Gov. Arnold Schwarzenegger

By Kevin Yamamura
kyamamura@sacbee.com
Published: Monday, Jan. 18, 2010 – 12:00 am | Page 3A

Gov. Arnold Schwarzenegger was insistent at his January budget presentation that his spending plan does not raise taxes.

He said, “I refuse to raise taxes, because there are so many other areas where Sacramento can be smarter, more efficient and save precious taxpayer dollars.”

But Schwarzenegger again proposed a 4.8 percent surcharge on all residential and commercial property insurance to help pay for the California Department of Forestry and Fire Protection. The Department of Finance estimates that the surcharge would cost about $48 per policyholder and relieve the general fund by $200 million through June 2011.

Property owners would begin paying the charge starting in January 2011. Most homeowners could not deduct it on their federal taxes because it would not be implemented as a property tax.

“We consider it a fee,” Schwarzenegger said. “I let some people debate over that – what’s a fee and what’s a tax. But I mean, I call it a fee.”

Generally, where fees are imposed, there is a nexus between payer and fee. Fishing and hunting license fees generate money for the Department of Fish and Game to manage wildlife and fish hatcheries, for instance.

Cal Fire offers little benefit to homeowners in downtown Sacramento, but great assistance to those living in the Sierra Nevada or mountain areas of Los Angeles County. Under Schwarzenegger’s plan, all of those homeowners would pay the same 4.8 percent surcharge on their insurance each year.

Nonpartisan Legislative Analyst Mac Taylor said it’s difficult to see how the surcharge is anything but a tax.

“We’ve always felt (it) was a tax because there wasn’t really a direct linkage between who was paying it and the benefits of it,” he said.

He recommended instead that the state look at limiting the fee to homeowners who live near forested areas rather than imposing a statewide charge that provides general budget relief.

Then, “you could make a much stronger case this really is a fee and that it was linked to the people who were getting the services provided by Cal Fire,” Taylor said.

Department of Finance spokesman H.D. Palmer responded that “it continues to be our view that this is a surcharge on property holders that funds activities that provide them with a direct benefit.”

In previous versions of the fire surcharge, the governor directed some of the money toward local fire departments to pay for equipment they use in statewide wildfires or other emergencies. That provided greater justification for charging all residents.

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