BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2048
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          ASSEMBLY THIRD READING
          AB 2048 (Dahle, et al.)
          As Introduced  February 20, 2014
          Majority vote 

           NATURAL RESOURCES   9-0         APPROPRIATIONS      17-0        
           
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          |Ayes:|Chesbro, Grove, Bigelow,  |Ayes:|Gatto, Bigelow,           |
          |     |Garcia, Muratsuchi,       |     |Bocanegra, Bradford, Ian  |
          |     |Patterson, Skinner,       |     |Calderon, Campos,         |
          |     |Stone, Williams           |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Holden, Jones, Linder,    |
          |     |                          |     |Pan, Quirk,               |
          |     |                          |     |Ridley-Thomas, Wagner,    |
          |     |                          |     |Weber                     |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Amends the statutes governing the fire prevention fee  
          by, among other things, clarifying who should pay the fee,  
          exempting an owner of habitable structures from paying the fee  
          if the structure was destroyed by natural disaster, and reduce  
          the penalty for untimely fee payments.  Specifically, this bill:

           1)Authorizes (rather than requires) the State Board of  
            Forestry and Fire Protection (Board) to adjust the fire  
            prevention fee for inflation.  

          2)Authorizes the Board to exempt from the fire prevention  
            fee any habitable structure that is subsequently deemed  
            uninhabitable as a result of a natural disaster during  
            the year for which the fee is due, as well as one  
            subsequent year if the habitable structure has not been  
            repaired or rebuilt.  

          3)If a petition for redetermination of the fire prevention  
            fee is filed after the expiration of the 30-day time  
            period, authorizes the Department of Forestry and Fire  
            Protection (CAL FIRE) to treat the untimely petition as  
            an administrative protest or claim for refund if it  
            determines that the facts presented indicate that the  
            fire prevention fee originally determined may have been  
            excessive or that the amount or the application of the  








                                                                  AB 2048
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            fee may have been the result of an error by CAL FIRE or  
            the Board.  

          4)Eliminates the 20% penalty for each 30-day period in  
            which the fee remains unpaid after becoming final and  
            replaces it with the state's general 10% penalty that  
            applies to late payments of fees.

           EXISTING LAW  :  

          1)Establishes CAL FIRE, which, among other things, is  
            responsible for the fire protection, fire prevention,  
            maintenance, and enhancement of the state's forest, range, and  
            brushland resources, contract fire protection, associated  
            emergency services, and assistance in civil disasters and  
            other nonfire emergencies.

          2)Creates, within CAL FIRE, the Board consisting of nine members  
            appointed by the Governor.  Requires the Board to protect the  
            state's interest in forest resources on private lands, which  
            includes establishing adequate forest policy and determining  
            general policies for CAL FIRE.

          3)Requires the 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 (these areas are  
            known as "state responsibility areas" or "SRA.")

          4)Requires the Board to adopt regulations to establish a fire  
            prevention fee in an amount not to exceed $150 (which must be  
            adjusted every year for inflation) 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 (this reduction applies to most  
            structures).

          5)Requires the fire prevention fees to be deposited in the State  
            Responsibility Area Fire Prevention Fund (SRA Fund), which is  
            available to the Board and CAL FIRE to expend for fire  
            prevention activities that benefit the owners of structures  








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            within the SRA who are required to pay the fire prevention  
            fee.  

          6)Allows a person to petition for a redetermination of whether  
            the fire prevention 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 fire  
            prevention fee).  Requires the petition to be sent to CAL  
            FIRE, the Board, and the Board of Equalization (BOE). 

          7)Imposes a 20% penalty for each 30-day period in which the fee  
            remains unpaid after the fee becomes final.

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)Unknown revenue loss (SRA Fund) due to the fee relief for  
            natural disasters, potentially in the range of $20,000 to  
            $140,000 annually.  Any loss in SRA Fund that brings revenues  
            below expenses will have to be backfilled by the General Fund  
            (GF).  

            The 2014-15 SRA fees are $117.33 for structures within a local  
            fire protection district and $152.33 for structures not within  
            a local district.  Assuming between 100 and 500 structures are  
            damaged per year for each type of structure, the revenue loss  
            would range from $11,733 to $58,666 for structures within a  
            district and $15,233 to $76,165 for structures outside a  
            district.

          2)Revenue loss (SRA Fund) in the $100,000 range for reducing  
            penalties from 20% to 10%.

          3)Unknown potential revenue loss for inflation adjustments at  
            the Board's discretion.

           COMMENTS  :  

          Fire Prevention Fee (AB 29 X1 (Blumenfield), Chapter 8, Statutes  
          of 2011-12 First Extraordinary Session).  Going into 2011, the  
          state was facing a $25.4 billion budget deficit (which grew to  
          $26.6 billion after the governor cancelled the sale of several  
          state buildings) and an annual structural deficit of up to $21.5  
          billion was projected into the future. In March 2011, the  








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          Legislature passed $13.4 billion in "solutions" (consisting  
          mostly of spending cuts) to address the deficit; however, there  
          was still a shortfall of $10.8 billion.  To help address the  
          budget shortfall, the Legislature passed, among other bills, AB  
          29 X1, 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 GF cut directed  
          at CAL FIRE in the 2011 budget bill.  It has been well  
          documented in news articles and political colloquy that the  
          Legislature was compelled to establish the fee because it had to  
          produce substantial GF cuts, and other budget options, such as  
          increasing revenues through additional sales and income taxes,  
          were politically infeasible due to the two-thirds vote  
          requirement for such measures.

          Inflation Adjustment.  Under existing law, the Board is required  
          to increase the fire prevention fee every year for inflation.   
          For fiscal year 2013-14, the fee is $152.33.  This bill would no  
          longer mandate this inflation adjustment; instead, it will be  
          left to the Board's discretion.    
                 
           Natural Disaster Exemption.  This bill exempts a person from  
          paying the fire prevention fee for two years if his or her  
          habitable structure becomes uninhabitable as a result of a  
          natural disaster.  Even after those two years, if the structure  
          is still uninhabitable, the fee can be waived for not being a  
          "habitable structure," which is a term defined by this bill.
                
           Appeals.  Under existing law, a person may appeal a fire  
          prevention billing notice through a petition for a  
          redetermination if that petition is filed within 30 days of  
          receiving the notice.  This bill gives CAL FIRE the  
          authorization to also consider appeals filed after the 30 day  
          period expires.  Additionally, this bill only requires a person  
          to send the petition to one agency (CAL FIRE) instead of three  
          (under existing law, a petition must be sent to CAL FIRE, the  
          Board, and BOE).  

           Penalties.  Under existing law, a person is subject to a 20%  
          penalty for each 30-day period in which the fee remains unpaid  
          after the fee becomes final.  In practice, this penalty has only  
          been applied if a person appeals the fee through a petition for  
          redetermination.  If CAL FIRE denies the petition for  








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          redetermination and the person does not pay the fee, the 20%  
          penalty will apply for each 30-day period during which the fee  
          remains unpaid.  According to a report from the BOE, if a person  
          does not appeal but fails to pay the fee on time, a 10% penalty  
          is applied pursuant to Section 55086 of the Revenue and Taxation  
          Code (a code section regarding fees in general).  This bill  
          eliminates the 20% penalty and instead applies the 10% penalty  
          to all late payments

          According to the BOE staff, for fiscal year 2011-12, the state  
          collected $71,872 attributable to the 20% penalty.  In fiscal  
          year 2012-13, the state collected $2,528.37 from the penalty.

           
          Analysis Prepared by  :    Mario DeBernardo / NAT. RES. / (916)  
          319-2092 


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