Capitol Alert: Gov. Jerry Brown signs lumber tax, wildfire liability limits

Gov. Jerry Brown signed legislation today that imposes a 1 percent tax on lumber products starting in January and restricts damages landowners pay for starting wildfires.

The timber industry backed Assembly Bill 1492 for several reasons. The new consumer tax pays for regulatory costs that landowners previously paid; the liability provisions could restrict payouts in future federal lawsuits; harvest plans remain effective for longer periods, resulting in less frequent environmental reviews; and the tax applies to purchases on lumber from out of state as well as from California.

"California's laws have saddled our timber industry with costly burdens while giving out-of-state competitors a free ride--but that stops today," Brown said in a statement. "This legislation enacts serious bipartisan reform to even the playing field to protect California's timber-industry jobs."

The California Forestry Association argued that small timber companies were at risk of going under because they faced high regulatory costs and could not get sufficient insurance in light of record-high wildfire lawsuit awards.

"The legislation will help to expand market opportunities for California producers, preserve working forests, encourage investment in our rural communities and will in time support thousands of new jobs," said California Forestry Association President David Bischel in a statement.

Some environmentalists supported the bill because it generates $30 million for timber regulatory activities, especially at the Department of Fish and Game whose budget has faced cuts in recent years. But other environmentalists expressed concerns about loosening time restrictions on timber harvest reviews, as well as narrowing liability provisions.

Lumber retailers Home Depot and Lowe's were opposed, as were dealers that sell wood to home builders. The Howard Jarvis Taxpayers Association also opposed the bill.

Brown soft-pedaled the 1 percent lumber tax in his press release and referred to it as an "assessment" that would "save California taxpayers tens of millions of dollars in general fund expenditures annually."

In a meeting with The Bee's editorial board last week, the governor argued the charge was a fee, not a tax, because funds were going directly to pay for regulatory activities. But legislative lawyers drafted the bill as a two-thirds supermajority tax because it imposes a charge on out-of-state lumber, whose producers see no benefit from regulatory relief.

And, as Brown said in his release, the new charge will relieve the state general fund from spending tens of millions of dollars - money now potentially free for use on education and social service programs unrelated to lumber.