Tax Relief for Thomas and Woolsey Fire Survivors Moves Forward

SB 1246 Passes Senate Governance and Finance Committee 4-0

May 5, 2022

Sacramento, CA- In a 4 to 0 vote, the Senate Governance and Finance Committee passed SB 1246 to make settlements from the Woolsey and Thomas fires nontaxable. Combined, both fires burned almost 380,000 acres of land in southern California, destroyed almost 3000 structures, and caused over $8 billion in damages. This vote marks a major victory for the thousands of people having lost homes, businesses, and possessions to these widespread tragedies.

Senator Stern noted in Wednesday’s hearing that “There are lot of people who have been hit twice, in other words, by these fires. They have lost everything and gone through their litigation and settlements and received the settlement and been taxed on it. Many people on fixed income who are hurting.”

In an attempt to make up for the immeasurable losses traced back to Southern California Edison’s power line failures, the company agreed to pay more than $4 billion to thousands of individuals and families to settle claims from the fires. However, these funds are minimal in the face of what was lost to the blaze, and taxation, in addition to lawyer fees, can reduce settlements by up to half.

Stuart Smith, a survivor who lost everything to the Woolsey fire in support of the bill shared “with our insurance and settlement, we’re not even close to being made whole. If SB 1246 doesn’t pass and we are taxed on any of the funds received from this disaster, we would never be able to finish our house rebuild, let alone cover our existing rent, existing mortgage on the burnout property, and just basically live a normal regular life.”

Micah Daily, another Woolsey fire survivor, echoes these sentiments in her testimony before the committee stating, “I earned every penny put into the place and things that burned down in November 2018. I paid my CA taxes and sales tax on every item that I lost. How is it fair or just to tax me again…Very candidly, I cannot sustain my life, if these settlement funds are taxed."

SB 1246 would provide peace of mind to those struggling in the wake of these fires by allowing them to retain the totality of their settlement funds without taxation. It would require taxes that have already been collected to be refunded and would constitute a massive relief to those in the process of rebuilding their livelihoods.

The price of reestablishing from the ground up can be all consuming. “The costs add up. The time lost adds up too” states the Senator. However, the bill’s passage in committee is just the first step as the bill continues to make its way as a commonsense approach to lend hope to victims of wildfire.