BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1258 (Kehoe)
Hearing Date: 05/27/2010 Amended: As introduced
Consultant: Brendan McCarthy Policy Vote: GO 7-1, BF&I 6-2
SB 1258 (Kehoe), Page 2
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BILL SUMMARY: SB 1258, an urgency measure, imposes a 4.8 percent
surcharge on fire or multi-peril insurance policies, to fund
state and local emergency response activities. The bill
specifies that 31.3 percent of collected revenues will be
provided to local fire departments that participate in the
state's mutual aid system.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Surcharge revenues ($238,000) ($478,000) ($478,000)Special
*
Funds for local fire agencies $150,000
$150,000Special *
Funds for state emergency $238,000 $328,000
$328,000Special **
response agencies
Proposition 98 obligation $131,000 $263,000
$263,000General
* New special fund, Emergency Response Fund.
* New special fund, Emergency Response Fund. These funds may be
used to reduce existing General Fund expenditures for emergency
response activities.
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STAFF COMMENTS: SUSPENSE FILE.
Under current law, the Department of Forestry and Fire
Protection (CalFire) is authorized to respond to wildfires in
state responsibility areas. Initially, state responsibility
areas were made up of rangelands, timberlands, and watersheds.
In recent years, significant amounts of suburban development
have occurred in state responsibility areas, requiring CalFire
to focus increasingly on the protection of structures and people
from wildfire. In addition to its wildfire protection
responsibilities, CalFire is authorized to assist local
governments in providing emergency response to non-wildfire
SB 1258 (Kehoe), Page 3
incidents, providing such responses can be accommodated within
existing resources. To this end, CalFire has entered into mutual
aid agreements with many local emergency response agencies.
Under the mutual aid system, the closest available resource is
tasked with responding to emergencies - whether those are
wildfires under CalFire's jurisdiction or medical emergencies
under local jurisdiction.
In addition to CalFire and local agencies, the California
Emergency Management Agency (CalEMA) and the Military Department
are participants in the mutual aid system.
Under current practice, the state's fire protection activities
are funded from the General Fund.
SB 1258 imposes a 4.8 percent surcharge on all commercial and
residential fire and multi-peril insurance premiums in the
state. The bill requires that 31.3 percent of collected
revenues, upon appropriation by the Legislature, be awarded to
local government agencies that are participants in the mutual
aid system. The funds for local emergency response agencies are
to be allocated based both on the prorata share of the revenue
collected in the agency's area and the population served by the
agency. The surcharge is to be collected by insurers and
remitted to CalEMA.
The bill requires CalEMA, CalFire, and various stakeholders
engaged in fire protection to develop a strategy to enhance the
mutual aid system. This strategy is to be updated every three
years. The bill also requires local fire agencies to submit
strategies for the enhancement of the mutual aid system to
CalEMA
The bill creates a new special fund, the Emergency Response
Fund, and makes monies in the fund available, upon appropriation
by the Legislature, to fund the emergency activities of CalFire,
CalEMA, and the Military Department.
This bill is an urgency measure.
This bill implements the Emergency Response Initiative proposal
included in the Governor's proposed budget. Under the Governor's
proposal, in the 2010-11 budget year, $200 million in revenues
from the Emergency Response Initiative would be used to reduce
state General Fund expenditures for emergency response
(primarily CalFire costs for wildland fire protection). In
SB 1258 (Kehoe), Page 4
subsequent years, new revenues would be used to offset $219
million in state emergency response costs, $73 million would be
used by state agencies for enhanced emergency response
capability, and $150 million would be provided to local
governments.
Because this bill does not include any provisions that would
reduce current General Fund expenditures for emergency response,
this analysis characterizes all expenditures under the bill as
additional expenditures.
Staff notes that the Governor's budget treats the Emergency
Response Initiative as a fee. Therefore, the Governor's budget
does not include any additional expenditure for education under
Proposition 98. However, Legislative Counsel has opined that the
Emergency Response Initiative is a tax, and therefore a portion
of the increased revenues must be spent on public education. The
Legislative Analyst's Office has indicated that under current
circumstances, the Emergency Response Initiative (and SB 1258)
would increase the state's Proposition 98 obligation by about
$131 million in the 2010-11 budget year and $263 million per
year thereafter. Because SB 1258 directs that revenues raised
under the bill be spent on emergency response activities, staff
assumes that the General Fund will be forced to pay for the
increased Proposition 98 obligation.
SB 1258 is identical to AB x8 36 (Ma) which was never heard in
committee and similar to AB 196 (Committee on Budget) which died
in the Senate Rules Committee.