Legislative Analyst's Office: February 2004 Analysis of the 2004-05 Budget Bill

Department of Forestry and Fire Protection (3540)

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 about $683 million for the department in 2004-05, including support and capital outlay expenditures. Of this total, 93 percent is for fire protection, 5 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 $163 million (or 19 percent) below estimated current-year expenditures. Most of this decrease reflects higher expenditures for fire suppression activities during the current year than proposed for 2004-05, reflecting a particularly high fire year in 2003-04. As in the current year, the proposed budget bill for 2004-05 authorizes the Director of Finance to augment the baseline appropriation for emergency fire suppression by an amount necessary to fund these costs.

The General Fund will provide the bulk of CDFFP's funding for state operations—$366 million (about 58 percent). The remaining funding will come from federal funds and reimbursements ($197 million), fees for fire protection and the review of timber harvest plans (THPs) ($63 million); and various other state funds. Major budget proposals include: (1) a reduction of $12.3 million in various resource management programs funded from the Forest Resources Improvement Fund (FRIF); (2) a plan to impose fees on timber operators (beginning in the current year and ramping up to $10 million for the budget year) in order to partially offset CDFFP's costs for the review and enforcement of THPs; (3) a continuation of federal reimbursement authority for the Cooperative Forestry Assistance Programs ($3.5 million); and (4) an increase of $1.6 million (State Emergency Telephone Number Account) to continue the implementation of the Computer Aided Dispatch (CAD) system. (For a discussion of the Governor's timber harvest plan fee proposal, please see the write-up in the "Crosscutting Issues" section of this chapter.)

Fire Protection Fees Should Go Further

As in the current year, the budget includes $52.5 million from fire protection fees to partially offset state costs to provide fire protection services on state responsibility areas. We recommend the enactment of legislation so that the state's costs of providing fire protection will be shared evenly between private landowners and the General Fund. This would result in budget-year savings of about $150 million to the General Fund. (Reduce Item 3540-001-0001 by $150 million; Increase Item 3540-001-3063 by $150 million.)

Background. 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.

The 2003-04 Budget Act included $52.5 million in fire protection fees levied on private landowners in SRAs to partially offset the state's costs to provide fire protection services benefiting these landowners. According to the administration, the department is currently working to implement the fee collection.

Budget Proposal Includes Revenue From Fire Protection Fees. The budget proposes expenditures of about $589.5 million for the department's fire protection services in 2004-05, of which $52.5 million is from fire protection fees, the same level as in the current year. The balance of the funding is from the General Fund ($353.1 million), reimbursements ($165.5 million), and federal and other funds ($182.3 million). Accordingly, the budget proposes that fees fund 9 percent of the department's fire protection budget. The administration indicates it will propose legislation to amend the fee legislation that was enacted this past session (Chapter 741, Statutes of 2003 [SB 1049, Committee on Budget and Fiscal Review]). At the time this analysis was prepared, the administration had not provided information to the Legislature indicating what those changes will be.

Recommend Administration Report on Proposed Changes to Fire Protection Fee. In order to assist the Legislature's evaluation of the department's budget proposal for fire protection, we recommend that the administration report prior to budget hearings on its proposed changes to the fire protection fee structure.

Recommend Fees Go Further in Budget Year. We think the proposed level of fee revenue from fire protection fees does not go far enough. As we discussed in our Analysis of the 2003-04 Budget Bill (page B-88), wethink that the costs for providing fire protection on private lands should be shared evenly between property owners and the general public. We think that such an even sharing of costs resulting in a higher level of support from private landowners is more reflective of the benefits to private landowners from the state's fire protection efforts. We therefore recommend the enactment of legislation to increase existing fire protection fees so that the state's costs of providing fire protection on SRAs are shared evenly between private landowners and the General Fund. Under the current fee structure, fees are assessed at a flat $35 per parcel annually. If our recommendation were adopted, this fee would increase to about $135 per parcel.

General Fund Savings. Implementing our recommendation for the sharing of costs of providing fire protection on SRAs evenly between property owners and the general public would result in budget-year savings of about $150 million to the General Fund.

Minimal Revenues Projected for the Forest Resources Improvement Fund

Revenues generated from timber harvesting on Jackson State Demonstration Forest (JSDF) have been used to support a variety of forest resource management programs. Because of ongoing litigation, timber harvesting will not occur on JSDF in the budget year. Therefore, the budget proposes to eliminate the activities funded from these revenues.

Background. Revenues generated from timber harvesting in state-owned forests are deposited into FRIF. Most of this revenue is generated from timber harvesting on the JSDF. Funds in FRIF have been used to support the operation of the state forests, for forestry assistance grants to landowners, and for the support of state nurseries, forest pest research and management, forest and rangeland assessment activities, and urban forestry programs.

For the fourth consecutive year, litigation has halted timber harvesting on JSDF. In August 2003, the Superior Court enjoined the department from harvesting timber on JSDF until a revised management plan and environmental analysis are approved by the Board of Forestry and submitted to the court for its approval. As a result of these requirements, the department indicates that timber harvesting will not likely occur on JSDF until 2005-06, at which time the department anticipates meeting the court's requirements that will allow it to resume harvesting on JSDF.

In recent years the department has addressed the shortfall in revenues from FRIF by reducing activities, providing a loan from the General Fund, and redirecting funds within CDFFP.

Budget Proposal. Due to the lack of FRIF revenues projected for the budget year, the budget proposes to eliminate funding ($12.3 million) for all FRIF-funded activities. Figure 1 shows the activities affected by this reduction.