Government Finance and Operations 03/29/2013
SB 636 (Hill) – Support
As Introduced on February 22, 2013
SB 636, by Senator Jerry Hill, would modify a provision included in the last year’s redevelopment budget trailer bill (AB 1484) relating to the allocation of property tax revenues from the Redevelopment Property Tax Trust Fund (RPTTF).
Among many other complex issues surrounding the dissolution of redevelopment agencies is the redistribution of property taxes. As successor agencies pay off their obligations, billions of property tax dollars will return to counties, cities, special districts, and of course school districts. No one disputes that these property taxes should be returned exactly as they would have been absent a redevelopment agency’s diversion of the tax increment.
Unfortunately, one provision of the laws passed during the final approval of the 2012-13 state budget inadvertently reduced property tax allocations to local agencies in counties where ERAF payments exceed the amount needed to fulfill school districts’ minimum funding requirements. This situation is known as “excess ERAF.” When it occurs the ERAF payments are returned to taxing entities in the proportion they were paid.
Removing this language will restore property tax allocations to their rightful levels, ensuring fairness and equity for the few counties affected and avoiding the legal and constitutional challenges raised by this issue.
The Senate Governance and Finance Committee will consider SB 636 at its hearing next Wednesday, April 3.
AB 619 (Garcia) – Support
As Introduced on February 20, 2013
AB 619, by Assembly Member Cristina Garcia, would apply interest penalties uniformly for underpayments to various state funds. Currently, underpayments to the State Trial Court Construction Fund are penalized at a far higher rate than those for all other funds.
AB 619 would make the state whole for local underpayments by requiring full repayment plus penalties equal to the annual LAIF returns. The LAIF rate is what the money would have earned absent underpayment. The current, higher penalty would continue to apply from thirty days after the underpayment is discovered. If the amount owed is extraordinary, the Controller would have the authority to work out a payment schedule with the entity that underpaid.
This change to statute would not only ensure the state is made whole, but is also fair to counties. The State Controller only audits most counties every few years, and the current high penalty rate is applied annually, so an error made a few years before the discovering audit results in an exorbitant penalty.
The Assembly Judiciary Committee will consider AB 619 at its hearing next Tuesday, April 2.