Gov’s plan to levy fees to fight fires ignites Capitol budget fight

The smoke and heat from California's round of wildfires has seeped into the Capitol. There, strapped budget writers have doubled the magnitude of Republican Gov. Schwarzenegger's plan to raise money to fight fires by levying a surcharge on property insurance policies. The action adds yet one more contentious element to a budget fight that may last through the summer.

The issue is simple: It costs money to fight fires and cope with disasters, and where's the money going to come from? At midweek, there were nearly 100 fires burning across the state and more than 866,000 acres had been charred. One commercial building was lost and 100 homes were destroyed, according to a joint state-federal command center.

Boosting resources to fight fires is popular, at least in theory. "We support it in concept. Our objective has always been to enhance fire-protection services," said Carroll Wills of the California Professional Firefighters. "But if it becomes a budget-protection fee rather than a fire-protection fee, we would have concerns."

Schwarzenegger's plan, after some rewriting and negotiating, would have raised about $125 million annually by adding a 1.4 percent surcharge to insurance premiums, both residential and commercial, in high-risk areas; in low-risk zones, the fee was put at .75 percent. Originally, the governor proposed a 1.25 percent surcharge across the board, but that was altered after members representing urban districts-led by San Francisco-complained.

Last week, the Democrat-controlled budget conference committee, its six members drawn from both houses, approved the governor's plan, but with a twist: they doubled the numbers.

The new plan would raise an estimated $250 million to $280 million with high-risk surcharges of 2.8 percent, and low-risk fees at 1.5 percent. A policyholder with a $1,000 homeowner's policy in a high-risk area would pay about $28 extra; a low-risk homeowner would pay about $15 more.

Although the numbers have changed, the governor remains supportive.

"We are pleased that the Democrats agreed that there is a need for emergency response funding. We will work with the Legislature on the details, but we need a budget to sign before this (the doubling) would have any effect," said Schwarzenegger spokeswoman Lisa Paige. The 2008-09 budget was supposed to be signed by July 1, the beginning of the new fiscal year, but the document remains stalled in the Legislature as lawmakers attempt to reach a bipartisan agreement. Democrats control both houses, but do not have enough votes to achieve the two-thirds majority for passage.

Assemblyman John Laird, D-Santa Cruz, the chairman of the budget conference committee, said the Legislature needed to cover the fire fighting costs and the surcharge was an effective way to do it. "That's the goal, that's the idea," Laird said.

Last year, he added, lawmakers approved $69 million for fire fighting and already the state has spent $380 million. "That means we have a $310 million shortfall in the fire fighting budget," he said, noting that even the proposed surcharge would not cover the entire tab. As head of the committee, Laird plays a pivotal role in shaping California's spending plan.

The governor in a recent radio address urged lawmakers to approve more money for fire fighting, which "will give our firefighters and other first responders the tools that they need. I have gone to many of these fires and the first thing that I hear from the chiefs and the fire experts is: Governor, we need more resources. We are fighting hard but we must have help."

With smoke lingering over the Capitol from a myriad of fires up and down the Valley, there is little opposition to providing more money for fire suppression. But Republicans, adamant about opposing tax increases, are deeply suspicious of the plan proffered by their fellow Republican governor, in part because they believe it is a tax not a fee, and in part because they believe people shouldn't have to pay extra for services that should already have been included in the budget.

"It's really a double tax. And now they want to charge people for doing the basic duties of the state, one of which is to protect its citizens from wild land fires. This should be part of a basic function of government," said Assemblyman Rick Keene, R-Chico, the vice-chairman of the conference committee.

He also questioned setting up a separate fire-fighting fund under the authority of the Office of Emergency Services, as proposed in the governor's budget language.

"It's a silly way to do it. Fire fighting should be within the purview of CalFire (the state Department of Forestry and Fire Protection)," Keene said.

Under the plan approved by the conference committee, money from the surcharge would be deposited beginning in January 2009 in a special fund in the treasurer's office managed principally by OES. Legislation containing the details of the surcharge is likely to be contained in a so-called "trailer bill" accompanying the main budget bill. The trailer bills typically reflect the agreements hammered out by lawmakers in order to get the budget passed.

Aside from the politics of the fee, the logistics of collecting the money also is drawing scrutiny from those who would do the collecting – the insurers. The insurance industry has not taken a formal position on the proposal.

"We will do everything we can to cooperate with the governor, who feels strongly about fires and their impact on people's lives, but we've got to be sure that the details and the language are such that we can implement it," said Ken Gibson, vice president for the western region of the American Insurance Association. "The worry we have is that when the conference committee doubles it, are they really doubling the funds for fire protection. From a public policy standpoint, we want to make sure that the funds are used for fire fighting, for personnel, equipment, trucks and helicopters."

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