BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1203


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          Date of Hearing:  April 30, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          AB 1203  
          (Jones-Sawyer) - As Amended April 6, 2015


          SUBJECT:  Office of Emergency Services:  property insurance  
          surcharge


          SUMMARY:  Replaces the State Responsibility Area Fire Prevention  
          Fee (SRA) with a special purpose surcharge on each commercial  
          and residential fire and multi-peril insurance policy.  The bill  
          would create the Disaster Response Fund (DRF or Fund) in the  
          State Treasury with the moneys collected from the surcharge.   
          The Fund shall be used for the purposes of funding emergency  
          activities of the Governor's Office of Emergency Services (Cal  
          OES), the Department of Forestry and Fire Protection (Cal Fire),  
          and the Military Department, and local public entities for  
          disaster preparedness and response. Specifically,  this bill  :


            1)  Repeals the State Responsibility Area Fire Prevention Fee.

            2)  Creates Disaster Response Fund in the State Treasury

            3)  Creates special purpose surcharge of 3% or 5%, as  
              specified, on each commercial and residential fire and  
              multi-peril insurance policy issued or renewed on or after  
              January 1, 2016. 

            4)  Requires moneys from the surcharge to be deposited in the  








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              Fund and be appropriated by the Legislature for the purposes  
              of funding emergency activities of Cal OES, Cal Fire, and  
              the Military Department, and local public entities for  
              disaster preparedness and response.

            5)  Requires every insurance company in the state to collect  
              the surcharge and separately identify the surcharge on each  
              affected insurance policy. 

            6)  Provides that the failure to pay the surcharge would  
              result in the cancellation of the policy.



          EXISTING LAW: 


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

          2)Creates within Cal FIRE the State Board of Forestry and Fire  
            Protection Board (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)Declares that it is necessary to impose a fire prevention fee  
            to pay for fire prevention activities in the SRA that  








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            specifically benefit owners of structures in the SRA.

          5)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.  

          6)Requires the fire prevention fees to be deposited in the State  
            Responsibility Area Fire Prevention Fund, which is available  
            to the Board and Cal FIRE to expend for fire prevention  
            activities that benefit the owners of structures within the  
            SRA who are required to pay the fire prevention fee.  

          7)Requires the SRA fund shall be used only fire prevention  
            activities, as specified, which does not include fire  
            suppression activities, such as fighting fires and acquiring  
            fire suppression equipment.

          8)Establishes OES by the Governor's Reorganization Plan No.2,  
            operative July 1, 2013.

          9)Requires OES to perform a variety of duties with respect to  
            specified emergency preparedness, mitigation, and response  
            activities in the state, including emergency medical services.

          10)Specifies that the State Emergency Plan (SEP) shall be in  
            effect in each political subdivision of the state, and the  
            governing body of each political subdivision shall take such  
            action as may be necessary to carry out the provisions  
            thereof.

          11)Requires the Governor to coordinate SEP and those programs  
            necessary to mitigate the effects of an emergency. 

          12)Requires the Governor to coordinate the preparation of plans  
            and programs for the mitigation of the effects of an emergency  
            by the political subdivisions of the State of California, such  
            plans and programs to be integrated into and coordinated with  
            the SEP and the plans and programs of the federal government  








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            and of other states to the fullest possible extent. 

          13)Specifies that the Governor may, in accordance with SEP and  
            programs for the mitigation of the effects of an emergency in  
            this state:

             a)   Ascertain the requirements of the state or its political  
               subdivisions for food, clothing, and other necessities of  
               life in an event of an emergency.

             b)   Plan for, procure, and pre-position supplies, medicines,  
               materials, and equipment.

             c)   Use and employ any of the property, services, and  
               resources of the state.

             d)   Provide for the approval of local emergency plans.

             e)   Provide for mobile support units.

             f)   Provide for use of public airports.

             g)   Institute training programs and public information  
               programs.

             h)   Make surveys of the industries, resources, and  
               facilities, both public and private, within the state.

             i)   Plan for the use of any private facilities, services,  
               and property and, when necessary, and when in fact used,  
               provide for payment for that use under the terms and  
               conditions as may be agreed upon.

             j)   Take all other preparatory steps, including the partial  
               or full mobilization of emergency organizations in advance  
               of an actual emergency; and order those test exercises  
               needed to insure the furnishing of adequately trained and  
               equipped personnel in time of need.









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          FISCAL EFFECT:  Unknown


          COMMENTS:  AB 1203 will be heard on Thursday, April 30, 2015,  
          upon adjournment of Session for the purpose of adopting an  
          amendment to add an urgency.  The committee will take no further  
          action on this bill.


           Prior legislation  :  AB 468 (Chesbro) of 2013/2014 Session.   
          Would have: (1)  Repealed the state fire prevention fee, (2)  
          created the District Management, Preparedness, and Assistance  
          Fund for funding emergency activities of the Office of Emergency  
          Services, the Department, and the Military Department, as well  
          as to local governments for disaster planning and response, and  
          (3) supported the Fund by requiring an insured to pay a special  
          purpose surcharge (the Disaster Management, Preparedness, and  
          Assistance Surcharge) on each commercial and residential fire  
          and multiperil insurance policy issued or renewed on or after  
          January 2, 2014, equivalent to 4.8% of the premium written on  
          residential fire and multiperil insurance or the property  
          exposure for commercial policies in California.  (Never heard in  
          Assembly Natural Resources Committee)


          SB 1258 (Kehoe) of 2009/2010 Session.  Would have created the  
          Emergency Response Fund in the State Treasury.  Requires  
          insureds to pay a special purpose surcharge (of 4.8%) on  
          commercial and residential fire and multi-peril 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 CalEMA, the Department of Forestry and Cal  
          FIRE, 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.  (Senate Appropriations  








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          Committee)


          


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Professional Firefighters (sponsor)
          California Labor Federation
          Rural County Representatives of California


          Opposition


          American Insurance Association


          Association of California Insurance Companies 


          California Association of Realtors


          California Chamber of Commerce


          California Taxpayers Association 


          Howard Jarvis Taxpayers Association 









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          Pacific Association of Domestic Insurance Companies


          Personal Insurance Federation of California







          Analysis Prepared by:Kenton Stanhope / G.O. / (916) 319-2531