Government Finance and Operations update 6/23/2014
AB 2493 (Bloom) – Oppose
As Amended on June 10, 2014
AB 2493, by Assembly Member Richard Bloom, would authorize successor agencies of dissolved redevelopment agencies to use and commit bond proceeds for those bonds issued between January 1, 2011 and June 28, 3011 for certain types of projects. This would directly affect the allocation of property tax revenues, since the allocation of property tax revenues is a zero-sum game. AB 2493 would therefore have negative fiscal consequences for affected taxing entities, including counties.
By authorizing the use of bond proceeds issued in 2011 regardless of whether the agency receives a finding of completion, AB 2493 redirects property tax increment revenues to fund new projects instead of paying down debt. Some redevelopment officials responded to the Governor’s 2011 proposal to eliminate RDAs by accelerating their tax allocation bond sales. In the first six months of 2011, RDAs collectively issued $1.5 billion in tax allocation bonds, exceeding the level of debt issued in the entire prior fiscal year. Further, many of these bonds were issued at significantly higher interest rates than in previous years. From a fiscal perspective, it does not make sense to allow a successor agency to utilize bond proceeds instead of defeasing the bonds, as these debt obligations would require property tax increment revenues well into the future at a high cost.
The bill includes criteria to establish eligible uses of these bonds, however the criteria are so broad that they would incorporate the vast majority of projects associated with these bonds.
The Senate Transportation and Housing Committee will consider AB 2493 at its hearing next Tuesday, June 17.
SB 1129 (Steinberg) – Oppose
As Amended on May 27, 2014
SB 1129, by Senate President pro Tem Darrell Steinberg, would make changes to three components of the redevelopment dissolution process: enforceable obligations, long range property management plans and compensation agreements, and use of bond proceeds for debt issued in 2011. Because each of these directly affects the allocation of property tax revenues and we know that the allocation of property tax revenues is a zero-sum game, SB 1129 will have fiscal consequences for affected taxing entities, including counties.
The Assembly Local Government Committee will consider SB 1129 at its hearing next Wednesday, June 18.
AB 2372 (Ammiano) – Support
As Amended on May 28, 2014
AB 2372, by Assembly Member Tom Ammiano, would change the definition of “change of ownership” for the purposes of property reassessment.
Alongside the broad popularity for the tax reductions of Proposition 13, there has also long been a sense that the statutory definitions that implemented the ballot measure gave an unfair advantage to corporations. While the definitions were implemented with good intentions at the time, the property tax burden has shifted substantially to homeowners since 1979, and corporations have devised legal schemes to avoid reassessment even when an entity has changed hands by any reasonable standard.
AB 2372 would address these issues in a manner consistent with the voters’ intent in passing Proposition 13. The bill would also require these changes in ownership to be reported by the ownership entities themselves, since, under the circumstances the bill would address, the usual legal documents such as deeds would not be filed.
The Senate Governance and Finance Committee will consider AB 2372 at its hearing next Wednesday, June 18.
AB 2119 (Stone) – Support
As Introduced on February 20, 2014
CSAC supports AB 2119, by Assembly Member Mark Stone, which would allow counties to propose a transaction and use tax increases only in the unincorporated area of the county. The proceeds from the tax, if unincorporated voters approve it, could only be used in the unincorporated area.
Under current law, counties can only impose transactions and use countywide, with permission from all the county’s voters. Many cities levy their own sales taxes for the sole benefit of city residents. Those residents are often understandably reluctant to impose a further tax on themselves. AB 2119 would give residents who live outside of cities the same rights as those who live in them.
The Senate Governance and Finance Committee passed AB 2119 last Wednesday, June 11, on a vote of 5-2.
AB 2170 (Mullin) – Support
As Introduced on February 20, 2014
CSAC supports AB 2170, by Assembly Member Kevin Mullin, which would clarify that joint powers authorities may exercise any power common to the contracting parties, including levying fees and taxes. Joint powers authorities are an important part of California governance, and clarifying the law in an appropriate means to ensure a common understanding of joint powers authorities’ powers to levy fees or taxes.
The Senate Governance and Finance Committee passed AB 2170 last Wednesday, June 11, on a vote of 5-2.
AB 2292 (Bonta) – Support
As Amended on June 11, 2014
AB 2292, by Assembly Member Rob Bonta, was recently amended to authorize infrastructure financing districts to finance facilities related to providing high-speed internet services.
At this point, the fact that broadband provides extraordinary economic development benefits is common knowledge. However, communities have very little say in the level of broadband services they receive. AB 2292 would give local agencies a valuable mechanism by which they could literally lay the groundwork for improved service and give communities more flexibility in the realm of this important utility.
Furthermore, IFDs specifically are a very good match for financing broadband facilities. The statutory language authorizing the creation of IFDs requires that they provide a benefit outside of the immediate area; the general and rippling benefits of broadband would do just that.
The Senate Governance and Finance Committee will consider AB 2292 at its hearing next Wednesday, June 18.