Fall 2003

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Guest Commentary

John Gamper is the director of taxation and land use for the California Farm Bureau Federation in Sacramento.

Senate Bill 1049 enacts the first state property tax in California in almost 90 years. This measure was a budget trailer bill, describing the new tax as an annual fire-protection benefit fee of $35 per parcel on privately held land within state responsibility areas. The new tax will be the same for each parcel regardless of its size, the use to which it is put, its location, or any other factor.

Some background: In February, the Legislative Analyst's Office reviewed the governor's budget proposal and recommended enactment of legislation to fund one-half of the proposed General Fund budget for fire protection on state responsibility areas by imposing a per acre fee on property owners in these designated areas. The LAO said that a "fee" of $6 per acre would be necessary to recoup the desired about of approximately $170 million. This $6-per-acre proposal eventually evolved into the $35 parcel charge to raise $52.5 million. As SB 1049, it was signed into law by Gray Davis on October 8.

The LAO, in developing its recommendation, made no attempt to establish a nexus between the level of the fee and the level of service provided. For an exaction to be a fee a connection between the fee, the service provided and the feepayer is necessary. The exaction in SB 1049 has no such connection or nexus.  It was a simple matter of arithmetic: amount of revenue desired divided by the number of acres taxed. (Oops, I mean subject to the benefit fee.) Rural rangeland owners who have experience with the California Department of Forestry and Fire Protection (CDFFP) scoffed at the notion that their cattle ground would receive a benefit anywhere near the level of this confiscatory "fee." At $6 an acre, this would have been three to six times the income-producing capacity of much of this land.

Some landowners were slightly more vociferous in characterizing the proposal: "This is a protection racket! This is a perfect example of government empowering itself to ‘sell’ me a service I don't want or need, and can't afford."

So how did the Legislature justify what eventually came to be a $50 million protection scheme, with $2.5 million added for the cost of collection? The CDFFP is responsible for fire protection on approximately 31 million acres of California's 100 million acres of lands. The land for which the state is responsible includes privately owned forestlands, watersheds, and rangelands referred to as "state responsibility areas" or SRAs. The SRA lands are 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 are several different types of property owners in SRAs, including timber operators, rangeland owners, and owners of individual residences. Technically, CDFFP is not responsible for the protection of structures in SRAs but in practice protection of persons and property is rightfully their top priority.

Funding for fire protection on SRA lands has come almost entirely from the General Fund. CDFFP also receives reimbursements from federal or local agencies to cover those instances in which state firefighters respond to incidents for which other agencies are responsible. For 2003-04, the budget proposed about $341 million from the General Fund for support of its fire protection program. The LAO argued that direct beneficiaries of fire protection service ought to share the costs because, it said, "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."

This is not the first time the LAO recommended financing resource programs by combining fees and General Fund revenues. In its analysis of the 1992-93 state budget bill, the LAO recommended that the Legislature enact a cost-sharing parcel fee for fire protection in SRAs so the General Fund didn't carry the full cost.

Of course back then, as it is still today, the CDFFA had no idea where all of the parcel lines were in the SRA or the level of benefit received by those parcels. These two pieces of information are not only necessary for collection purposes, the latter is crucial if the so-called "fee" were to pass the laugh test. In 1992 the landowner fee issue was dropped because the cost of finding and mapping the parcels made the cost of collection prohibitive.

Eventually, Senate Bill 1049, a budget trailer bill, was enacted to impose an annual fire-protection benefit fee of $35 per parcel on privately held land within state responsibility areas. The fee will be the same for each parcel regardless of its size, the use to which it is put, its location, or any other factor. Consider two parcels: One consists of several acres on which a resort with several large, multistory buildings operates. The other is a quarter-acre vacant parcel. Under the new law, both parcels will be assessed the same fee, even though the proportional special benefit (i.e., structural fire protection) conferred on the former parcel far exceeds the benefit conferred on the latter.

Several statewide organizations, including the California Farm Bureau, California Taxpayers’ Association, and the Howard Jarvis Taxpayers Association, confirm that this measure constitutes the first state imposed property tax in California. The issue is further confounded by the lack of definition of a parcel. Since the only mechanism for collection will be to use assessor parcel numbers (APN), another little known provision of the Government Code may come into play.

In 1998, in an effort to enact parcel tax reform, the Farm Bureau sponsored AB 1866. This measure created Government Code Section 53087.4 that recognized, for the first time, that APNs are administrative parcels and not legal lots of record. As a result of this statute, landowners will have 90 days after the initial receipt of their tax bill to provide written notice to their county assessor identifying those APNs that represent legal parcels. Thus, if SB 1049 survives what is likely to be a vigorous legal challenge, rural landowners could be subject to multiple per parcel charges on fictitious bureaucratic parcels and should be aware of their right to only be charged on real parcels.

What are others saying about SB 1049? In its letter to Governor Davis urging a veto, the California Fire Chiefs’ Association wrote: "The proposal is based on a mistaken belief that private property owners within SRA lands benefit from CDFFP fire protection services at the expense of the general tax-paying public. In reality, the vast majority (90%-95%) of all private property owners within SRA lands are provided fire protection services through paid, part paid/part volunteer, or volunteer fire departments, paid for by the local taxpayers. Many of these departments are not only responsible for the structural fire protection and emergency medical calls of such property owners, but provide valuable mutual aid and initial attack support for CDFFP."

The passage of SB 1049 represented the very worst of the legislative process. It was a "gut and amend" under the guise of a budget trailer bill that never received a single public hearing. The various sections of measure should all be repealed and the Legislature forced to review each proposed tax and fee increase on their individual merits or lack thereof.