It is not news to note that from 2014 through last summer, North Central Washington has become “ground zero” for wildfires and loss. The names of the fires — Carlton Complex, Twisp, Mills Canyon and others — and the loss of firefighters’ lives, people’s homes and property and precious forest lands has been well-documented.
What IS new is a stepped-up the effort to prevent wildfire, improve forest health and better prepare to fight the fires when they do happen. Legislation and regulations creating a 20-year plan to improve the health and fire resiliency of state forest lands was a great beginning in 2018.
Unfortunately, the follow-up plan from Commissioner of Public Lands Hilary Franz, now being debated by the Legislature in Olympia, is a step backward. Their plan is to create a dedicated fund to pay for fighting wildfires and improving forest health — and to pay for it with higher taxes on insurance policies consumers rely on to rebuild homes and businesses after the fires are out. The plan — SB 5996 — is a budget gimmick and a tax increase that will impact insurance costs for consumers for years to come.
The bill creates a dedicated account for the state Department of Natural Resources, funded by a 25 percent increase in the tax on property and casualty insurance policies, totaling $125 million per budget. Not just home or property insurance; all P&C policies, including homeowner and renter’s coverage, auto liability insurance (plus motorcyclists, boat owners and commercial drivers), malpractice coverage for medical providers, construction liability for builders, professional liability …even taxes on cell phone and pet insurance policies are targeted. Under the bill, insurers that don’t add the cost of the tax to insurance premiums will instead add it directly to consumers’ insurance bills — like the long list of local and state taxes on a cell phone bill.
The proposal is a shell game we’ve all seen before. Today, the cost of fighting wildfires is paid for by all taxpayers in Washington, from state general fund revenue. SB 5996 creates a dedicated account, allowing legislators to increase state spending on other programs and charge a higher tax on insurance policies to raise a fresh $125 million. Under SB 5996, the cost of wildfire suppression and prevention will be paid entirely by a tax increase on insurance policies and no longer shared by all taxpayers.
There are no reforms or new accountability oversight in SB 5996 — and no guarantee that the added $125 million will make our forests more resistant to wildfire. Nor is there a provision reducing or eliminating the tax if the wildfire threat is reduced. In fact, the same ‘fire borrowing’ we see today in federal forests — where dollars meant to improve forest health are used instead to fight fires — will now spread to state forest lands, because SB 5996 specifically prioritizes new tax dollars for firefighting first and forest health last.
Shifting the burden to insurance policyholders isn’t necessary — the Legislature could dedicate existing general or “rainy day” surplus funds to a dedicated account to prevent and fight wildfires. But as needless and harmful as SB 5996 is to consumers, it also disproportionately hurts Washington-based insurance companies (and policyholders) compared to their out-of-state competitors — which is bad public policy for our economy.
Every state has a “retaliatory tax,” to protect its own in-state insurance companies. It requires companies based here to pay our state’s tax rate in any state where they sell insurance, if that state’s tax rate is lower than Washington’s.
Raising Washington’s premium tax rate as proposed will make Washington’s insurance tax higher than the same tax in 36 other states. One Washington insurer calculated that for every $1 of increased premium tax in our state imposed by SB 5996, they could pay $3 in higher taxes to other states.
Taxes already paid by insurers and policyholders already contribute more than $1.4 billion to the state budget, even before this 25 percent tax increase. Wildfire prevention and suppression are goals shared statewide. Reaching those goals should not mean unfair treatment or higher insurance costs for families and businesses all over North Central Washington.
We encourage legislators here and across Washington to use existing revenues, not new insurance policy taxes, to protect our forests, our communities — and insurance policyholders.
Kenton Brine is president of the NW Insurance Council, a nonprofit, insurer-supported organization providing information about home, auto and business insurance to consumers, media and public policymakers in Washington, Oregon and Idaho. Dave Street has been serving Central Washington insurance consumers as a professional insurance agent since 1986. He is principal/owner of Martin-Morris Insurance Agency, with offices in Wenatchee, Quincy and Ephrata.