BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1413 (Wyland) - State Responsibility Areas: Fire Prevention
Fee
Amended: April 10, 2014 Policy Vote: G&F 6-0
Urgency: No Mandate: No
Hearing Date: May 5, 2014 Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1413 would extend the period of time owners of
structures have to pay or request redetermination of the fire
prevention fee from 30 days to 60 days.
Fiscal Impact: The Board of Equalization (BOE) estimates the
annual revenue loss to be about $461,000 (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). The BOE establishes the values of state-assessed
property, including inter-county pipelines, railroads, and
regulated telephone, electricity, and gas utilities. The BOE
also hears taxpayer appeals of BOE administered taxes and fees
and FTB decisions on personal income and corporation taxes.
The California Department of Forestry and Fire Protection
(CALFIRE) provides wildland fire protection on non-federal lands
in California outside cities. Toward this end, the State Board
of Forestry and Fire Protection designates the State
Responsibility Area (SRA) 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
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fee (adjusted annually for inflation) is $152.33 per structure
in 2014 (though most owners will receive a $35 reduction in the
fee), and is due and payable 30 days from the date of assessment
from BOE. A 20 percent penalty applies for each 30 days that
pass without payment.
While BOE collects the fee, CALFIRE determines both who must pay
the fee and the amount of the fee. 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 CALFIRE'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, CALFIRE 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 that
property owners have to pay the fire prevention fee from 30 to
60 days. The measure also extends the time period for property
owners to request redetermination from CALFIRE from 30 to 60
days.
Related Legislation:
AB 1519 (Donnelly) deletes the 20 percent fire
prevention fee penalty that is added to final
redeterminations for each 30-day period the fee remains
unpaid.
AB 1954 (Harkey) changes the finality date of a
petition for redetermination from 30 to 90 days and, within
that 90 days, allows a feepayer to appeal to the BOE those
redeterminations that deny all or part of a refund.
AB 2048 (Dahle et al.) among its fire prevention fee
provisions, adds definitions, makes permissive the annual
rate adjustment, clarifies the imposition of the fee,
provides a disaster relief provision, adds a "late protest"
procedure, and replaces the 20% penalty with a 10% penalty.
Staff Comments: The administrative activities associated with
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the SRA fee include registering accounts, annual issuances of
notices of determination, collection of past due fees, and
processing refunds, and notices of redetermination. 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 Franchise Tax Board Notices of Proposed
Assessment, and (2) reflect the difficulty BOE has had
contacting rural landowners as part of the SRA fee collection
process. For the first two years of the fee's collection,
roughly 70 percent of owners of structures are paying timely,
and up to 15 percent are not remitting payment. Compliance has
shown some improvement, as those paying after the 30 day
deadline, but before 60 days declined from 10.6 percent in the
first year to 6 percent in the second year.
BOE's revenue reduction methodology assumes total interest and
penalties paid were evenly distributed over both years the
agency has been collecting the fee. Given fire prevention fee
compliance would be expected to continue to increase in future
years, the revenue loss from this measure would likely be lower
than the BOE estimate. Finally, any reductions to interest and
penalties paid to BOE would ultimately lead to reduced interest
earnings for the State's Pooled Money Investment Account.
However, these losses would be very minor.