Legislative Analyst's Office
Analysis of the 2003-04 Budget Bill
The California Department of Forestry and Fire Protection (CDFFP), under the policy direction of the Board of Forestry, provides fire protection services directly or through contracts for timberlands, rangelands, and brushlands owned privately or by state or local agencies. In addition, CDFFP (1) regulates timber harvesting on forestland owned privately or by the state and (2) provides a variety of resource management services for owners of forestlands, rangelands, and brushlands.
The budget requests $671.5 million for the department in 2003-04, including support and capital outlay expenditures. Of this total, 91 percent is for fire protection, 7 percent is for resource management, and the remainder is for State Fire Marshal activities and administration.
The total proposed budget is a decrease of about $46 million (or 6.4 percent) below estimated current-year expenditures. Most of this decrease reflects higher expenditures for fire suppression activities during the current year than proposed to be budgeted for 2003-04.
The General Fund will provide the bulk of CDFFP's funding—$413.8 million (about 63 percent). The remaining funding will come from federal funds and reimbursements ($166.5 million); the Forest Resources Improvement Fund (FRIF) ($11.5 million); and various other state funds. Major budget proposals include: (1) a continuation of federal reimbursement authority for prefire activities ($6.6 million) and the Cooperative Forestry Assistance Programs ($4.9 million), (2) a reduction of $3.5 million in various FRIF funded programs, (3) an increase of $2.2 million in federal reimbursement authority for the California Climate Change Initiative, and (4) an increase of $2.1 million (State Emergency Telephone Number Account) to continue the implementation of the Computer Aided Dispatch (CAD) system.
We recommend enactment of legislation to fund one-half of the proposed General Fund budget for fire protection on state responsibility areas by imposing fees on property owners who benefit from these services. This would result in a savings of about $170 million to the General Fund. We also recommend the enactment of legislation to establish a new special fund for the deposit of the fees. (Reduce Item 3540-001-0001 by $170 million; increase new special fund item under Item 3540 by like amount. )
Areas of State Responsibility. The CDFFP is responsible for fire protection on approximately one-third (31 million acres) of California's lands. The lands for which CDFFP is responsible are mostly privately owned forestlands, watersheds, and rangelands referred to as "state responsibility areas" (SRAs). The SRA lands must be designated by the Board of Forestry and must be covered wholly or in part by timber, brush, or other vegetation that serves a commercial purpose (such as rangeland or timber harvesting) or that serves a natural resource value (such as watershed protection). There can be several different types of property owners in SRAs, such as timber operators, rangeland owners, and owners of individual residences. However, CDFFP is not responsible for the protection of structures in SRAs.
Fire Protection Funded From General Fund. Funding for fire protection on SRA lands has come almost entirely from the General Fund. The department also receives reimbursements from federal or local agencies to cover those instances in which CDFFP responds to incidents for which other agencies are responsible. For 2003-04, the budget proposes about $341 million from the General Fund for support of its fire protection program.
Direct Beneficiaries of Fire Protection Service Ought to Share Costs. Property owners in SRAs directly benefit from CDFFP's fire protection services, as does the state's general population though the preservation of natural lands and their wildlife habitat. As we noted in our discussion of financing resource programs in the Analysis of the 1992-93 Budget Bill, combining fees and General Fund revenues to finance a program enables a sharing of costs among private beneficiaries of services and the general public (please see page IV-19). We therefore recommend that the Legislature enact legislation that would provide for a sharing of the costs of fire protection in SRAs between property owners and the general public. This approach is also consistent with that of several other western states which require landowners to share in the costs of fire protection services provided by the state. We further recommend that the costs be shared evenly between the state and fee payers. This approach is used in Oregon and Washington and appears to be a reasonable approach to allocating costs of a service for which the benefits and costs cannot be precisely measured and allocated.
Various Fee Mechanisms Could Be Established. There are a number of potential ways that fees could be structured to partially recover state costs for providing fire protection services in SRAs. All of the fee structures discussed below assume that (1) the fees are assessed only on those parcels located within SRAs and (2) the fees would be collected either by CDFFP or by each county as part of the property tax assessment.
The fee mechanisms are discussed individually below, but in many cases the individual fee mechanisms could be combined in a more complex fee structure. Some of the fee mechanisms result in fees for all landowners in SRAs, although the fee amount will vary. Other fee mechanisms would be focused on selected types of parcels in SRAs, such as parcels with timber or those parcels with residences.
Options for All SRA Parcels to Pay a Fee. These options include:
Options for Selected Parcels in SRAs to Pay a Fee. These options include:
For any one of the above fee mechanisms, fees could be adjusted to provide an incentive to property owners to take steps that potentially lower the extent of state fire protection services that would be needed. These would include fuel reduction and fire safe planning activities. In addition, fee reductions could be offered to property owners that have already purchased some level of fire protection, thereby potentially lowering the extent of state fire protection services that would be needed.
Preferred Fee Mechanism. Our review of the various potential fee mechanisms concludes that the preferred approach for the budget year would involve two steps: (1) establishing a simple per-acre fee structure as part of the county tax collection efforts for the interim (2003-04 and 2004-05) and (2) establishing a process to develop a permanent fee structure. We estimate the fee would need to be about $6 per acre in order to fund one-half of the proposed General Fund budget for fire protection in SRAs.
We think a per-acre fee is the preferred approach among the options discussed because it is the most efficient fee mechanism by which the state could recover a portion of its costs of providing wildland fire protection services to landowners in the budget year. Furthermore, we think that acreage is a reasonable proxy for benefit to landowners and, unlike many of the other options, it is broad based and would not disproportionately affect one type of landowner over another. Lastly, the state's costs to collect the fee would be reduced by using an existing collection process (county property tax assessment and collection), rather than creating an entirely new one.
While we think a per-acre fee is a reasonable approach for the next two years, we recommend a permanent fee structure be developed and established by the Board of Forestry (to be implemented beginning with 2005-06) based upon further analysis of the various fee options. We think such an analysis is needed in order to further refine the fee structure by making more precise the relationship between the amount of the fee assessed and the benefit a particular landowner receives from the state's firefighting services. This analysis should take into account any fire protection services already purchased by the landowner. In addition, the fee structure should allow for incentives to reduce the risk of wildland fire. We think such an analysis can be completed by the department under the direction of the Board of Forestry as part of its resource assessment activities. (For a discussion of the department's resource assessment activities, please see the "Crosscutting Issues" section of this chapter.) Based upon the analysis by the department, we recommend the board set fees commencing with 2005-06.
Recommend Legislation to Enact an Interim Per-Acre Fee Structure and Provide for Development of a Permanent Fee Structure. We therefore recommend the enactment of legislation to establish a per-acre fire protection fee to partially offset the state costs to provide fire protection services in SRAs. We recommend the fee be imposed on all parcels located within SRAs except for those parcels (1) exempt from property taxes, (2) owned by a public agency, or (3) already receiving fire protection and suppression services under a cooperative agreement between a local entity and CDFFP. We further recommend that the Legislature specify that such a fee be collected by each county as part of the property tax assessment and collection process. We also recommend that the fee rate be set for 2003-04 and 2004-05 at a level sufficient to fund one-half of the proposed General Fund budget ($170 million) for fire protection in SRAs and the county's administrative costs.
Finally, we recommend that the fee legislation provide that, commencing with 2005-06 and each fiscal year thereafter, the fee rate is to be set by the Board of Forestry, based upon an analysis by the department of the costs and benefits of the various fee mechanisms, including those mechanisms that provide incentives for activities that may reduce the need for state fire protection services.
Recommend Creation of Special Fund. Lastly, we recommend the enactment of legislation to create a special fund into which the fee revenues would be deposited, with expenditures subject to appropriation by the Legislature. We think that this would increase the Legislature's oversight of the use of the new fees.
General Fund Savings. Implementing our recommendation to partially shift funding for wildland fire protection in SRAs to fees would result in a General Fund savings of about $170 million. We therefore recommend that the Legislature make the corresponding reductions in the department's General Fund budget and provide an increase of a like amount from the new special fund that we recommend be established for the deposit of the fire protection fee. In estimating the savings to the General Fund, we have assumed that the fee structure and collection process would be in place to allow for collection of the fire protection fee for a full year.
Consistent with our recommendation in the "General Government" chapter of this Analysis, we recommend rejection of the proposal to provide funding for the Computer Aided Dispatch system because funding the proposal from the State Emergency Telephone Number (911) Account is inconsistent with current law and changes the nature of the 911 surcharge. (Reduce Item 3540-001-0022 by $2.6 million.)
Budget-Year Proposal. The budget proposes $2.6 million in one-time funding from the State Emergency Telephone Number (911) Account to continue the implementation of the Computer Aided Dispatch (CAD) system that facilitates dispatch of CDFFP resources to emergencies. In 2001-02, CDFFP received $10.4 million General Fund for the development and implementation of the CAD system.
This proposal is part of a larger proposal to shift $47 million in funding from the Motor Vehicle Account and the General Fund to the 911 Account. (Please see the discussion of these proposals in the "State Emergency Telephone Number Account" write-up in the "Crosscutting Issues" section of the General Government chapter of this Analysis.)
Recommend Rejection of CAD Proposal. Consistent with our recommendation in the "General Government" chapter of this Analysis, we recommend rejection of CAD proposal because funding the proposal from the 911 account is inconsistent with current law and changes the nature of the 911 surcharge.