Redevelopment

As part of his May Revision, Governor Brown this week proposed a trailer bill that would make a number of changes to the redevelopment dissolution process. That language is available here.

The bill as proposed would affect the disposition of pass through agreements, clawback of improper payments, the role of the Department of Finance, the dispersal of cash assets, and several other issues of interest.

Counties are encouraged to review this language and provide any comments to Geoffrey Neill.

Bankruptcy

AB 1692 (Wieckowski) – Oppose
As Amended on May 2, 2012

AB 1692, by Assembly Member Bob Wieckowski, would renege on last year’s negotiated agreement on the municipal bankruptcy process.

Last year’s AB 506 implemented a voluntary process whereby local agencies could enter into a neutral evaluation with their creditors and other stakeholders. This process is available to precede or avert bankruptcy. The final result of the bill was the product of many hours of negotiation between the author, Governor Brown, Senator Wolk, and local agencies.

AB 1692 is an attempt to change that deal before it has even had a chance to work. Two cities are currently in the AB 506 process. Due to the confidential nature of that process, it is impossible to know what might be done to improve upon it, making the bill premature at best.

Furthermore, AB 1692 specifically reneges on the deal reached so carefully late last year. First, it would make the neutral evaluation process an open-ended one, so a local agency using it could not plan for how long it might last. Second, it would no longer be a neutral process, since the mediator would have the power to make binding decisions and order investigations. These were both key elements of last year’s deal and were among the reason that CSAC and other local government organizations moved to a ‘neutral’ position on AB 506.

The Assembly could take up AB 1692 on the floor as early as next Monday. Counties are encouraged to contact their legislative delegation to voice their opposition to the bill.

Sales and Use Tax

AB 2618 (Ma) – Support
As Amended on April 18, 2012

AB 2618, by Assembly Member Fiona Ma, would ensure that purchasers of cars at auction pay the appropriate amount of sales or use tax on those transactions.

All too frequently, unscrupulous Californians are avoiding paying taxes on cars purchased at auction, especially salvaged auto auctions, by telling the auctioneer that they will be reselling the vehicles later, then never doing so. Many of these vehicles are either never subsequently registered with DMV, or if they are they report a value lower than the actual sale price.

AB 2618 would curb this fraud by requiring those buyers claiming intent to resell to be licensed dealers, dismantlers, repair dealers, or scrap metal processors.

The sales and use tax supports not only the state’s General Fund, but also counties and cities. The sales and use tax is also an important funding component for 2011 Realignment.

The Assembly Revenue and Taxation Committee passed AB 2618 at its hearing on Monday, May 14, with no ‘no’ votes. The bill now moves to the Assembly Appropriations Committee.