BILL ANALYSIS Ó AB 1203 Page 1 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 AB 1203 Page 2 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 AB 1203 Page 3 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 AB 1203 Page 4 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. AB 1203 Page 5 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 AB 1203 Page 6 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 AB 1203 Page 7 Pacific Association of Domestic Insurance Companies Personal Insurance Federation of California Analysis Prepared by:Kenton Stanhope / G.O. / (916) 319-2531