Insuring incertitude

As this year’s fire season heats up, there is little doubt that California is in desperate need of ways to mitigate its growing costs for firefighting and other forms of disaster relief. But the state Legislature needs to beware of solutions that may cost more than they’re worth.

The state Department of Finance has sounded an alarm about SB290, authored by state Sen. Bill Dodd, DNapa, and supported by Insurance Commissioner Ricardo Lara. The bill would allow the governor to buy disaster insurance and other risk-transfer policies directly from insurance companies. Current law requires state agencies to buy insurance through a broker selected via competitive bidding.

That change caught the attention of the state Department of Finance.

“The costs for the state to purchase insurance, and the claims that would be paid by insurance in any given year, are unknown but likely significant,” wrote the agency in its bill analysis.

The agency also noted that it is opposed to the bill because the governor already has “broad authority” to spend money from state funds and to take other necessary actions to pay for emergency relief.

In other words, the legislation would increase taxpayer costs — and it’s unnecessary.

In response to these concerns, Deputy Insurance Commissioner Byron Tucker said that SB290 doesn’t mandate anything.

“One way or another, the state is ultimately going to pay the costs of fighting these wildfires,” Tucker said. “SB290 simply gives the state another tool, one that other states have used, saving taxpayers from volatile costs and providing budget predictability.”

That’s at odds with what the Department of Finance believes. At the very least, the latter agency’s concerns should slow SB290’s progress until its sponsors can show that it’s necessary and will save taxpayers money. But SB290 has been sailing through the Legislature with little dissent.

It’s currently in the Assembly Appropriations committee. We’ll be watching that committee’s Bay Area members — Rob Bonta, DAlameda, and Bill Quirk, DHayward — to ensure they take an interest in California’s taxpayers before voting.