Local Revenue

AB 1191 (Huber) – Sponsor
As Amended on January 4, 2012

AB 1191, by Assembly Member Alyson Huber, provides counties and their cities a process to seek reimbursement for revenues lost as a result of the triple-flip and the VLF swap. CSAC and the Regional Council of Rural Counties are jointly sponsoring the bill.

These two accounting maneuvers were designed to reimburse counties and cities for their losses related to the diversion of a quarter cent of the local sales tax and the permanent reduction of VLF to 0.65 percent. They work by transferring school property tax revenue to counties and cities; the state then fills in schools’ lost revenue pursuant to Proposition 98. School districts that have their full Proposition 98 minimum guarantee met by local property taxes are called “basic aid,” and the triple-flip and VLF swap do not allow county auditors to divert those districts’ property taxes.

Two counties, Amador and Mono, find themselves in a circumstance unforeseen by the state or local governments in 2004: all of their local school entities qualify as “basic aid.” This means they have no source for their triple-flip and VLF swap.

AB 1191 outlines a process by which county auditors would be required to present information to the State Controller that identifies the amount of reimbursement owed to each local agency for both the Flip and Swap. Once those amounts are appropriated by the Legislature, the Controller then transfers the owed funds to the county auditor for distribution to the affected county and cities.

The Assembly Local Government Committee passed AB 1191 unanimously at its hearing on Wednesday, January 11. The bill now moves to the Assembly Appropriations Committee.

Redevelopment

SB 654 (Steinberg) – Pending
As Amended on January 11, 2012

SB 654, by Senate President pro Tem Darrell Steinberg, would revise the laws governing the winding down of redevelopment agencies to, first of all, ensure all unspent affordable housing funds continue to be dedicated to that purpose, and, second, allow the remaining tax increment to pay loans between a redevelopment agency and its sponsoring agency made within two years of the creation of a project area, as long as the loans are specific to that project area.

The Senate Transportation and Housing Committee passed SB 654 unanimously at its hearing on Tuesday, January 10. The Senate Appropriations Committee will consider the bill next Tuesday, January 17.

SB 659 (Padilla) – Watch
As anticipated to be amended January 13, 2012

Senator Alex Padilla has authored SB 659, a measure that seeks to move the dissolution date for community redevelopment agencies from February 1, 2012 to April 15, 2012, among other things. Please note that the bill is not yet available in print, as amendments were put across the desk today. The bill should be available for counties to review on Tuesday, January 17.

SB 659 is currently in the Assembly, but the amended version has not yet been set for hearing. We anticipate a hearing in short order, as the bill is an urgency matter and February 1 is a mere two weeks away. As such, the bill requires a 2/3 vote in each house of the Legislature. CSAC will share more details with counties as language becomes available.

Elections

AB 1436 (Feuer) – Oppose
As Introduced on January 4, 2012

AB 1436, by Assembly Member Mike Feuer, would create a process for potential voters to register to vote and vote in the final two weeks before an election, and is very similar to last year’s SB 641, which failed to pass the Assembly Appropriations Committee. Currently, citizens must register at least fifteen days before an election to vote in that election.

The most populous counties in the state already struggle to certify their votes by the end of the 28-day canvass period. AB 1436 would add significantly to that struggle. Not only would election offices need to meet all of the current certification and audit requirements, they would also need to process large numbers of voter registration forms and provisional ballots. Verifying and counting provisional ballots are by far the most time-consuming processes that county registrars must undertake during the canvass; AB 1436 would increase the number of provisional ballots by multiples.

In complying with this requirement, counties would incur costs that are difficult to overstate. The new law would increase election departments’ workloads by, firstly, all the provisional ballots from voters that would not otherwise have registered, but, more importantly, by the provisional ballots from all of the voters that, absent this law, would have met the 14-day deadline but with it see no need to do so. In large counties, the elections office building will prove insufficient to handle the surge of registrants and provisional ballot for counting and they would have to lease large space elsewhere. To process the enormous increase in provisional ballots, elections departments in counties that already barely meet the 28-day canvass deadline will have to hire significantly more temporary workers, all of whom must be trained in the minutiae of election law to protect the integrity of the election and to ensure every eligible vote is properly counted.

Last year’s budget suspended the mandates that require counties to provide mail ballots to everyone who requests them. That policy has arguably been the greatest step forward this state has taken to increase voters’ access to elections, and to pass this bill and suspend that program in the consecutive years would send conflicting messages. The cost to provide mail ballots is significant; to overlay this new, expensive requirement at the same time without funding it will force service reductions to the health, public safety, and safety net programs counties provide locally and on the state’s behalf.

If this policy is an issue of statewide concern, as passing this mandate would indicate, then the state should be willing to use statewide revenues to pay the cost.

County Budget Process

AB 1253 (Davis) – Support
As Amended on January 4, 2012

AB 1253, by Assembly Member Mike Davis, would allow Boards of Supervisors to amend recommended budgets (due by June 30 each year) before adopting a final budget (due by October 2 each year). A revision of the 2009 Budget Act inadvertently deleted the ability to do so.

The Assembly Local Government Committee unanimously passed AB 1253 at its hearing on Wednesday, January 11.

Underpayment Penalties

AB 1289 (Davis) – Support
As Amended on January 12, 2012

AB 1289, by Assembly Member Mike Davis, would decrease the penalty for underpayments from counties to the State Trial Court Construction Fund. By changing the penalties so they are equal to the annual returns in the Local Agency Investment Fund (LAIF), AB 1289 would make them the same as penalties for all other underpayments. It would also make the state whole, since the LAIF rate is what it would have earned on the underpaid funds. The change would also be fairer to counties. Because the State Controller only audits these payments from most counties every five to seven years, the current high annual penalty rate results in exorbitant penalties when not caught for a few years.

The most recent amendments authorize the Controller to allow the county or city to pay the interest or penalty on a payment schedule in cases of hardship.

The Assembly Judiciary Committee passed AB 1289 unanimously at its hearing on Tuesday, January 10.

Transactions and Use Tax 

AB 1126 (Calderon) – Support
As Amended on January 4, 2012

AB 1126, by Assembly Member Charles Calderon, would ensure that counties and cities can ask voters to raise transactions and use taxes in one-eighth cent increments instead of one-quarter cent increments. AB 686, passed last year, first permitted this smaller increment. AB 1126 would make the change in two sections left out of last year’s bill.

The Assembly Revenue and Taxation Committee passed AB 1126 with no ‘no’ votes at its hearing on Monday, January 9.

Sales Tax

SB 516 (Correa) – Oppose Unless Amended
As Amended on January 4, 2012

SB 516, by Senator Lou Correa, would have excluded the trade-in value of a motorcycle from tax calculations on purchases of a new motorcycle. Current statute requires the state to reimburse locals tax revenue lost due to new exemptions, but this bill would have sidestepped that requirement.

The Senate Governance and Finance Committee failed to pass SB 516 at its hearing on Wednesday, January 11.