1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 OCTOBER 25, 2011 9 10 P OTHER ADMINISTRATIVE MATTERS 11 ITEM P5.2 12 FIRE PREVENTION FEE 13 14 ---O0O--- 15 16 17 18 19 20 21 22 23 Reported by: Juli Price Jackson 24 No. CSR 5214 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John 12 Chiang, State Controller (per 13 Government Code Section 7.9) 14 15 Diane G. Olson Chief, Board 16 Proceedings Division 17 Liz Houser Deputy Director 18 Administration 19 David Gau Deputy Director 20 Property and Special Taxes Department 21 22 23 24 ---oOo--- 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 OCTOBER 25, 2011 4 ---oOo--- 5 MS. HOUSER: And I have one more item. I just 6 wanted to give you an update on the Fire Prevention Fee. 7 It was enacted with ABx-1 29. It was scheduled 8 to begin on July 1st, 2011. 9 At this point implementation is delayed due to 10 a lack of funding in the '11/'12 fiscal year. We have 11 submitted a BCP for '12/'13 fiscal year funding. 12 Finance is currently exploring the possibility 13 of a general fund loan to Cal Fire to cover the costs 14 for this fiscal year. If that loan is approved, the 15 implementation would be begin in either November or 16 December, depending on when the loan is approved. 17 The loan would be to Cal Fire, not to BOE. And 18 then Cal Fire would enter into a contract with BOE to 19 reimburse our costs associated with the registering of 20 taxpayers and the collection of the fee. 21 BOE and Cal Fire would be allowed to 22 administratively establish positions in the current year 23 to address this workload, with ongoing resources being 24 addressed in the Governor's '12/'13 budget. 25 Our estimated costs under a scenario that would 26 have started November 1 would be $4.4 million and 14.3 27 positions. The ongoing, full year costs, is 64.5 28 million -- 64.5 positions and $7 million. 3 1 That concludes my presentation. I'll be happy 2 to answer any further questions. 3 MR. HORTON: Member Yee? 4 MS. YEE: Thank you. 5 Miss Houser, do -- has the administration 6 revised the revenue impact as a result of the delay? 7 MS. HOUSER: They -- they are looking at the 8 revenue numbers that came out of the first set of 9 regulations from the Cal Fire Board. 10 MS. YEE: Uh-huh. 11 MS. HOUSER: There have been a number of new 12 appointments to that Board. So, we might be in a fluid 13 situation here. 14 So, the last we heard they are going to have to 15 revise their revenue estimates, so -- 16 MS. YEE: So, we're not holding this -- we'ere 17 not the only ones holding this up and there are some 18 real implementation -- 19 MS. HOUSER: There's -- 20 MS. YEE: -- issues? 21 MS. HOUSER: -- a lot of things, yeah. At this 22 point, we're -- we're not holding it up at all. We -- 23 MS. YEE: Okay. 24 MS. HOUSER: -- we can't do -- we're kind of a 25 service provider -- 26 MS. YEE: Right. 27 MS. HOUSER: -- for Cal Fire. 28 MS. YEE: Right. 4 1 MS. HOUSER: So, until they're able to provide 2 us a list of people that we can bill, there's -- there's 3 not much we can do at this point. 4 MS. YEE: Okay. 5 MS. HOUSER: And neither us or Cal Fire have 6 received any money to even begin the -- the first 7 programming step. 8 MS. YEE: Okay. You may not have been 9 monitoring our meeting last week with the assessors, but 10 is this going to require interaction with the assessors 11 to identify properties? 12 MS. HOUSER: Cal Fire seems to think -- I 13 haven't been that engaged in all the conversations with 14 Cal Fire, but I -- I believe they seem to think they 15 have a way to identify the -- 16 MS. YEE: Okay. 17 MS. HOUSER: -- the structures. 18 I don't -- there hasn't been a lot of 19 discussion on what the assessors' involvement would be 20 at this point. 21 MS. YEE: Okay. 22 MS. HOUSER: But I did have the opportunity to 23 monitor that. So, I have someone coming up. 24 Here's Mr. Cal Fire himself. 25 MR. GAU: No, I was just going to confirm -- 26 MS. HOUSER: The Fire Prevention Fee dude. 27 MR. GAU: -- my understanding's the same as 28 Liz's, that Cal Fire is independently developing this 5 1 list. 2 MS. YEE: Okay. 3 MR. HORTON: Further discussion, Members? 4 My concern goes to the funding of this -- not 5 funded through the normal process. 6 MS. YEE: Right. 7 MR. HORTON: Seeking a loan, some -- not 8 inconsistencies, but certainly discomfort with the 9 process itself, the governance and so forth. 10 And then we're going to establish some 11 permanency on our part once the loan is enacted. 12 And, so, is there some sort of disclaimer or 13 protection in there for our agency relative to ongoing 14 funding of this activity? 15 MS. HOUSER: We're still in ongoing discussions 16 with Finance because a decision has not been made by the 17 administration if this is where they would like to put 18 some of the very few available funds that they have. 19 One of the things I wanted to be sure of was 20 that the Board was protected, so that we didn't end up 21 with a situation where the -- where we had a loan or we 22 would have to possibly have a deficiency request. 23 So, we made sure that if there was going to be 24 a loan, it would be to Cal Fire, not to us. And we 25 would be reimbursed through an interagency agreement. 26 As far as the positions go, we are only 27 talking -- it's 14, but if -- if it's like January or, 28 you know, December or January before we get a final 6 1 decision, that number goes down the further along they 2 move this. 3 So, we might be down to 10 or 11 positions by 4 the time we're actually given authority to go ahead and 5 hire. So, with us administratively establishing 10 to 6 11 positions, we can do a short term thing like a 7 limited term pending a decision for '12/'13. 8 We haven't really got into that much of a 9 discussion because until they tell us we're going to 10 have a loan and tell us, yes, we're going to 11 administratively establish them -- they may only 12 establish them as six-month LTs. So, they haven't got 13 to that level of detail. 14 But we do have the opportunity to fill them as 15 limited term positions. And then as the '12/'13 budget 16 begins to be exposed to us in mid-January, we'll have a 17 better idea as to whether or not the Fire Prevention Fee 18 has been permanently funded in the budget. 19 And we have asked for a direct appropriation 20 for our portion of the Fire Prevention Fee. So, we 21 would be able to see that in the budget, if the 22 Governor's -- if the administration chooses to put it 23 in. 24 MR. HORTON: Yeah, I think we need to have some 25 understanding from the administration as to what their 26 plans are relative to the permanency of this. 27 Given the nature of the fee, it's -- we're 28 probably going to -- these are not probably all going to 7 1 be new hirees, they're probably going to be individuals 2 that we are providing an opportunity to that are 3 currently part of the team as it is, therein creating a 4 backfill issue for us. 5 MR. GAU: That's correct. 6 MR. HORTON: And, so, on the backfill there is 7 a -- if we make the option to do that backfill, then 8 that, in itself, creates a level of permanency for the 9 agency that could be concerning, if, in fact, the 10 administration decides not to fund this program. 11 So, I would just ask that we be conscious of 12 that -- 13 MS. HOUSER: Okay. 14 MR. HORTON: -- as we and that we report back 15 to the Board so that that's a decision that the Board 16 will make, given the exposure to our agency from a 17 budget perspective as well as from an employee 18 perspective. 19 MS. HOUSER: Okay. 20 MR. HORTON: Further discussion, Members? 21 MS. HOUSER: I'd be happy to do that. 22 MR. HORTON: Hearing none, thank you very much. 23 MS. HOUSER: Thank you. 24 25 26 27 28 8 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 OCTOBER 25, 2011 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 8 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: NOVEMBER 7, 2011 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 9