BILL NUMBER: AB 185 AMENDED
AMENDED IN SENATE FEBRUARY 17, 2010
AMENDED IN SENATE SEPTEMBER 4, 2009
INTRODUCED BY Committee on Budget (Evans (Chair), Arambula, Beall,
Blumenfield, Brownley, Caballero, Carter, De La Torre, Feuer, Hill,
Huffman, Monning, Ruskin, and Swanson)
FEBRUARY 2, 2009
An act to amend Sections 6585, 6588, 6588.6, and 6591 of,
to add Section 53610 to, and to add Chapter 4.5 (commencing with
Section 53998) to Part 1 of Division 2 of Title 3 of, the Government
Code, to amend Section 33681.12 of the Health and Safety Code, and to
amend Section 100.06 of the Revenue and Taxation Code, relating to
local government finance, and declaring the urgency thereof, to take
effect immediately. An act to add Sections 8587.3 and
8587.4 to the Government Code, and to add Section 16031 to the
Insurance Code, relating to emergency services, and declaring the
urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 185, as amended, Committee on Budget. Property tax
revenues: Proposition 1A receivables. Emergency
services: property insurance surcharge.
(1) Existing law establishes the California Emergency Management
Agency, which is responsible for the state's emergency and disaster
response services for certain manmade disasters and emergencies,
including responsibility for activities necessary to prevent, respond
to, recover from, and mitigate the effects of emergencies and
disasters to people and property.
This bill would establish the Local Government Mutual Aid
Enhancement Program in the agency, and would require funds, as
specified, deposited in the Emergency Response Fund, to be allocated
to the program upon appropriation by the Legislature. This bill would
require the Secretary of California Emergency Management to allocate
funds to specified entities, for the purpose of enhancing or
sustaining fire and rescue disaster mutual aid capacity to combat the
effect of all hazard disasters, as provided. This bill would also
require the secretary, in consultation with specified entities, to
develop a strategy, as provided, for the enhancement of mutual aid,
and would require each fire and rescue operational area to submit a
3-year strategy for the enhancement of fire and rescue disaster
mutual aid, as specified, to the secretary.
(2) Existing law provides that the Insurance Commissioner, in
cooperation with insurers, the Office of Emergency Services, and
other emergency service agencies, shall establish procedures for the
coordination of efforts between insurers and their representatives
and those of emergency response agencies.
This bill would create the Emergency Response Fund in the State
Treasury. Insureds would be required to pay a special purpose
surcharge on commercial and residential fire and multiperil insurance
policies, including policies with combined property and liability
coverage, issued or renewed on or after July 1, 2010, as specified.
Funds from this surcharge would be available for appropriation by the
Legislature to fund emergency activities, as defined, of the
California Emergency Management Agency, the Department of Forestry
and Fire Protection, and the Military Department. Any balance
remaining in the fund at the end of a fiscal year would be retained
and carried forward to the next fiscal year. This bill would require
insurers collecting the surcharge to make a specified disclosure on
the policy declarations page, billing statement, or a separate
document accompanying the declarations page or billing statement.
This bill would also require the Department of Insurance, the
Department of Forestry and Fire Protection, and other state agencies
and departments to cooperate and provide information to the
California Emergency Management Agency as necessary to implement this
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
(1) Existing property tax law requires the county auditor, in each
fiscal year, to allocate property tax revenue among local
jurisdictions in accordance with specified formulas and procedures.
The California Constitution allows for a specified suspension of the
prohibition on the Legislature from modifying the manner of
apportioning ad valorem property tax revenues. Existing law requires
the auditor of each county to reduce the amount of ad valorem
property tax revenue apportionments to each local agency for the
2009-10 fiscal year by 8% of the total amount of ad valorem property
tax revenue apportioned to that local agency in the 2008-09 fiscal
The Marks-Roos Local Bond Pooling Act of 1985 defines the term
"authority" and authorizes joint powers authorities to, among other
things, purchase, with the proceeds of bonds or its revenue, a local
agency's right to receive moneys in repayment of its revenue losses
(Proposition 1A receivables) resulting from this modification of ad
valorem property tax revenue allocations. Existing law authorizes a
local agency subject to this reduction to sell its Proposition 1A
receivables to the authority.
This bill would revise the definition of the term "authority," in
the case of an authority issuing bonds in which Proposition 1A
receivables are pledged to the payment of the bonds, to require it to
consist of not less than 250 local agencies.
The bill would require a county auditor to prepare, by September
15, 2009, a list of each taxing agency within the county and the
amount of the Proposition 1A receivables, to prepare a certified list
by October 30, 2009, and to make this information available, as
specified. The bill would also revise provisions regarding the sale
of bonds for which the indebtedness is serviced by Proposition 1A
By imposing new duties upon county auditors, this bill would
impose a state-mandated local program.
(2) Existing law specifies authorized investments for local
This bill would additionally authorize a local agency to purchase,
with its revenue, Proposition 1A receivables sold pursuant to the
requirements that would imposed by this bill.
(3) Existing law allows the Director of Finance, upon the written
request by a local agency no later than October 15, 2009, to decrease
the amount by which ad valorem property taxes are required to be
reduced for the 2009-10 fiscal year, on the basis of extreme
hardship. Existing law also requires the state to fully reimburse
these revenue reductions in specified amounts.
This bill would instead allow this request to be made 30 days
after the issuance of bonds or December 1, 2009, whichever date is
earlier, and would authorize the Director of Finance to make this
decrease only to the extent that the agency did not receive bond
proceeds for the full amount of Proposition 1A receivables that it
offered for sale. The bill would also revise provisions regarding the
reimbursement of the revenue reductions.
(4) The bill would provide a court ruling that any portion of the
revenues that are subject to the ad valorem property tax reduction
may not be loaned to the state would not affect any remaining
revenues or the implementation of any other portion of this bill or
Chapter 14 of the Statutes of the 2009-10 Fourth Extraordinary
(5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
(6) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 8587.3 is added to the
Government Code , to read:
8587.3. (a) There is established in the California Emergency
Management Agency the Local Government Mutual Aid Enhancement
(b) (1) On July 1, 2011, and each year thereafter, upon
appropriation by the Legislature, the program shall be allocated 31.3
percent of the funds deposited in the Emergency Response Fund
created pursuant to Section 16031 of the Insurance Code, for the
purposes specified in this section.
(2) The Secretary of California Emergency Management shall
allocate the funds specified in paragraph (1) to entities within an
operational area as specified in Section 8605, and that are
participants in the Master Mutual Aid Agreement as defined by Section
8561. The funds shall be allocated to entities based upon both of
(A) A pro rata share of fees collected for the Emergency Response
Fund created pursuant to Section 16031 of the Insurance Code within
that operational area.
(B) The population served by each local fire agency or special
district that provides fire protection within that operational area.
(3) On an annual basis, any funds that are not allocated and are
not scheduled to be allocated from the Emergency Response Fund
created pursuant to Section 16031 of the Insurance Code for the
support of state expenditures, shall, upon appropriation by the
Legislature, be allocated to the program for the purposes specified
in this section, and shall be allocated by the secretary pursuant to
(c) Entities that receive an allocation pursuant to subdivision
(b) shall use the funds to enhance or sustain fire and rescue
disaster mutual aid capacity to combat the effect of all hazard
disasters in any of the following areas:
(1) Disaster response capacity.
(2) Communications interoperability that comply with Section
(3) Household and individual preparedness outreach and education.
(4) Programs to immediately reduce community vulnerability to
hazards identified in their approved hazard mitigation plan pursuant
to Section 65302.6.
(d) Entities that receive an allocation pursuant to subdivision
(b) may use the funds to support personnel, training, exercises,
equipment, construction, and other activities that enhance or sustain
disaster mutual aid capacity, or reduce community vulnerability to
(e) For purposes of promoting the implementation and functioning
of the program, upon appropriation by the Legislature, the secretary
may allocate funds to reimburse agencies and special districts that
provide staff support for operational area or regional fire and
(f) Funds allocated to entities pursuant to this section shall not
be used to supplant any existing funds allocated to that entity by
the California Emergency Management Agency for fire and rescue
SEC. 2. Section 8587.4 is added to the
Government Code , to read:
8587.4. (a) Beginning on July 1, 2011, and on July 1 every three
years thereafter, the Secretary of California Emergency Management,
in consultation with the Department of Forestry and Fire Protection,
FIRESCOPE, and any other necessary groups representing firefighters,
fire chiefs, and special fire districts throughout the state, shall
develop a strategy for enhancement of mutual aid. The strategy shall
do all of the following:
(1) Identify eligible purchases, activities, and programs that
promote the delivery of mutual aid.
(2) Set goals for mutual aid enhancement.
(3) Identify criteria for allocations of resources for mutual aid.
(4) Prescribe the fiscal and administrative oversight of the Local
Government Mutual Aid Enhancement Program established pursuant to
(b) On a date identified by the Secretary of California Emergency
Management, each fire and rescue operational area shall submit a
three-year strategy, to the secretary, for the enhancement of fire
and rescue disaster mutual aid. The plan shall satisfy the
requirements specified in subdivision (a) and shall specify how fire
entities within the operational area will use the funds over the next
SEC. 3. Section 16031 is added to the
Insurance Code , to read:
16031. (a) The Emergency Response Fund is hereby created in the
State Treasury. Funds received by the California Emergency Management
Agency pursuant to this section shall be deposited into this fund.
Funds deposited into this fund may be appropriated by the Legislature
for the purposes of this section to fund the emergency activities of
the California Emergency Management Agency, the Department of
Forestry and Fire Protection, and the Military Department.
(b) Insureds shall pay a special purpose surcharge on each
commercial and residential fire and multiperil insurance policy
issued or renewed on or after July 1, 2010, equivalent to 4.8 percent
of the premium written on residential fire and multiperil insurance
or the property exposure for commercial policies in California. The
surcharge shall only be applied to new business and renewal
transactions. No adjustment shall be made for midterm increases or
decreases in exposure or coverage. The amount of the surcharge shall
be calculated to the nearest dollar. Notwithstanding any other
provision of law, failure to collect the surcharge from insureds
prior to January 1, 2011, shall not result in a penalty, fine, or
(c) Every admitted insurer in this state shall collect the
emergency response surcharge specified in subdivision (b), which
shall be separately identified on each policy, with respect to
residential fire and multiperil insurance and the property portion of
(d) For those policies on which the surplus line tax is paid by a
surplus line broker pursuant to Sections 1775.1 to 1775.5, inclusive,
the surplus line broker shall collect the emergency response
surcharge with respect to the property portion of any homeowners
policy, all risk insurance policy, or named peril insurance policy
that specifically includes fire coverage placed with a nonadmitted
insurer. Where those policies cover multistate risks, the surcharge
shall be applied pro rata to that portion of the premium allocated to
risks in this state based on the percentage of the property risk
located in California.
(e) (1) Funds received as a result of the surcharge imposed on
insureds as a percentage of premiums written on residential fire and
multiperil insurance and property exposures for commercial insurance
policies shall be remitted by the admitted insurers to the California
Emergency Management Agency, or other state agency designated to
collect the surcharge on behalf of the California Emergency
Management Agency, within 45 days following the end of each calendar
quarter. The premiums written by admitted insurers for property
exposures shall be as stated on lines 1, 4, and 5.1 of the annual
statement filed by each insurer pursuant to Section 900.
(2) Funds received as a result of the surcharge imposed on
insureds as a percentage of premiums written on property exposures
for both commercial and residential insurance policies placed with a
nonadmitted insurer shall be remitted by the surplus line brokers to
the Surplus Line Association in the same manner and form as the
stamping fee paid on the policies placed with a nonadmitted insurer
by a surplus line broker. The Surplus Line Association shall remit
the funds received from surplus line brokers to the California
Emergency Management Agency, or its designee, within 45 days
following the end of each calendar quarter.
(f) None of the special purpose surcharges shall be considered
premiums for any purpose, including the computation of gross premium
tax or agent's commission. The full amount of the surcharge is due at
inception or renewal of the insurance policy, even if the premium is
paid in installments. The amount of each special purpose surcharge
shall be separately stated on either a billing or policy declaration
sent to an insured. Notwithstanding this subdivision, an admitted
insurer or surplus line broker may omit collecting of the surcharge
from its insured if the expense of collecting the surcharge would
exceed the amount of the surcharge and instead remit the amount of
omitted surcharges to the California Emergency Management Agency or
its designee, provided that nothing in this subdivision shall relieve
the admitted insurer or surplus line broker of its obligation to
recoup the amount of the surcharge otherwise collectible.
(g) (1) For commercial policies with combined property and
liability coverage, for which the actual property coverage cannot be
determined, the admitted insurer shall calculate, and the insured
shall remit, the surcharge based upon the ratio of 50 percent
attributable to the property coverage. Within 45 days following
submission of its annual statement to the National Association of
Insurance Commissioners, an admitted insurer shall reconcile its
lines 1, 4, and 5.1 surcharge remittances based upon its annual
(2) For policies for which a surplus line tax is paid by a surplus
line broker pursuant to Sections 1775.1 to 1775.5, inclusive, for
risks with combined property and liability coverage, the surplus line
broker shall calculate and the insured shall remit the surcharge
based on a ratio of 50 percent attributable to the property coverage.
(h) Each admitted insurer and surplus line broker collecting the
surcharge shall be required to disclose the surcharge as the
"California Emergency Response Safety Surcharge" on the declarations
page, the billing statement, or a separate document accompanying the
declarations page or billing statement. If an insurer chooses to
provide supplemental materials to policyholders describing the
surcharge, the language shall comply substantially with the
"The State of California has imposed an Emergency Response Safety
Surcharge on all residential and commercial insurance policies issued
or renewed on or after July 1, 2010. The purpose of this surcharge
is to ensure adequate funding of emergency response services
throughout California. We are required by law to collect the
surcharge from our policyholders. The surcharge, which is separately
stated on your declarations page or billing statement, is calculated
at 4.8 percent of the applicable policy premium."
(i) Failure of an insured to pay the surcharge shall be treated as
a failure to pay the premium. Failure to pay the surcharge shall
result in the cancellation of the policy.
(j) If a policy is canceled before the end of the term for which
it was issued or the end of the period for which a premium has been
paid, the surcharge amount shall not be refunded. However, any
assessable policy of insurance that is canceled as of the effective
date of the policy, if all of the premium is returned to the insured,
and no coverage was ever provided to the insured, shall not be
subject to a surcharge. All refunds of previously collected
surcharges on those canceled policies shall be applied to reduce the
surcharges reported in the same calendar quarter in which the
refunded surcharges were made.
(k) Funds in the Emergency Response Fund shall be distributed,
upon appropriation, to the California Emergency Management Agency,
the Department of Forestry and Fire Protection, and the Military
Department for the support of the emergency response activities of
those departments, and to the California Emergency Management Agency
or its designee for the actual administrative costs incurred in
collecting the surcharge pursuant to this section, and for the
maintenance of an adequate reserve.
(l) Any balance remaining in the Emergency Response Fund at the
end of each fiscal year shall be retained in the fund and carried
forward to the next fiscal year.
(m) The Department of Insurance, the Department of Forestry and
Fire Protection, and other state agencies and departments shall
cooperate and provide information to the California Emergency
Management Agency as necessary to implement this program.
(n) For the purposes of this section, the following definitions
(1) "Admitted insurer" means an insurer that has secured a
certificate of authority from the commissioner as required by Section
700 and is subject to the tax set forth in Section 28 of Article
XIII of the California Constitution.
(2) "Hazard" means the potential impact to people or property as a
result of seismic activity, flood, or wild land fire.
(3) "Surplus line broker" means a person licensed pursuant to
(o) For purposes of this section, "FAIR Plan" established pursuant
to Chapter 9 (commencing with Section 10090) of Part 1 of Division
2, is an admitted insurer.
SEC. 4. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to make necessary statutory changes to improve the state'
s ability to respond to potentially devastating and deadly
emergencies at the earliest time possible, it is necessary that this
act take effect immediately. All matter omitted in this version
of the bill appears in the bill as amended in the Senate, September
4, 2009. (JR11)