Recent state budget actions by California Gov. Gavin Newsom and the state Legislature make a strong argument that the state is not serious about addressing the state’s immense wildfire risk. Unquestionably, California’s wildfire risk is the second biggest problem facing the state, after COVID-19.
Yes, the governor has committed some $2 billion dollars to wildfire budget items. These include $404.8 million to hire staff and purchase firefighting equipment, $1.128 billion for forest management such as thinning and prescribed burns, and $616 million to community investments. The complete details for this founding can be found in the Wildfire and Climate Change Fact Sheet provided by the governor’s office.
However, if you compare that commitment of dollars to the list of other budget allocations the governor has just signed, it appears the administration and the Legislature determined the wildfire problem was only as worthy as some of the lower priority budget allocations like cleaning up trash ($1.5 billion), and paying-off delinquent water and electrical bills ($2 billion).
Over the last five years, wildfires in California have burned millions of acres, destroyed entire towns, wiped out well over 10,000 homes, killed scores of residents, and blanketed the state with unhealthy air. California homeowners and businesses are paying five- and six-figure premiums for property insurance, and that is only when they can find insurance at any price. California’s largest industries, agriculture and wine production, are being devastated by the lack of available insurance.
Throughout the state, wildfires threaten communities in the foothills, along the coast and in the wildland-urban interface. We are seeing this play out in the headlines already this month with some of the largest fires ever threatening parts of the state.
There are over 160 million dead trees in the forests, practically kindling in overgrown forests and foothills as the drought tightens its grip. Last year, wildfires consumed some 4 million acres of the state. Already this year from January to June, California has had 700-plus more wildfires than last year.
In light of all these facts, in the just-signed California budget, the governor and Legislature have committed:
- $25 billion to reserves;
- $12 billion to fight homelessness;
- $12 billion for additional stimulus payments;
- $6.2 billion for broadband deployment;
- $5.2 billion for rent relief;
- $5.1 billion for drought measures;
- $4.1 billion to small businesses for COVID-19 relief, seed and micro-grant funding, I-Bank loans, and loan guarantees;
- $3.4 billion for pre-school expansion.
The $2 billion dollars committed to wildfire risks doesn’t even make it into the top five issues in the state based on the budget allocation committed to the fight.
To make a dent in California’s wildfire problem, the state needs to be thinning, managing, or burning between 1 to 2 million acres of forest, foothill, and brush areas annually for the next five years to 10 years.
Current state efforts are just over 100,000 acres per year with the goal to reach 500,000 acres by 2025. At the rate of only targeting 500,000 acres per year, it will take the state decades to address the 20 million acres in California that must be better managed in order for the state to address the risk of catastrophic wildfires.
The availability and affordability of property insurance in California are not likely to change until the worldwide reinsurance market believes California is serious about addressing its wildfire risks and there are demonstrable results in reducing the number and severity of wildfires in the state.
Without the reinsurance market backing California property/casualty insurance companies, there will continue to be an availability crisis in the state for property insurance and prices for such coverage will continue to increase substantially to the detriment of California’s homeowners and businesses.
Unfortunately, the state’s current efforts will be unlikely to impress the reinsurance community. As such it is extremely likely that California residents will continue to face major property insurance restrictions for the foreseeable future.
Norwood with Norwood Associates is a lobbyist who represents insurance agents, wholesalers and carriers in Sacramento. He earned his Juris Doctorate from the University of the Pacific, McGeorge School of Law and is an active member of the California State Bar.
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