Property Tax

SB 636 (Hill) – Support
As Introduced on February 22, 2013

SB 636, by Assembly Member Jerry Hill, would modify a provision included in the last year’s redevelopment budget trailer bill (AB 1484) relating to the allocation of property tax revenues from the Redevelopment Property Tax Trust Fund (RPTTF).

Among many other complex issues surrounding the dissolution of redevelopment agencies is the redistribution of property taxes. As successor agencies pay off their obligations, billions of property tax dollars will return to counties, cities, special districts, and of course school districts. No one disputes that these property taxes should be returned exactly as they would have been absent a redevelopment agency’s diversion of the tax increment.

Unfortunately, one provision of the laws passed during the final approval of the 2012-13 state budget inadvertently reduced property tax allocations to local agencies in counties where ERAF payments exceed the amount needed to fulfill school districts’ minimum funding requirements. This situation is known as “excess ERAF,” and when it occurs, the ERAF payments are returned to taxing entities in the proportion they were paid.

Removing this language will restore property tax allocations to their rightful levels, ensuring fairness and equity for the few counties affected and avoiding the legal and constitutional challenges raised by this issue.

The Senate Governance and Finance Committee passed SB 636 on a vote of 6-0 at its hearing on Wednesday April 3. The Senate Appropriations Committee will consider it next Monday, April 15.

AB 1172 (Bocanegra) – Oppose
As Amended on March 21, 2013

AB 1172, by Assembly Member Raul Bocanegra, would require base year value transfers between counties for all counties upon voter approval of an unspecified constitutional amendment. CSAC opposes this measure because it would result in a significant fiscal impact to local agencies that rely on property tax revenues to fund local services.

Currently, there are eight counties that have opted in to the existing provisions associated with Proposition 90 (1988). In these counties — Alameda, El Dorado, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura — the boards of supervisors have approved an ordinance accepting base transfers from other counties with data to assist in analyzing the fiscal impact and input from the public, including other taxing entities. In fact, there are an additional seven county participants — Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey and Marin — that subsequently repealed the ordinance due to fiscal concerns. At least one county considered repeal as late as last summer. The appropriate evaluation of costs and benefits associated with Proposition 90 at the board level is a fiscally responsible approach that considers the broad array of competing local spending priorities and allows for an open and public dialogue among interested parties, including all affected local agencies.

AB 1172 makes no consideration of the fiscal impact of its provision to any of the local agencies that receive property taxes. In California counties, the property tax is the primary source of discretionary revenue, constituting 23% of county revenues statewide. Property tax revenues fund public safety, health and human services programs, elections, libraries, parks, and other important local programs and services. County service responsibilities have increased significantly over the past years – primarily in the public safety and human services areas – and proposals to continue that trend are currently being considered in the state budget. CSAC opposes any effort that undermines our ability to maintain funding for our existing responsibilities, not to mention any new responsibilities that may come our way.

The Assembly Local Government Committee will consider AB 1172 at its hearing next Wednesday, April 17.

AB 920 (Ting) – Concerns
As Amended on April 9, 2013

AB 920, by Assembly Member Phil Ting, would require that each county tax bill contain certain information regarding allocation and expenditure of local property tax revenues. While property tax transparency is a laudable goal, and one that CSAC supports, we are concerned about counties’ ability to meet its requirements from a fiscal and practical perspective.

Over the years, the state has shifted, flipped, swapped, and reallocated property tax revenues for a variety of reasons and county auditors have implemented those provisions as directed by state law. The significant complexity of the statute makes it difficult to accurately reflect property tax allocations in a manner that is meaningful for citizens. Additionally, while some agencies may be able to provide information regarding the percentage allocation at the tax rate area level, we suggest that implementing this provision on a statewide basis would be difficult to achieve by 2014-15; certainly, it would be difficult for counties to devote the human and financial resources to do so in the time required by AB 920.

The Assembly Local Government Committee will consider AB 920 at its hearing next Wednesday, April 17.

Televising Meetings

AB 185 (Hernandez) – Oppose
As Amended on April 2, 2013

AB 185, by Assembly Member Roger Hernández, would require that counties that collect franchise fees from the holder of state franchises that provides public, educational, and governmental (PEG) channels to televise the open and public meetings of its legislative body and its planning commission. The bill further authorizes the use of franchise fees for this purpose, and directs, if franchise fees are available, that these fees be used to provide live streaming of these meetings on the Internet. Simply put, AB 185 creates an impractical mandate for counties and limits local discretion.

In 2006, during legislative debates over the Digital Infrastructure and Video Competition Act (DIVCA), counties and cities communicated our strong concerns about the ability to maintain and expand PEG programming to televise public meetings and other educational content. Prior to 2006, local agencies negotiated these aspects of franchise agreements to meet each agency’s unique local needs. Under DIVCA and relevant federal law, franchisees instead pay a fixed amount for PEG programming and have a fixed responsibility to provide channels for PEG programming. The Legislature approved this change with the full knowledge that statewide PEG requirements would not meet the demands of some local communities. In requiring a new obligation for local agencies to televise open and public meetings, AB 185 fails to recognize the policy choice made by the Legislature in enacting DIVCA and now requires local agencies to finance a new policy direction. AB 185 essentially penalizes local agencies for being on the losing side of the argument during the DIVCA discussion.

While local agencies generally have placed a priority on providing their constituencies with remote viewing of local meetings, in some cases, local agencies have necessarily had to set priorities with local revenues given their economic circumstances. We question the wisdom of prioritizing televising and/or live streaming over other critical local services on a statewide basis. The economy is recovering, but local agencies must have continued flexibility to prioritize the expenditure of scarce local dollars. AB 185 imposes an expensive mandate that does not necessarily reflect the priorities of our local communities.

We also reject the assertion that changes to the requirements of the Brown Act as contemplated in this bill are not reimbursable under subdivision © of Section 36 of Article XIII. Open and public meetings are by their very definition open to the public. Activities associated with Brown Act compliance are intended to inform of matters prior to their occurrence so that citizens can be engaged in the public debate while it occurs, if they wish to do so. Televising meetings is simply a means of information sharing, just as a newspaper article would or monitoring a Twitter feed. AB 185 imposes a costly requirement on local agencies that will likely outweigh its benefits.

CSAC sent a joint letter with RCRC and UCC opposing the bill. The Assembly Local Government Committee will consider AB 185 at its hearing next Wednesday, April 17.

Sales Tax

AB 718 (Melendez) – Oppose Unless Amended
As Introduced on February 21, 2013

AB 718, by Assembly Member Melissa Melendez, would make April 15 a sales tax holiday. It would not apply to the use tax. The bill except the Bradley-Burns portion of sales taxes from the exemption, but not any of the other pieces of sales tax that benefit counties, such as the portions that pay for 2011 Realignment, 1991 Realignment, and Proposition 172. If the state prioritizes purchases made on this day as opposed to other days, it should use state funds to do so or else reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will be considering AB 718 at its hearing on Monday, April 15.

AB 220 (Ting) – Oppose Unless Amended
As Amended on April 8, 2013

AB 220, by Assembly Member Philip Ting, would exempt low-emission vehicles from the sale and use taxes until 2018. The bill except the Bradley-Burns portion of sales taxes from the exemption, but not any of the other pieces of sales tax that benefit counties, such as the portions that pay for 2011 Realignment, 1991 Realignment, and Proposition 172. If the state prioritizes purchases of these cars over other products, it should use state funds to do so or else reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will be considering AB 220 at its hearing on Monday, April 15.

Local Finance

SB 56 (Roth) – Support
As Amended on March 4, 2013

SB 56, by Senator Richard Roth, would provide a “Vehicle License Fee Adjustment Amount” for those newly incorporated cities and cities with annexed properties 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 56 provides a mechanism by which the newly incorporated cities and cities with annexed properties can 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 56 restores funds to those impacted by SB 89 and ensures their continued viability.

The Senate Governance and Finance Committee will consider SB 56 at its hearing next Wednesday, April 17.