in a flat annual fee; the committee voted 15-1 to report the bill out.
A House committee voted 15-1 to move a PCS for House Bill 1085 out of committee. The PCS phases out the current percentage fee applied to service-warranty sales and scales up a flat annual fee for sellers who had previously been grandfathered at lower rates.
The sponsor told members the original statute added a 2% fee and grandfathered certain companies with a $3,000 annual fee. The PCS phases the percentage down over several years while raising the flat annual fee in steps to $3,700, with the sponsor saying the schedule was intended to smooth the fiscal impact on the current budget. “The original bill was just an immediate drop of the percentage fee to 0 and the increase of the flat fee to 3,700, creating a $2,000,000 impact in this budget. And so I was asked to push it out some so the PCS was just pushing it out over time to lessen the impact in the current year,” the sponsor said.
The sponsor attributed the bill request to the service-warranty industry. Fiscal estimates provided to the committee show roughly $200,000 fiscal impact in the current year, about $1 million in the following year and approximately $2 million in the final ongoing year; the sponsor said those figures drove the PCS schedule.
The PCS was adopted by voice or unanimous consent for the amendment and the committee later recorded a 15-1 vote to report the bill out of committee.
