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Author urges tax exemption for past wildfire settlements to aid victims in rural districts
Summary
AB 429 would exempt insurance and settlement payments for wildfire losses from gross income for specified years (2020–2026); author and victims testified about unrecovered losses in rural communities and asked the committee to refer the bill to the suspense file for budget consideration.
Assemblymember Hatwick presented AB 429, a bill that would exempt wildfire‑related settlement payments from gross income for losses incurred in defined years (2020 through 2026). The author said recent catastrophic fires and settlements can leave victims with unexpected tax liabilities that complicate recovery and rebuilding.
"The average citizen has no idea that a settlement for disasters and destruction of their home would be subjected to taxes," Hatwick told committee members, describing constituents who continue to struggle rebuilding years after the Dixie and Park fires. Hatwick said the governor included wildfire relief for more recent fires but that the budget has gaps for prior years affecting rural districts; her office has submitted a formal budget request seeking inclusion.
Affected residents testified in support. Doug Stoy, a Dixie Fire survivor from Greenville, described complete loss of his home on Aug. 4, 2021, and said settlement funds fell short of replacement costs. He said taxing settlement payments would be "grossly unfair" to families who lost everything. Representatives from the California Forestry Association, Associated California Loggers and multiple county boards of supervisors also voiced support for the bill.
Committee members asked clarifying questions about individual fires; staff noted one fire (the Park Fire) had an arson finding that could affect settlements. The author replied that settlement eligibility depends on declarations and the size and nature of damages. As with other fiscal items on the agenda, AB 429 was referred to the committee's suspense file for further fiscal and budget consideration.
