Existing law requires the state to have the primary financial responsibility for preventing and suppressing fires in areas that the State Board of Forestry and Fire Protection has determined are state responsibility areas, as defined. Existing law requires that a fire prevention fee be charged on each habitable structure on a parcel that is within a state responsibility area, collected annually by the State Board of Equalization, in accordance with specified procedures, and specifies that the annual fee shall be due and payable 30 days from the date of assessment by the state board. Existing law authorizes a petition for redetermination of the fee to be filed within 30 days after service of a notice of determination, as specified.

This bill would extend the time when the fire prevention fee is due and payable from 30 to 60 days from the date of assessment by the State Board of Equalization and would authorize the petition for redetermination to be filed within 60 days after service of the notice of determination, as specified.

Existing law requires the state to have the primary financial responsibility for preventing and suppressing fires in areas that the State Board of Forestry and Fire Protection has determined are state responsibility areas, as defined. Existing law requires that a fire prevention fee be charged on each habitable structure on a parcel that is within a state responsibility area, collected annually by the State Board of Equalization, in accordance with specified procedures, and specifies that the annual fee shall be due and payable 30 days from the date of assessment by the state board. Existing law authorizes a petition for redetermination of the fee to be filed within 30 days after service of a notice of determination, as specified.

This bill would extend the time when the fire prevention fee is due and payable from 30 to 60 days from the date of assessment by the State Board of Equalization and would authorize the petition for redetermination to be filed within 60 days after service of the notice of determination, as specified.

Date of Hearing: May 10, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 288

Author:(Obernolte) – As Amended Ver:April 25, 2017

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill extends the period of time owners of structures have to pay or request redetermination of the fire prevention fee from 30 days to 60 days. This bill also contains an amnesty program, which begins January 1, 2019, for fee liabilities due and payable beginning before March 1, 2018.

FISCAL EFFECT:

1. Unknown increased recovery of delinquent fee revenue resulting from the amnesty program. This figure will be less than what is owed because it will not include interest and penalites. Unknown, likely unabsorbable costs for BOE to administer this program.
2. Interest and penalty revenue loss of $456,000 in FY 2017-18 resulting from the extension of the time period fee-payer have to submit what is owed from 30 to 60 days.

According to Baord of Equaliztation (BOE) staff, the 31-60 day interest and penalties data indicate a continuous decline of less than 1% from FY 2012-13 through FY 2014-15. However, FY 2015-16 saw an irregular and significant 60.5% decrease in payments made between 31-60 days compared to FY 2014-15. Accounting for both a 1% decline from FY 2012-13 through FY 2014-15 and the irregular steep decline in FY 2015-16, staff used a four-year running average to determine the revenue impact. Staff estimates interest and penalty revenue loss to be $456,000 in FY 2017-18.

1. The BOE will incur some minor one-time costs for computer programming and revising information and publications.
2. Unknown costs for CAL FIRE to coordinate with BOE to advertise the amnesty program.

COMMENTS:

1. Purpose. According to the author, many homeowners have expressed concern that the 30-day period does not allow sufficient time to pay or dispute the fee. This bill provides additional time for feepayers to review their assessments and either dispute the fee or adjust their budgets and pay their fees in a timely manner.

Additionally, the Assembly Natural Resources Committee added an amnesty program to address the $47 million in uncollected fees. This bill now establishes the amnesty program for a 6-month period beginning January 1, 2019, through June 30, 2019, or an alternative six-month period ending no later than December 31, 2019. The Program applies to fee liabilities due and payable for reporting periods beginning before March 1, 2018.

1. Background. The state is responsible for wildland fire protection in state responsibility areas (SRA) which are generally defined to include most nonfederal timberlands, rangelands and watersheds thinly populated and not within the boundaries of a city. Over 31 million acres, much privately owned, are located in SRA. In the past, SRA lands were largely unpopulated. In recent years, however, local governments have allowed increased housing development in SRA but at a level of density that maintains the state's obligation to provide wildland fire protection.

As housing development in SRA increased, so did state fire protection costs. In 1996-97, the department spent $475 million on fire protection; in more recent years, CALFIRE's annual fire protection costs neared or surpassed $1 billion.

1. Fire Prevention Fee. In 2011 the Legislature passed ABx1 29 (Blumenfield), requiring the Board of Forestry and Fire Protection to adopt emergency regulations to establish a fire prevention fee. The fee, not to exceed $150 on each structure, was to raise $50 million to fund CALFIRE fire prevention activities. In January 2012, the board issued its regulation, establishing a fee of $150 per habitable structure on a parcel located within SRA, with a $35 reduction for each habitable structure that is also within the boundaries of a local agency that provides fire protection services. Revenues from the fee are to be used exclusively for fire protection. In authorizing the fee, the Legislature recognized that individual owners within SRA received a disproportionately larger benefit from fire prevention activities than realized by the state’s residents generally.

As allowed by law, the Fire Board adjusted the fee for inflation and the fee is currently $152.33 per habitable structure outside a fire protection district and $117.33 for habitable structures within a fire protection district.

The fee generates approximately $80 million a year in revenues, which is used to enhance statewide fire prevention work, including local assistance grants. Recent local assistance grant awards have focused on responding to the tree mortality crisis in California where over 100 million trees have died. The local assistance grants help locals reduce wildfire and tree fall risks near homes in high tree mortality areas.

1. Collection Issues. According to the BOE, approximately 72% of fee payers pay the fee within the 30 days and 7% of fee payers pay between 31 to 60 days. This bill would save the 7% of fee payers who pay between 31 to 60 days the 10% penalty assessed to late accounts.

Petitions for Redetermination have declined from over 100,000 in 2011-12 fiscal year to around 30,000 in 2014-15 fiscal year, of which only 11% were successful. Over 10% of fee payers pay after 60 days and additional 10% have not paid the fee any of the five years it has been assessed. More than $47 million in fees remain uncollected. Additional time may be warranted for paying the fee or appealing it. The Natural Resources Committee added the amnesty program in this bill to address the $47 million in fees that remain uncollected and give fee payers the onetime opportunity to pay their debts without interest or penalty.

The fee has been collected since 2011. Residents in the SRA are still receiving the vast majority of their fire protection at state expense while residents in non-SRA areas pay for their fire protection through local taxes. Additionally, some of the revenue derived from the fee is returned to SRA residents through local assistance grants.

The Committee may wish to consider whether we should be allowing SRA property owners more time to adjust to paying a fee which has been in place for almost six years and costs no more than $12.50 per month. Additionally, the Committee may wish to consider whether an amnesty program is fair to the 72% of fee payers who submit their payments on time.

1. Prior Legislation. SB 1413 (Wyland), of the 2013- 2014 Legislative Session, was almost identical to this bill and was held in this Committee on Suspense.

AB 203 (Obernolte), of the 2015-2016 Legislative Session, contained the same provisions as this bill, but also codified the existing fee level. This bill was placed on the inactive file on the Assembly floor by the author.

AB 1642 (Obernolte), of the 2015- 2016Legislative Session, was almost identical to this bill and was held in this Committee on Suspense.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 17, 2017

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Cristina Garcia, Chair

ABPCA Bill Id:AB 288 (

Author:Obernolte) – As Introduced Ver:February 2, 2017

SUBJECT: State responsibility areas: fire prevention fees

SUMMARY: Extends the deadlines to either pay the state responsibility area (SRA) fire prevention fee (fee) or file a petition for redetermination of the fee from 30 days to 60 days.

EXISTING LAW:

1. Requires the Board of Forestry and Fire Protection (Board) to classify all lands within the state for the purpose of determining areas in which the financial responsibility of preventing and suppressing fires is primarily the responsibility of the state.
   
2. Declares that it is necessary to impose a fee to pay for fire prevention activities in the SRA that specifically benefit owners of structures in the SRA.
   
3. Requires the Board to adopt regulations to establish the fee in an amount not to exceed $150, and allows the Board to adjust the fee every year for inflation. Requires the fee to be charged on each “structure” on a parcel that is within the SRA. Defines “structure” as a building used or intended to be used for human habitation, including a mobile home or manufactured home. Reduces the fire prevention fee by $35 if the structure is also within the boundaries of a local agency that provides fire protection services. Defines “owner of a habitable structure” as the person that is the owner of record of a habitable structure in the county tax assessor rolls or as recorded by the Department of Housing and Community Development (HCD) on July 1 of the state fiscal year for which the fee is due. Requires the Board of Equalization (BOE) to collect the fee.
4. Requires the fee to be deposited in the State Responsibility Area (SRA) Fire Prevention Fund, which is available to the Board and the Department of Forestry and Fire Protection (CAL FIRE) to expend for fire prevention activities that benefit the owners of structures within the SRA. Limits fire prevention activities to the following:
   

a) Local assistance grants established by the Board;

b) Grants to Fire Safe Councils, the California Conservation Corps, or certified local conservation corps for fire prevention projects and activities in the SRA;

c) Grants to a qualified nonprofit organization with a demonstrated ability to satisfactorily plan, implement, and complete a fire prevention project applicable to the SRA;

d) Inspections by CAL FIRE for compliance with defensible space requirements around structures in the SRA;

e) Public education to reduce fire risk in the SRA;

f) Fire severity and fire hazard mapping by CAL FIRE in the SRA; and,

g) Other fire prevention projects in the SRA that are authorized by the Board.

1. Allows a person to petition CAL FIRE for a redetermination of whether the fee applies to him or her within 30 days after being served with a notice of determination (i.e., the notice from CAL-FIRE stating that a person must pay the fee).
2. Imposes a 10% penalty 30 days after the BOE’s date of assessment for the fee.
   

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. California’s SRA covers over 31 million acres and includes land in every county except San Francisco and Sutter. CAL FIRE operates more than 200 fire stations within the SRA, contracts with other firefighting agencies, and has a proposed wildland fire protection budget of $1.8 billion for this fiscal year. The fire protection budget includes, among other things, fire prevention activities such as brush clearance, defensible space inspections, fire breaks, and other measures to reduce the cost of firefighting, property loss, injury to firefighters, and damage to the environment.
   

CAL FIRE’s fire protection budget has seen a steady increase over the years and is the largest budget in the Natural Resources Agency. In the 1996-97 fiscal year, CAL FIRE’s fire protection budget was $266 million. This increase has been attributed in large part to the significant housing development at the boundaries between wildlands and urban areas, the heightened risk of catastrophic fires due to climate change and fire suppression activities over the last century, and increased staff costs.

1. Fire Prevention Fee. In early 2011, the state was facing a $26.6 billion budget deficit, and an annual structural deficit of up to $21.5 billion was projected into the future. In March 2011, the Legislature passed $13.4 billion in budget solutions (consisting mostly of spending cuts) to address the deficit; however, there was still a shortfall of $10.8 billion. To assist in addressing the budget shortfall, the Legislature passed ABX1 29 (Blumenfield), Chapter 8, Statutes of 2011-12 First Extraordinary Session, which required the Board to adopt emergency regulations to establish a “fire prevention fee” not to exceed $150 for each structure on a parcel that is within the SRA. The fee was intended to fill a hole created by a $50 million General Fund cut to CAL FIRE in the 2011 budget bill. The fee generates approximately $80 million a year in revenues, which is used to enhance statewide fire prevention work, including local assistance grants. Recent local assistance grant awards have focused on responding to the tree mortality crisis in California where over 100 million trees have died. The local assistance grants help locals reduce wildfire and tree fall risks near homes in high tree mortality areas.
2. Collection Issues. The author claims that many homeowners have expressed concern that the 30-day period does not allow them sufficient time to pay or dispute the fee. The author believes that a 60-day period to pay or dispute the fee would allow sufficient time for those residents to review their assessments and account for any delays. According to the BOE, approximately 72% of fee payers pay the fee within the 30 days and 7% of fee payers pay between 31 to 60 days. This bill would save the 7% of fee payers who pay between 31 to 60 days the 10% penalty assessed to late accounts. Petitions for Redetermination have declined from over 100,000 in 2011-12 fiscal year to around 30,000 in 2014-15 fiscal year, of which 11% were successful. Over 10% of fee payers pay after 60 days and additional 10% have not paid the fee any of the five years it has been assessed. More than $47 million in fees remain uncollected. Additional time may be warranted for paying the fee or appealing it. However, the additional 30 days will not have a significant impact on $47 million in outstanding fees and will not affect the over 20% of fee payer that do not pay within the 60 days. Having such a high percentage of people who don’t pay the fee is unfair to the vast majority who do. In addition, the $47 million could significantly help reduce the impacts of the tree mortality crisis California is facing.
3. Amendments. The author and committee may wish to consider amending the bill to:
   1. Require BOE to offer a penalty and interest amnesty program to fee payers who agree to enter into a payment plan to pay their past due fees; and,
   2. Require BOE to file a tax lien against any fee payer who does not enter the amnesty program and owes over $1,000 in SRA fees, interest, and penalties or over $600 in SRA fees alone.
4. Related/Prior Legislation.

AB 2048 (Dahle, Chesbro, and Gordon), Chapter 895, Statutes of 2014, among other things, reduces the penalties for unpaid fees and simplifies the appeals process.

SB 1413 (Wyland, 2014) was almost identical to this bill and was held in Assembly Appropriations Committee.

AB 203 (Obernolte, 2015) contained the same provisions as this bill, and was placed on the inactive file on the Assembly floor.

AB 1642 (Obernolte, 2016) was almost identical to this bill and was held in Assembly Appropriations Committee.

SB 9 (Gaines) repeals the SRA fee. This bill is awaiting hearing in Senate Natural Resource and Water Committee.

AB 211 (Bigelow) reinstates annual reporting requirements regarding the expenditure of SRA fire fees. This bill transfers reporting responsibility to CAL FIRE from the Board, and expands previous reporting requirements. This bill is awaiting hearing in the Assembly Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Sen. George Runner, Member, State Board of Equalization (Sponsor)
Apple Valley Fire Protection District
California Association of Realtors
California Fire Chiefs Association
California Taxpayers Association
Fire Districts Association of California

Howard Jarvis Taxpayers Association
Rural County Representatives of California
San Diego County Board of Supervisors
Santa Clara County Board of Supervisors

State Board of Equalization

Opposition

None on file

Analysis Prepared by: Michael Jarred / NAT. RES. /