Why Isn't California Spending Millions in Fire-Prevention Money?

by | October 5, 2015

By Jim Miller

Amid a drought that has created bone-dry conditions across much of California's wildland area, a state fire prevention account has ended recent fiscal years with tens of millions of dollars unspent.

The money has been generated by a contentious, 4-year-old fee pushed through by Gov. Jerry Brown and legislative Democrats over the objections of Republicans and rural property owners. The state collected more than $300 million through June and spent about $260 million, including roughly $228 million on administration and statewide prevention activities, vegetation clearing, defensible space inspections and other programs.

About $22 million went to a state tax agency to cover collection costs.

But as fires burned hundreds of thousands of acres this year, the state ended the fiscal year in June with an estimated $43 million in fee money left over.

"We made a lot of people in the Legislature take a vote on this fee that they never really liked. But then to collect the money and just sit on it, and not deploy it in ways to help make those communities safer, is just silly," said Paul Mason, vice president of policy and incentives at Pacific Forest Trust, a forest protection group.

More than 800,000 property owners pay the fee, most of them $117.33 a year for each habitable structure.

The money is intended to support fire prevention activities in the almost one-third of California where the state has the primary firefighting responsibility. Nearly three-quarters of the 31 million-acre area _ mostly privately owned watershed, rangeland and forested areas outside city limits _ presents a very high or high fire risk.

In the devastating Valley and Butte fires, state responsibility lands made up more than 80 percent of the areas burned. As of Friday, the Valley fire in Lake County had burned more than 76,000 acres, and destroyed 1,958 homes and other structures. The Butte fire in the Sierra foothills had burned 71,000 acres and destroyed 475 homes. Authorities have confirmed the deaths of four people in the Valley fire and two in the Butte fire.

Statewide since January, more than 5,300 fires have torched almost 300,000 acres, according to the California Department of Forestry and Fire Protection. The toll would have been worse without activities and projects funded by the fire-prevention fee, state officials said.

Yet officials said they have proceeded cautiously in spending the prevention fee money because they were not sure how much money the charge would bring in.

"Given the fact that it's a relatively new fund, there's not a long track record on receipts. We do want to maintain a prudent reserve for unforeseen circumstances," Department of Finance spokesman H.D. Palmer said.

The fund's reserve, however, is much higher than that of the typical special fund. The fire fund began the current fiscal year with reserves totaling more than half of the prevention money the fee produced last year. By comparison, state special funds' total reserves averaged about one-quarter of annual revenue in 2014-15. The state's multibillion-dollar general fund ended June with reserves of just 3.5 percent.

Republican state Sen. Jim Nielsen, who sits on the budget subcommittee that oversees Cal Fire, rejected the idea that the fire fund's large reserve reflects prudence.

"They're hoarding it," he said. "What for, I don't know."

Some have suggested the state may have one eye on the courts, where it is fighting a lawsuit filed by critics who contend the fee is an illegal tax.

In August, a Sacramento County judge elevated the case to class-action status, and a trial date is expected next year. If the state ultimately loses, the fee revenue would disappear and the state would face refunding an estimated 12,000 property owners eligible for the class.

Refunding five years of fees to landowners who filed a required protest would cost more than $7 million. Nevada County Supervisor Hank Weston, echoing a common belief, said he thinks the large balance in the fire prevention fund reflects officials' concern the state will lose the case.

Palmer rejected that notion. "If we budgeted on the assumption we're going to lose every lawsuit, fiscal planning for the state would come to a screeching halt," he said.

Lawmakers approved the bill, ABx1 29, in June 2011, creating a new State Responsibility Area Fire Prevention Fund.

The fee has proven to be more costly than usual to collect. About 10 percent of people initially do not pay the charge, said former lawmaker George Runner, a member of the state Board of Equalization, which spent $8.9 million of the fee money in the last budget year to collect the fee. The typical noncompliance rate is about 3 percent, he said.

"It really gets expensive for us when we have to chase after such a low amount," Runner said.

Lawmakers approved the fee in June 2011, during the recession, as a way to help prevent budget cuts to Cal Fire. The fee was fair, some supporters said, because more people living in rural areas raised the state's firefighting costs.

Elected officials soon began raising concerns about the unspent balances. "I just don't want money sitting there when there's a lot of prevention to be had and an increase in the number of fires," then-Senate President Pro Tem Darrell Steinberg, who voted for the fee, said early last year, when fires were burning around the state. "You spend the reserves during the most crucial times."

Weston, a former Cal Fire unit chief who pays the fire prevention charge, said there's no excuse for all of the unspent money in the fund.

"Statewide, they're collecting $75 million (a year), during one of the worst droughts, in one of worst fire seasons, and the best thing would have been to add a bunch of inspectors. They didn't do that," Weston said.

"I guarantee you that the biggest bang for your buck is you do prevention. It's not glorious. (Fighting fires) looks good on the news," he said. "But who knows? They could reduce the threat to some homes."

The state cut the money available for local assistance grants this year, allocating $5 million _ one-half of last year's total. Instead, the state gave $5 million more to another department, the California Conservation Corps, which has handled some fire prevention activities in the past.

Other questions have surfaced about how the state uses the money.

This year, the administration proposed spending fee revenue to help carry out a new law meant to help protect Native American cultural resources during the environmental review process. It argued that the law affects Cal Fire's plans for vegetation management.

Cal Fire "should not propose funding from fire-prevention funds for CEQA (California Environmental Quality Act) archeological and cultural requirements," a Senate committee report advised. The final budget paid for the law from another source.

The Legislature has allowed Cal Fire to use fee revenue to pay for litigation to recover money from people who accidentally start fires.

Pursuing the cases, officials said, encourages people to be more careful and prevent fires in the state responsibility area.

Legislative attorneys, though, have warned that using the money that way likely runs afoul of Proposition 26, the 2010 voter-approved law which requires that any fee provide a direct benefit to the person paying it. Any money recovered goes into the state's general fund, where it can be used for any purpose.

"Civil cost recovery is all about one thing _ it's about getting more money for government. That's what the goal of the fire tax has been from the beginning," Nielsen said. "It's got nothing to do with prevention."

Plaintiffs in the lawsuit trying to overturn the charge say such spending proves their point. They contend the fee is really a tax that should have required a two-thirds vote of the Legislature, not the fee bill that passed on a majority vote.

Tim Biddle, an attorney for the Howard Jarvis Taxpayers Association, one of the plaintiffs in the case, acknowledges the fee likely is paying for some brush clearing or inspections that directly benefit the people who pay it.

But hundreds of thousands of fee-payers are not receiving such services, he said, while fee money has helped pay for such work as post-fire data analysis and public education campaigns that offer no direct benefit to state responsibility area property owners.

"If you look at how the fee has actually been expended ... it clearly looks like it is being spent on services and programs that benefit the general public, not the payers," he said.

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