BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular
SB 250 (Gaines) - State responsibility areas: fire prevention
fees
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|Version: February 18, 2015 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: April 20, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 250 would extend from 30 days to 60 days the
period of time that owners of qualified structures have to pay
or request redetermination of the fire prevention fee.
Fiscal Impact: The Board of Equalization (BOE) estimates the
annual revenue loss to be about $383,000 (special funds).
Additionally, BOE would incur minor one-time costs for computer
programming and revising publications (special funds).
Background: The BOE is comprised of five members-four members
each elected specifically to the Board on a district basis and
the State Controller. The BOE administers the sales and use tax
(including all state and local components), oversees the local
administration of the property tax, and collects a variety of
excise and special taxes (including the gasoline tax, insurance
tax, and cigarette and tobacco products taxes) and various fees
(including the underground storage tank fee and the e-waste
recycling fee). BOE establishes the values of state-assessed
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property, including inter-county pipelines, railroads, and
regulated telephone, electricity, and gas utilities. BOE also
hears taxpayer appeals of (2) taxes and fees that it
administers, and (2) Franchise Tax Board (FTB) decisions on
personal income and corporation taxes.
The California Department of Forestry and Fire Protection (CAL
FIRE) provides wildland fire protection on non-federal lands in
California beyond city boundaries. Toward this end, the State
Board of Forestry and Fire Protection designates State
Responsibility Areas (SRAs) every five years. In 2010, the
Legislature imposed the fire prevention fee on owners of
structures in SRAs to pay for the State's costs of protecting
SRAs against fires, and directed the BOE to collect it in
accordance with the state's Fee Collection Procedures Law. The
fee (adjusted annually for inflation) is $152.33 per structure
in 2014-15, though 90 percent of structures located in SRAs are
also covered by a local fire protection agency, and consequently
receive a $35 reduction in the fee. The fee is due and payable
30 days from the date of assessment from BOE (the date printed
on the bill).
While BOE collects the fee, it does not determine the fee's
amount nor which payers it impacts. Instead, CAL FIRE determines
both. BOE can neither redetermine the fee, nor accept a claim
for refund unless the determination has been set aside by
CALFIRE, or a court reviews CAL FIRE's determination.
Currently, owners of structures in SRAs can petition for
redetermination within 30 days after service of notice of
determination; after that, the amount becomes final. If the
owner petitions for redetermination within the 30 day period,
CAL FIRE must make a determination in writing, and can eliminate
the fee if finds the fee doesn't apply.
Proposed Law: This bill would extend the time period from 30
days to 60 days that property owners have (1) to pay the fire
prevention fee from the date of BOE's assessment, (2) request
redetermination from CAL FIRE, and (3) pay the fee after CAL
FIRE's determination.
Related Legislation:
AB 203 (Obernolte) is identical to this bill, and is
currently pending in the Assembly Appropriations Committee.
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AB 1202 (Mayes) would provide a fire prevention fee
reduction equal to the amount paid to a local fire district
for fire prevention services, and is currently pending in
the Assembly Natural Resources Committee.
SB 198 (Morrell) and SB 520 (Berryhill) each would
repeal the fire prevention fee in its entirety. Both are
currently in the Senate Natural Resources and Water
Committee. SB 198 failed passage on March 24th (with
reconsideration granted), while SB 520 awaits its first
hearing.
SB 1413 (Wyland, 2014) was largely similar to this bill,
and was held on the Assembly Appropriations Committee's
suspense file.
AB 2048 (Dahle, Chapter 895, Statutes of 2014) made
various modifications to improve the fire prevention fee's
administration.
Staff Comments: The administrative activities associated with
BOE's collecting the SRA fee include registering accounts,
annual issuances of notices of determination, collection of past
due fees, and processing refunds. In addition, the agency notes
that there would be additional fee payer assistance measures,
increased mail inquiries, cashiering and key entry, account
maintenance, and reconciliation, and ongoing IT costs given the
volume of the new fee base. Technology appears to be a
continuing issue based on the complexity of BOE's legacy
systems.
Generally, taxpayers have 30 days to pay or petition for
determination to BOE under its more than 30 tax and fee
programs. Consequently, this bill would depart from all other
BOE-administered programs, though it would (1) conform with
deadlines to respond to FTB Notices of Proposed Assessment, and
(2) reflect the difficulty BOE has had contacting rural
landowners as part of the SRA fee collection process.
BOE data indicate that, for the first three years of the fee's
existence (2011-12 through 2013-14), roughly 70 percent of
owners of structures are paying timely, with the figure trending
upwards very slightly over the period. Meanwhile, roughly 11
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percent of owners are not remitting payment each year. In
between, therefore, penalties and interest paid for the first
three billing periods has been stable as well, and has averaged
roughly $500,000 for each of the three years. However, embedded
in that total was a 20 percent penalty that was reduced to 10
percent with the implementation of AB 2048, suggesting that
extending the payment period to 60 days would lessen the amount
of foregone penalties and interest in future years.
Moreover, with over 700,000 accounts, the fire prevention fee
program is the second largest one that BOE administers (trailing
only the sales and use tax). BOE has never had a relationship
with the vast majority of the owners living in SRAs (who are
thus required to pay the fee). With this in mind, continued
education and outreach efforts would likely further reduce the
amount of lost interest and penalty revenue resulting from the
bill, to closer to $400,000 annually.