Legislators consider using kicker for wildfire funding

Presenter: Senate Bill 1177 would use this year’s kicker to establish a wildfire fund. Speaking in support April 7, Sen. Jeff Golden:

[00:00:09] Sen. Jeff Golden: This is about wildfire. You probably know about the massive work group that met intensively over the interim. They were charged with finding a funding source to protect our communities from the kind of devastation we are seeing around the West every single year now.

[00:00:25] Here’s how it would work: You’ll remember we recently got an estimate of a pending $1.73 billion kicker. This proposal invests all of that into a permanent fund managed by the Treasury for the best low-risk return. The principle of that fund, $1.7 to $1.8 billion, whatever it turns out to be, would never be touched.

[00:00:50] The interest that it earns would perpetually pay for wildfire prevention and suppression. So a 5% return on that investment— and based on the Treasury’s track record, that’s a prudent and safe estimate—would yield between $170 and $180 million per biennium for wildfire programs.

[00:01:13] The one-time investment this coming biennium of $1.73 billion will provide us with that $170 to $180 million every single biennium through this century and beyond (if Oregon government is still around), without taking a dime from the general fund that holds Oregonians’ tax dollars.

[00:01:35] If we pass Senate Bill 1177, we will use Oregonians’ dollars one time to fund roughly half of our wildfire needs. If we don’t pass it, we’ll be back here scooping up their tax dollars or lottery dollars for wildfire every two years again and again and again. This is the only option on offer that’s a one-and-done way to pay the major portion of our wildfire costs.

[00:02:02] I don’t think we need to apologize to anyone if we pass this measure. We can look our constituents in the eye and say, essentially: ‘Yes, this one time we’re investing kicker dollars that would’ve gone to you next year into a permanent fund that will keep us from coming back to you every two years for the rest of your life to ante up for wildfire.’

[00:02:26] We can say we’re investing, all of us, into what’s probably the most cost-effective insurance policy any of us will ever see.

[00:02:35] Presenter: Rep. Mark Gamba:

[00:02:37] Rep. Mark Gamba: I’m Mark Gamba, House District 41. I’ll be much briefer than my colleague. He laid it out very well. I think the nuts and bolts of how this would work and the importance of it are pretty clear.

[00:02:49] When we talk about how we’re going to pay for something that we have to pay for— this is not a bill we can just choose not to pay— it’s always a give or a take, right? We’re going to take the money from somewhere. The money has to come from somewhere.

[00:03:03] So do we want it to come from the general fund that’s already starved in the realms of education and mental health care and all the other things that we don’t have enough money for? I don’t think that’s a very popular concept and I think, some of the ideas that are on the table that came out of that work group are not any better.

[00:03:22] One of the ones that we’re struggling with is to tax the bottle bill. So instead of the concept that we have here, taxes that are already paid that will pay for a significant portion of the wildfire costs that we have going forward—and make no mistake, those wildfire costs are going to grow every year. That is the trajectory we’ve been seeing for the last decade. That’s what we’re going to continue to see.

So instead of taking money that we’ve already collected, putting it in a fund that will then generate income that we can use for this purpose, we’re talking about possibly breaking a system that currently works pretty well. The bottle bill is a national model for how well you can cause recycling to work. Well, imagine if folks are, instead of paying a dime for their soda, they’re paying 20 cents more and they’re only getting half of that back. That’s the choice, right?

[00:04:22] Those are the things we’re weighing because we’ve decided, and I don’t think incorrectly, that all Oregonians need to help pay for the cost of fighting wildfires. It’s not just the rural areas where the fires are, all of us.

[00:04:37] But does it make more sense to utilize taxes we’ve already collected and allow those to generate income for the foreseeable future? Or does it make more sense to create a new sales tax, quite honestly, to do the very same thing?

[00:04:53] This is the give and take that we have to try and wrestle with. And I know that the kicker is always a tough conversation, but it is taxes that have been paid. They’re here and the option on the table otherwise is to basically create a sales tax on beverages. And I think that would be a mistake, ’cause it’ll break that system too.

[00:05:14] Presenter: Casey Kulla:

[00:05:15] Casey Kulla (Oregon Wild): My name is Casey Kulla and I’m here representing Oregon Wild, a member of the Wildfire 35, the Wildfire Funding Work Group. We wrestled a lot with the complexity of wildfire funding in Oregon with the costs and the potential sources of funding. And in the process I’ve thought a lot about the fairness around the cost of wildfire mitigation and response.

[00:05:32] And I’ve submitted kind of more extensive comments into the record in support of SB 1177. And I think that that one is actually one of the best revenue policies that we can establish.

[00:05:41] And I think we have two good examples of trust funds right now. Well, the common school fund and the incoming or upcoming environmental restoration fund, which was established out of the Monsanto PCB settlement. they provide and will provide stable, dedicated funding that doesn’t require tax increases into the future.

[00:05:59] How do we provide stable funding into the future without raising the cost for ordinary Oregonians? In this case, it’s one year’s kicker to provide dividends for years to come.

[00:06:09] Presenter: Ralph Bloemers:

[00:06:11] Ralph Bloemers (Green Oregon Alliance): My name is Ralph Bloemers and I work for the Green Oregon Alliance as a director of Fire Safe Communities, trying to help individuals figure out what they can do to support firefighters before fire comes, keep their insurance, and make sure their home doesn’t burn down in a fast-moving fire.

[00:06:27] The research has been out there for decades from the Missoula Fire Lab, from the Fire Safety Research Institute, from the Insurance Institute for Business and Home Safety. My team and I have visited those facilities, documented what people can do.

[00:06:40] We are seeing as a result of increasing hazard across the landscape in Oregon, California, and Colorado insurance flight, insurance premiums going up, and my sources in the insurance and reinsurance world are telling me that the premiums will continue to go up unless and until communities become fire safe collectively—so 60%-70% of the homes are ignition-resistant.

[00:07:04] And I think this kind of investment by the kicker, specifically for community adaptation and wildfire mitigation is exactly what we need to stabilize insurance markets and have a hope of pulling ourselves out of a situation where the prediction is that insurance premiums are going to start to approach the cost, the annual cost of a mortgage.

[00:07:27] Losing insurance is like having the water turned off to your house. You all understand, I am sure, the ripple effects and the financial contagion potential of more insurance companies exiting Oregon. I can tick off the insurance companies that have already exited and I can tick off the ones that have rising premiums.

[00:07:45] This is happening in California. You can look across the border. You can talk directly to brokers and people in the insurance world. They will tell you what the premiums are. Those are very significant premiums that will then result in huge reductions in the value of people’s private property, uninsurability.

[00:08:04] But what will that also affect? That will affect the ability of local governments to gather tax revenues, right? It will affect bonding markets. That is what I foresee happening and is predicted to happen as a result of the Palisades and Eaton Fire.

[00:08:19] So I think this is a kicker for the people, a kicker for Fire Safe people.

[00:08:24] Presenter: Cindy Robert.

[00:08:26] Cindy Robert (Rainmakers Government Strategies): My name is Cindy Robert. I’ve been a lobbyist in this building for 35 years. I’ve seen good times with the budget and bad times with the budget. And I’ve seen wildfire as an eminent concern, even a crisis, for almost a decade now, starting with an incredibly diverse Wildfire Council in 2019 to Wildfire Programs Advisory Council established in 2021 with a wildfire czar established in the governor’s office.

[00:08:50] But the issue of funding catastrophic wildfire has not been fixed. This is a year we make something happen. We have a long-term problem that we have the opportunity to address with Senate Bill 1177. I urge you to make this the session that we kick wildfire. Using the kicker to establish a fund just makes sense. This is a vital one-time reinvestment. An end to councils, work groups, and task forces: Problem addressed.

[00:09:19] Presenter: Derek Sangston:

[00:09:21] Derek Sangston (Oregon Business and Industry): I’m Derek Sangston, for Oregon Business and Industry. OBI opposes Senate Bill 1177 because by directing most of Oregon’s personal kicker rebate to wildfire funding, the bill would decrease the effectiveness of one of the few provisions of Oregon’s tax policy that mitigates the growing tax burden imposed upon taxpayers, and it would remove an important check on the growth of the state’s general fund budget.

[00:09:43] While Oregon has long taxed the income earned by individuals and businesses at rates that are among the highest in the United States, the state and local governments have recently added to this burden by imposing several new taxes on both gross receipts and income.

[00:09:57] As a result, the nonprofit and nonpartisan Tax Foundation has decreased Oregon’s general tax competitiveness from ninth to 30th in the United States, while also ranking the state’s corporate tax competitiveness at 49th.

[00:10:09] While Senate Bill 1177 promises to direct the funds it takes from the kicker rebate to the wildfire mitigation and adaption fund and not the general fund, there are simply no adequate safeguards to ensure those funds will not be used to replace general fund dollars already dedicated to wildfire suppression and mitigation.

[00:10:26] Thus, the impact would almost certainly be to continue the growth of Oregon’s budgets and eventually further increase the taxes Oregonians pay to sustain them. For those reasons, I ask this committee to oppose Senate Bill 1177.

[00:10:38] Presenter: Jody Wiser:

[00:10:39] Jody Wiser: My name is Jody Wiser. I’m speaking for Tax Fairness Oregon, a group that advocates around our tax code. The uptick in destructive wildfires in recent years and the demands they have made on the general fund, along with a devastating destruction of whole communities and the terrifying aspects on individual lives has made clear: Oregon needs to be better prepared for wildfires.

[00:11:08] We need funds both to decrease their damage by paying for community risk reduction upfront and to pay for the costs associated with fighting fires when they happen. This bill and its companion in the House are the best approach we have to actually set aside funds for these costs. It’s likely not enough, but it’s a good start.

[00:11:32] And it’s a vote that this building has taken before, to use the kicker for something besides kicking it back. Hopefully, the years of dramatically large kickers are coming to an end. This may be your last chance to use this mechanism to responsibly prepare for wildfires without dramatically reducing the funds available for other state services.

[00:11:55] It seems that if you’re willing to find $1.4 billion for a baseball stadium in Portland, you should be willing to find $1.7 billion for those living in rural Oregon at risk of wildfires.

[00:12:09] Presenter: Karl Koenig:

[00:12:10] Karl Koenig (Oregon State Firefighters Council): I’m Karl Koenig, president of the Oregon State Firefighters Council. Back in 1973 we (the fire service and federal government) commissioned a report called ‘America Burning.’ That was in 1973. Today we’re talking about the same stuff that came out of America Burning and that paper: who’s doing the work, the cost of performing the work, the nature and focus of the work to extinguish and prevention, building construction and fire safety education.

[00:12:38] I think the easiest way to talk about 1177 and our support of it is what is predictable is preventable. We were part along with our partners of this Fire 35 group, looking at what is predictable is preventable and we keep small, fire, small, this is a important step in the Fire 35’s recommendations, really looking at that prevention piece as being a key component of taking care of stuff, whether it’s pre-positioning, home hardening, fire, safe communities, getting out and making sure people know that we are here not only on the fire engines, fire trucks on the fire lines, but we’re really here in the prevention mode, making sure that everybody is taken care of across the entire state of Oregon.

[00:13:29] Smoke goes everywhere here in Oregon. It’s not just stuck on the east side.

[00:13:33] Presenter: Kyle Smith:

[00:13:34] Kyle Smith (Nature Conservancy): I’m Kyle Smith. I’m the Director of Government Relations for the Nature Conservancy in Oregon. I served on the Wildfire 35. We shook a lot of trees. There were no low-hanging fruits that fell into our laps. It was a hard group. We’ve done the work, we’re handing the work over to you. Now we recognize the difficulty of this problem. It’s not going to go away without proactive, upfront investments in mitigation. There was a recent study from Northern Arizona University that stated that for every dollar we spend on risk reduction in Western United States for wildfire, we get $7 back in benefits.

[00:14:08] So this is a good investment in Oregonians money. There’s no amount of money that we can spend on suppression that will solve this problem. We need to start making upfront investments to make Oregon a safe place for Oregonians.

[00:14:19] Presenter: Mike Eliason:

[00:14:20] Mike Eliason: Mike Eliason. I’m here representing Oregon Forest Industries Council, the larger forest landowners and wood product manufacturers in Oregon.

[00:14:28] Stable funding to address our hotter, longer, and more destructive and expensive wildfire seasons has become one of the most important issues of recent times.

[00:14:36] It’s maybe the most important issue for OFIC members and forest landowners around the state who have a very vulnerable and generally uninsurable asset that is increasingly at risk.

[00:14:46] We grow the best trees in the world for home building here in Oregon, and if we are ever to in achieve the increase in annual housing production that we desperately need, we should be using Oregon-grown wood to do it.

[00:14:58] But forest landowners are understandably worried about the number of large fires that usually originate on federal land, spread to private land, and the cost associated with addressing those fires.

[00:15:08] Numerous different work groups have taken place over the past decades searching for durable funding solutions beyond the combination of the state’s general fund and the roughly $80 million in annual landowner contributions via assessments, taxes, and in-kind contributions of labor and equipment.

[00:15:23] To say it’s been a challenge has been an understatement.

[00:15:26] This past year, 35 dedicated individuals, representing many different perspectives, industries, and walks of life, met for months to explore ways to bring more revenue into the system, while at the same time ensuring that landowners can afford to pay their various assessments for basic fire protection.

[00:15:42] One of the six options is the bill you see before you today, which would divert the kicker to a fund that would draw interest and be used for mitigation and community adaptation first and foremost, and then apparently remaining funds accumulated through interest earnings could also be used for suppression purposes.

[00:15:58] OFIC is chosen to honor the deliberations of the work group and is generally supportive of the work that generated the ideas that have been advanced. I would note, however, that it is maybe a little backwards from our perspective. By prioritizing community adaptation mitigation first, and then using remaining funds for response and suppression. We fear that we could run the risk of, again, ending up short on funding to firefighters and hence potentially end up right back in special sessions to pay our bills.

[00:16:25] Oregonians would rightfully be confused and concerned if that were the case after giving up a kicker refund. But that aside, we very much appreciate the work of Sen. Golden, his participation in the work group and the seriousness with which he’s approached this issue.

[00:16:40] Presenter: Senate Bill 1177 gets its public hearing, as legislators consider using the kicker to create a dedicated wildfire fund.