CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, APRIL 13, 2010, OR THEREAFTER
BY THOMAS D. ELIAS
“ARNOLD’S INSURANCE “FEE” ACTS LIKE A NEW TAX”
Fee: a payment asked or given for professional services, admissions, licenses, tuition….
Tax: a compulsory payment.—Webster’s New 21st Century Dictionary
More than any governor in California history, Arnold Schwarzenegger has been adamant about his pledge never to raise taxes.
“I refuse to raise taxes,” he said at his mid-winter budget presentation, “because there are so many other areas where Sacramento can be smarter, more efficient and save precious taxpayer dollars.”
Yet, Schwarzenegger has never hesitated to raise fees, whether the increases involved state park admissions, college and university tuition or the cost of a driver’s license.
Those, of course, are all optional activities, in a sense. While it’s true that young people who attend universities generally increase their future potential in many ways, including earning power, no one forces them to attend college, so by Webster’s definition, tuition is a fee even if students feel the payment is compulsory. Visiting state parks and driving also are optional.
But buy a home and there’s no choice about obtaining fire and liability insurance: every bank, credit union or other lender requires this. Paying for insurance is compulsory.
That’s why the 4.8 percent surcharge on all residential and commercial property insurance Schwarzenegger’s budget proposes to charge looks more like a tax than the fee he claims it is.
Even the governor hedged a tad when he proposed it. “We consider it a fee,” he said. “I let some people debate over that – what’s a fee and what’s a tax. But I call it a fee.”
California’s nonpartisan legislative analyst, Mac Taylor, disagrees. “We’ve always felt it was a tax,” he told a reporter.
Plainly, even Schwarzenegger realizes he’s playing games with semantics here. For essentially this is a sales tax on every property insurance policy sold in California, one that will cost the average policyholder $48 per year, a total of about $200 million. Money produced by this “fee” would be earmarked for the California Department of Forestry and Fire Protection, better known as CalFire.
That makes this plan particularly unfair to everyone who doesn’t live in an area prone to wildfires. If you live in San Francisco or the Oakland flats or Fresno or the cities of Madera or Bakerfield or San Bernardino, chances are you will never need a CalFire crew to help you out. City or county fire departments handle home and building fires in those places.
But it’s different for property owners in the highly-populated, high priced suburban hills and many lower-priced rural areas, plus some leafy hillside areas in big cities like Los Angeles and Oakland. Their mortgage lenders also demand they buy fire insurance and because of their locations, they often must pay far higher than average prices to get it. In fire seasons, they will see plenty of CalFire personnel and a lot of others, too.
But their decision to live in those areas is a conscious choice. No one forces home buyers to choose Malibu or the Berkeley hills or the Hollywood hills, where hugely expensive wildfires occur so regularly that their former Native American denizens were staging controlled burns centuries before Europeans arrived.
Why should a resident of the Berkeley flats or San Francisco’s Marina district or Huntington Park or San Leandro pay a “fee” for their protection? Why should the owners of the Serramonte shopping mall south of San Francisco pay this fee, or the owner of the huge Gilroy factory outlet mall or the operator of the Westside Pavilion shopping center in Los Angeles? It makes no sense.
Decades ago, telephone companies began breaking toll calls and other specialized services off from the price of a basic land line, billing only the users of those functions for them. It was called “usage sensitive pricing” and it made sense. Spreading the costs run up by heavy phone users among everyone, including those who used their phones least, made no sense; the practice stopped.
Now Schwarzenegger wants to bring it back, asking homeowners sensible enough not to buy in wildfire risk areas to subsidize those who do, even though most property owners in those areas boast incomes far above the statewide average.
The bottom line: If the state needs to raise $200 million to fund fire protection for homeowners who put themselves and their possessions at risk, charge them and not everyone else. Sure, that would raise their fees well above the average now contemplated. But that was part of the risk they took by willingly moving to a danger area, just like students who enroll at a university by their own choice run the risk of hiked tuitions.
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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net
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I agree whole-heartedly with this column!
ReplyDeleteMy hometown, Hamilton City, as many areas in California, is not within a Cal-Fire service area. We, and those like us, should not be asked to subsidize those other areas when we have taken care of our own needs.
In 2004, as a Fire Commissioner with the Hamilton City Fire Protection District (Glenn County) I helped lead the effort (Measure D) to increase our “fire parcel tax” to help keep our fire department going. That tax was increased from an average $55.00 per house annual tax to $250.00 and we garnered a nearly 80% approval! The result of that tax increase is our local fire department is alive and well.
On March 7th I wrote to the Governor, Senator Aanestad and Assemblyman Nielsen asking them to reconsider this fee. I have not yet received a reply from Senator Aanestad or Assemblyman Nielsen. On April 9, the Governor's office responded; but did not address my specific concerns.
I support Cal-Fire and commend them as professionals and their noble efforts to protect Californians from the catastrophic effects of wildfires. However, until those other areas have helped themselves to the extent the rest of us have ourselves, only then should we discuss augmenting the Cal-Fire budget in the manner proposed.
This column is spot on! As you point out, not all residents in California will equally benefit from such a surcharge as many localities pay for their own fire protection through local taxes and assessments.
ReplyDeleteIn 2004 I helped lead the effort in my hometown (Hamilton City, Glenn) to increase the “fire parcel tax”. The tax went up from an average $55.00 per house annual tax to $250.00 with nearly an 80% voter approval! The result of that tax increase is our local fire department is alive and well. Since Hamilton City, as many areas in California, is not within a Cal-Fire service area we should not be asked to subsidize those other areas.
On March 7th I wrote to the Governor, Senator Aanestad and Assemblyman Nielsen asking them to reconsider this fee. So far (4/10/10) only the Governor's office has replied and that was a “canned” response that did not address my specific concerns.
I support Cal-Fire and their efforts to protect Californians from the catastrophic effects of wildfires and other natural disasters. Once those other areas of the State have helped themselves to the extent the rest of us have, we then can discuss providing additional financial support to Cal-Fire in the manner proposed.