May 21, 2020

Should property taxes be refunded to landlords because of state regulations related to COVID-19? That’s the question at the heart of SB 1431, by Senator Steve Glazer.

Even though counties and other local agencies in California are the ones who are directly responding to COVID-19 crisis, burning through reserves to directly treat both the health emergency directly as well as the economic effects on individuals and businesses that have been affected indirectly, Senator Glazer stated in committee that his bill is about fairness. The bill would require property taxes to be refunded mid-year to landlords due to the Executive Order putting a moratorium on evictions.

SB 1431 would immediately and significantly decrease funding for local governments at the worst possible time, despite clear language in the California Constitution that property may only be reassessed mid-year if it has been “physically damaged or destroyed”. Proponents argue that COVID-19 is an environmental “contaminant”—a tenuous connection at best to the constitutional requirement—yet at the same time are not proposing that property owners be required to make any showing that the contaminant was actually present at the property itself.

Furthermore, the bill does not require a property owner to have tenants that haven’t paid to qualify for the mid-year refund. If it did, it would be glaringly obvious that the payments the bill would require in fact have nothing to do with property value, and therefore property taxes.

Instead, SB 1431 simply requires local governments to pay landlords for theoretical loss of income resulting from state regulations.

State policymakers contemplating ways they can to assist Californians should focus on using the state’s own funds to do so, along with any available federal funds, and avoid responses like SB 1431, which would have negative, long-term impacts on the single most important funding source for counties, special districts, cities, and schools, as well as put a significant administrative burden on county assessors. We would also suggest the state focus its limited resources for relief on those who reside in the state and who are most vulnerable, under-resourced, and least able to maintain their basic health and welfare during this emergency.

The Senate Governance and Finance Committee passed SB 1431 on Thursday, May 21. We would like to thank the chair, Senator McGuire, the vice chair, Senator Moorlach, as well as Senator Beall for voting against the measure. Voting in favor of the measure were:

• Senator Hertzberg (Los Angeles County)
• Senator Hurtado (Fresno, Kern, Kings, and Tulare Counties)
• Senator Nielsen (Butte, Colusa, Glenn, Placer, Sacramento, Sutter, Tehama, and Yuba Counties)
• Senator Wiener (San Francisco and San Mateo Counties)

The bill now moves to the Senate Appropriations Committee, where it will be heard in early June.