Government Finance & Operations 08/27/2010
AB 155 (Mendoza) – Oppose
As Amended on August 20, 2010
AB 155, by Assembly Member Tony Mendoza, would require a local agency desiring to seek Chapter 9 bankruptcy protection to either request the approval of the California Debt and Investment Advisory Commission (CDIAC) or to request and receive a review of the local agencies’ financial position from the State Auditor prior to entering federal bankruptcy court.
The amendments giving the State Auditor option were proffered with Senators Mark DeSaulnier and Lois Wolk to provide a less onerous option for local agencies facing a fiscal crisis. Unfortunately, delays in seeking the protections provided by federal bankruptcy law have the potential to be severely damaging to the local agencies fiscal position and to local programs and services. CSAC, along with the Urban Counties Caucus, the Regional Council of Rural Counties, the League of California Cities, and the California Special Districts Association, among others, remains opposed.
It appears likely that the Senate Appropriations Committee will hear AB 155 today, August 27. If it passes that committee and the Senate Floor, it will still require concurrence of Senate amendments in the Assembly. The last day of the regular legislative session is Tuesday, August 31.
Utility Users Taxes
AB 2545 (De La Torre) – Oppose Unless Amended
As Amended on August 17, 2010
AB 2545, by Assembly Member Hector De La Torre, would require the CPUC to convene a stakeholder process that is charged with producing recommendations to the Legislature on issues including, but not limited to, collecting and distributing all manner of communications taxes, fees, and surcharges. Objectionably to counties, this specifically includes local utility users taxes.
CSAC objects to both the content and timing of the substantive August 17 amendments. Before those amendments, the bill would simply have ensured that prepaid wireless phone users paid their share of 9-1-1 charges.
Unlike every single other charge contemplated by AB 2545, the use of utility users taxes is completely unrelated to communications; they are simply charges on transactions, some of which are communications-related. However, the majority of utility user tax revenue comes from non-communications sources: gas, electricity, water, and sewer services.
Also, unlike every single other tax, fee, and surcharge included in AB 2545, local utility users taxes are entirely local affairs. They are approved by local voters, at rates that each community sets based on its own local circumstances. They are administered by the local agencies that impose them, and the resultant revenues are used for local priorities, often for public safety services.
The CPUC is not an appropriate authority for arbitrating discussions about the collection and distribution of local taxes, including the utility users tax. Local agencies must retain full authority to administer them because utility users taxes are imposed in some communities and not others, not statewide. They are imposed on different services and at different rates in the communities that do impose them. Further, the taxes are imposed in accordance with the stringent constitutional requirements that govern local taxes.
AB 2545 orders the development of recommendations that “shall include, but shall not be limited to” a list of issues related to collection and distribution of communications taxes, fees, and surcharges. If the purpose of the bill is to address issues related to collection and distribution, then the recommendations should absolutely be limited to exactly those issues. CSAC objects to including a local general-purpose tax (the utility users tax) in a wide-open discussion about communications-related taxes, especially when the local government presence on the stakeholder group the bill requires is dwarfed by the presence of those required to pay the taxes.
Finally, CSAC is opposed to AB 2545 because the late amendments significantly alter a bill at such a time as to make impossible the appropriate policy oversight that the normal legislative process provides. Surely this issue is not so urgent that it cannot undergo more thorough analysis and oversight next year.
CSAC seeks amendments to specifically exclude the utility users tax from the process the bill describes.
AB 2545 was passed by both policy and fiscal committees before the recent substantive amendments; it now awaits action on the Senate Floor.
Senior Citizens’ Property Tax Deferral Program
AB 1718 (Blumenfield) – Support
As Amended on August 19, 2010
AB 1718, by Assembly Member Bob Blumenfield, would restore the Senior Citizens’ Property Tax Postponement Program by authorizing counties to implement the program (the County Deferred Property Tax Program for Senior Citizens and Disabled Citizens) locally at their option. The statewide Senior Citizens’ Property Tax Postponement Program 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.
CSAC, along with county assessors, auditor-controllers, and treasurer-tax collectors, has been working with Assembly Member Blumenfield, the State Controller’s Office, and the State Treasurer’s Office to identify program improvements and a new financing mechanism that would ensure that the program is fully self-funded while continuing to allow eligible Californians to utilize this important service. After considerable time focused on developing a workable program that did not result in a cost to the state General Fund, it became clear that individual counties could implement the program locally with statewide criteria and provide the relief that qualified seniors and people with disabilities need to enable them to stay in their homes.
Some have raised concerns about the priority lien status of the deferred property taxes in AB 1718. Counties strongly endorse the priority lien as a long-standing practice for collecting local taxes and assessments that support public programs and services in counties, cities, schools, and special districts. The program contemplated in AB 1718, the County Deferred Property Tax Program for Senior Citizens and Disabled Citizens, authorizes deferral and later payment of property taxes, thus the appropriate placement of the lien is first lien status.
The premise of the Senior Citizens’ Property Tax Postponement Program was to provide assistance to income eligible seniors and the disabled to allow them to stay in their homes by deferring their property taxes until sale of the property or death. The premise of AB 1718 is the same.
AB 1718 made it out of the Senate Banking and Finance Committee yesterday, August 26, conditional on a commitment from the author that he would not have the bill taken up on the Senate Floor without technical amendments. Since the technical amendments do not address the lien status, which Republicans and likely some Democrats oppose, and since the rule waivers necessary to amend a bill at this late date require 2/3 approval, AB 1718 appears unlikely to pass.
SB 1040 (Padilla) – Support
As Amended on August 16, 2010
Senate Bill 1040, by Senator Alex Padilla, would expand the California Advanced Services Fund (CASF), which encourages deployment of broadband in unserved and underserved areas, from $100 million to $225 million. It would also delete the sunset date on the program; the sunset is unnecessary since the program caps the dollar amount.
The California Public Utilities Commission (PUC) and the Legislature created CASF in 2007 and 2008 to help fund the expansion of broadband infrastructure into difficult-to-serve areas. While the program could be designed more perfectly to assist rural areas further, the CASF is still an important part of closing the digital divide and creating economic opportunities for residents of rural areas.
The Assembly passed SB 1040 on August 19, and the Senate passed it on August 25. It now goes to the Governor.
AB 1690 (Chesbro) – Support
As Introduced on January 27, 2010
Assembly Bill 1690, by Assembly Member Wes Chesbro, would reimburse Humboldt County for its property tax losses sustained due to the earthquake this last January.
The Senate passed AB 1690 unanimously on August 24 and it now heads to the Governor.
AB 2136 (V. Manuel Perez) – Support
As Amended August 20, 2010
Assembly Bill 2136, by Assembly Member V. Manuel Perez, would reimburse Imperial County for its property tax losses sustained due to the recent earthquake there.
The Senate passed AB 2136 unanimously on August 24. The bill stopped very briefly to obtain approval of the Assembly Housing and Community Development Committee, and it now moves to the Assembly Floor for concurrence of Senate amendments.
Vehicle Registration Amnesty
AB 2461 (Emmerson) – Support
As Amended on August 12, 2010
AB 2461, by Senator Bill Emmerson, would extend the current Vehicle License Fee (VLF) amnesty program for kit cars by a year and a half and give the Bureau of Automotive Repairs (BAR) the authority to carry out their related duties.
CSAC was pleased to support the bill by then-Assembly Member Emmerson that implemented a VLF amnesty program for so-called kit cars. This new bill, AB 2461, would give explicit authority to BAR to fulfill their duties under the program, thus making the amnesty program workable. Due to the problems related to implementing the program, it makes sense to extend the sunset date; this will give kit car owners an opportunity to take advantage of the amnesty and come into compliance with the law.
The Assembly adopted AB 2461 on Friday, August 20, and now moves to the Governor for his consideration.