BILL ANALYSIS Ó AB 2048 Page 1 ASSEMBLY THIRD READING AB 2048 (Dahle, et al.) As Introduced February 20, 2014 Majority vote NATURAL RESOURCES 9-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |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 Page 2 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 AB 2048 Page 3 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 AB 2048 Page 4 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 AB 2048 Page 5 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 FN: 0003637