Fire Surcharge Omitted From California Budget

Insurers are thanking their lucky stars, that for the third year in a row, California Gov. Arnold Schwarzenegger’s proposal to impose a 4.8 percent statewide surcharge on all residential and commercial property insurance premiums for fire suppression efforts did not come to fruition.

The governor’s proposal, known as the Emergency Response Initiative (ERI), would have used monies gained from the surcharge to enhance the state’s emergency response capabilities, including enhancements for CAL FIRE, the California Emergency Management Agency, the Military Department, and assistance to local first response agencies in support of the state’s mutual aid system, the governor said. He had estimated $238 million would have been gained in the current budget year, and about $480 million per year would be gained in subsequent years.