July 3 (Bloomberg) -- It was a call about suspicious activity that led police in Orange County, California, last month to a parking lot behind a liquor store, where they arrested a man selling 500 pounds of fireworks.
The banned pyrotechnic products were shipped to the state fire marshal, adding to 300,000 pounds (136,000 kilograms) California has stockpiled because it didn’t have funding to get rid of them. It costs as much as $10 a pound to transport and destroy the popular July 4 accessories at disposal sites in Louisiana or Missouri.
While certain types of fireworks are permitted in California, tons of prohibited pyrotechnics are smuggled in each year from neighboring Nevada. A plan by Governor Jerry Brown, a Democrat, to tax legal fireworks to pay for disposal stalled in the legislature amid opposition from Republicans.
“There is no funding source for this, which has contributed greatly to our stockpiles,” Assistant State Fire Marshal Mike Richwine said in a telephone interview. “Many decades ago, we would simply dig a big hole and burn the fireworks, but we are no longer allowed to do that.”
The U.S. fireworks industry earned almost $1 billion in revenue last year, according to the American Pyrotechnics Association. Two-thirds of that was from individual consumers who bought 163 million tons. The rest was spent on display fireworks such as those used in outdoor shows across the U.S. on July 4.
Legal firework sales generate about $70 million a year for more than 3,000 local nonprofit organizations such as churches and charities, according to California Senate figures. Illegal fireworks include sky rockets, bottle rockets, roman candles, aerial shells, firecrackers and other types that explode, rise into the air or move on the ground in an uncontrollable manner.
To dispose of some fireworks in the past, California used a $1 million fine it imposed on a company caught illegally burning the products, Richwine said. Funding for disposal has been spotty -- based on one-time appropriations rather than a steady source of revenue, he said.
“During the Fourth of July season, we have kind of an amnesty period where members of the community will bring in boxes and bags of leftover assorted fireworks and drop them off at police and fire stations and that contributes to the quantities we have stockpiled,” Richwine said.
Brown’s proposal would charge distributors of legal fireworks 10 cents a pound, raising as much as $1.5 million annually, according to the Department of Finance. Assemblyman Tim Donnelly, a Tea Party Republican, calls it a patriot tax.
“When you tax something, you end up getting less of it and this is a tax on patriotism,” Donnelly said in a telephone interview. “If you tax patriotism, you will get fewer displays of it.”
Tax increases in California need two-thirds approval from both chambers of the Legislature. While Democrats have enough members in the Assembly to reach a two-thirds majority, they are short in the Senate after three members were charged in unrelated public corruption scandals.
The $156 billion budget Brown signed into law last month did include a one-time payment of $1.5 million to help whittle the stockpile. Some of the fireworks that aren’t packaged can be burned in California once a regulatory permit is issued.
Brown last year sought permanent funding from the general fund of $500,000 annually, though it was stricken from the final budget Democrats put up for a vote. The bill also would have allowed California to sell stockpiled fireworks back to states where they are legal.
“This should be a general fund budget responsibility and should not be imposed on distributors who follow the law,” said Peter DeMarco, spokesman for the Senate Republican Caucus.
California officials have been urging residents to use fireworks with caution this year amid a three-year drought that has left millions of acres of brush in the most populous U.S. state primed to burn.
The state has imposed burn bans across 31 million acres as the number of wildfires has climbed 70 percent above average. Fireworks account for two out of five reported fires on July 4 in the U.S., more than any other cause, according to the National Fire Protection Association.
“No one can argue that that we are not at critical mass here,” said Janet Upton, spokeswoman for the Department of Forestry and Fire Protection. “What we are going to get into with these conditions is multiple large fires occurring at the same time.”