Government Finance and Operations update 6/27/2014
AB 1862 (Melendez) – Support
As Amended on June 15, 2014
AB 1862, by Assembly Member Melissa Melendez, was recently amended to allow a county Board of Supervisors to fill a supervisorial vacancy within 90 days, at which point the power would fall to the Governor.
The bill failed to pass out of the Senate Governance and Finance Committee at its hearing on June 25.
AB 1873 – Support
As Amended on May 28, 2014
AB 1873, by Assembly Member Lorena Gonzalez, would authorize a county to conduct a special vacancy election entirely by mail under certain circumstances. This common-sense approach provides an opportunity to improve voter participation and save money.
Special elections have embarrassingly low voter turnout. The 2013 special elections were particularly poor in turnout, with turnout rates in single digits in some of the later elections. Special elections are also expensive for counties to run.
CSAC is very interested in exploring new approaches to elections that will result in lower costs to counties and improved voter participation. AB 1873 promises progress on both.
The Senate Elections and Constitutional Amendments Committee passed AB 1873 on a 5-0 vote at its hearing on Tuesday, June 24.
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 Governance and Finance Committee passed AB 2493 at its hearing on Wednesday, June 25, on a vote of 4-1, with two Senators not voting.
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 Housing and Community Development Committee passed SB 1129 on Wednesday, June 25, on a vote of 5-1.
AB 2231 (Gordon) – Support
As Amended on June 19, 2014
AB 2231, by Assembly Member Rich Gordon, would restore the Senior Citizens’ Property Tax Postponement Program that was eliminated in the February 2009 budget agreement.
The Senior Citizen’s Property Tax Postponement Program offered income-eligible seniors and the disabled the opportunity to postpone their property tax payments in exchange for full repayment with interest when their home is sold. The program had a minimal start-up cost and, in most years, generated revenue for the state General Fund. Unfortunately, in large part due to the recent recession and housing crisis, the program failed to pay for itself in 2007-08 and 2008-09, making it a target for elimination given the state’s budget crisis at the time.
AB 2231 reestablishes the Senior Citizen’s Property Tax Postponement Program at the state level with important modifications to ensure that the state’s General Fund is protected during economic downturns, and keeping the program up and running when these residents need it most.
The Senate Governance and Finance Committee passed AB 2231 unanimously at its hearing on Wednesday, June 25.
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 passed AB 2372 at its hearing on Wednesday, June 25, on a vote of 5-2, Republicans voting against.
SB 1364 (Fuller) – Support
As Amended May 27, 2014
SB 1364, by Senator Jean Fuller, would extend the sunset date for the California High-Cost Fund-A (CHCF-A) and CHCF-B until 2019.
California’s two high-cost funds, A and B, subsidize small independent telephone companies and large telephone corporations respectively to provide service in the rural and smaller metropolitan communities. These subsidies, paid for by surcharges on telephone bills, promote universal service by helping to ensure reasonable rates for basic telephone service and internet access in hard-to-reach areas of the state. Affordable telephone and other telecommunication rates are vital to both residential and business customers in our member counties.
The Assembly Utilities and Commerce Committee passed SB 1364 unanimously on Monday, June 23.