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Tiny California fire agency overcharged $700,000 for wildfire work. Are others doing it?

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California Governor Gavin Newsom signed a bill Friday to provide up to $26 billion to address wildfire threats. The proposal comes amid PG&E's bankruptcy and aims to give more certainty to victims. Some worry it won't do enough to prevent wildfires.
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California Governor Gavin Newsom signed a bill Friday to provide up to $26 billion to address wildfire threats. The proposal comes amid PG&E's bankruptcy and aims to give more certainty to victims. Some worry it won't do enough to prevent wildfires.

A fire department south of Lake Tahoe has overbilled government agencies by more than $700,000 in the last three years, according to a report released Thursday by the California State Auditor’s office.

State auditors say the Fallen Leaf Lake Community Services District, which provides fire protection services under an agreement between federal and state agencies, might have to pay the money back, which would dramatically slash its $1.2 million reserve balance.

In a letter to Gov. Gavin Newsom and legislative leaders, State Auditor Elaine Howle wrote that “the district jeopardized its financial viability because it may have to repay the excessive reimbursement amounts.”

Howle also pointed blame to California Governor’s Office of Emergency Services for its “limited oversight of the enhanced salary rates claimed by local fire agencies and weaknesses in the reimbursement process.”

According to the report, the district’s fire chief reported higher salary rates when filing its salary forms for 2016 through 2018 compared to what the district actually paid its firefighters. State investigators recommended the area limit its reliance on “volatile revenue sources to balance its budget.”

The Fallen Leaf Lake district disputed the investigators’ conclusions that it was on unsafe financial ground.

In response to the audit’s findings, the Fallen Leaf Lake Community Services District said “the district believes it makes financially sound choices. The district will strengthen its finances by taking the necessary steps to review and assess, on an annual basis, any revenue sources that it and its auditors may reasonably conclude are ‘volatile.’”

Howle released the audit a day after California officials and the U.S. Forest Service extended the California Fire Assistance Agreement, the pact that describes how different government agencies work together in wildfires.

Its status was in doubt after the Trump administration questioned about $9 million in reimbursement requests from California fire departments and withheld payment. The administration has not released its audit of California fire departments and state officials have asked the Forest Service to release money owed to local departments.

California’s Office of Emergency Services said it is working with the State Controller’s Office to conduct audits of submitted salaries. OES Director Mark Ghilarducci also questioned the scope of the report itself.

“Fallen Leaf is just one of more than one thousand local entities that participate in the California Fire Assistance Agreement,” Ghilarducci wrote. “It is important to note that the California State Auditor’s recommendations were made in the context of the review of Fallen Leaf, as opposed to all, or a larger sample, of the entities that comprise the CFAA.”

Howle disputed Ghilarducci’s suggestion that Fallen Leaf overcharging agencies is an isolated case.

She said other local fire departments could be overbilling state and federal agencies because “the fire agreement does not require local fire agencies to submit documentation to support the enhanced salary rates they submit to Cal OES.”

Bryan Anderson is a political reporter for The Bee. He covers the California Legislature and reports on wildfires and transportation. He also hosts The Bee’s “California Nation” podcast.
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