Government Finance and Operations update 8/1/2014
AB 280 (Alejo) – Concerns
As Amended on June 18, 2014
AB 280, by Assembly Member Luis Alejo, would implement a state-level preclearance system similar to the federal system effectively overturned by the US Supreme Court last year. The new state-level system would apply to about 25 counties and many more school districts, cities, and special districts for which counties run elections. A jurisdiction would be subject to the new rules if the voting-age citizen population of at least two racial, ethnic, or language groups is at least 20 percent.
Under the new system, jurisdictions would be required to obtain permission from the state before making changes to polling places, jurisdictional boundaries (like annexations), or voting districts. Unlike the old federal system, a local agency would have to wait for permission before implementing the change. Also unlike the federal system, no system for expedited review is included in the current bill.
Unfortunately, the rules related to changing polling places would significantly impinge election departments’ ability to comply with existing legal requirements.
CSAC’s concerns with AB 280 have to do with the cost of complying with these new regulations and the conflict between current rules about polling places and the rules this bill would impose. We are in discussions with the author’s office and with county election officials to figure out a way to achieve the bill’s purposes without imposing unnecessarily costly or administratively burdensome requirements.
AB 280 is up in the Senate Appropriations Committee on Monday, August 4.
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 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.
AB 2231 is up in the Senate Appropriations Committee on Monday, August 4.
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.
AB 2372 is up in the Senate Appropriations Committee on Monday, August 4.
SB 69 (Roth) – Support
As Amended on June 16, 2014
SB 69, by Senator Richard Roth would provide a “Vehicle License Fee Adjustment Amount” for newly incorporated cities, including those that were impacted by SB 89 (2011). CSAC supports this measure, as it would provide immediate financial assistance to the four newly incorporated cities in Riverside County.
Prior to the passage of SB 89 (2011), the four newly incorporated cities in Riverside County relied on current state law in evaluating their fiscal viability through the LAFCO process. In each case, LAFCO considered the Vehicle License Fee (VLF) revenue special allocation in their evaluation of the new cities’ revenue, which informed the eventual LAFCO vote to allow the local voters to consider incorporation. When SB 89 passed and redirected those VLF revenues to 2011 realignment, these fledgling cities were impacted in a significant way.
SB 69 provides a mechanism by which the newly incorporated cities resume receipt of revenues anticipated prior to their incorporations/annexations. By establishing a “Vehicle License Fee Adjustment Amount” and replacing the lost VLF revenues with property taxes from the schools’ share (as currently exists for all other cities and counties in the state), SB 69 restores funds to those impacted by SB 89 and ensures their continued viability.
SB 69 is up in the Assembly Appropriations Committee on Wednesday, August 6.
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.
AB 2493 is up in the Senate Appropriations Committee on Monday, August 4.
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.
SB 1129 is up in the Assembly Appropriations Committee on Wednesday, August 6.
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.’’
SB 1364 is up in the Assembly Appropriations Committee on Wednesday, August 6.