While June is known chiefly for its budget debates, it is also a busy time for bills, as the deadline for most bills to pass out of policy committee looms.

Vehicle License Fees

AB 1191 (Huber) – Support
As Amended on January 23, 2012

AB 1191, by Assembly Member Alyson Huber, would provide 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.

Several years ago, the state shifted a portion of the local sales and use tax away from counties and cities to pay off some of the state’s debt, the Economic Recovery bonds; this diversion will end when these bonds are fully paid. Around the same time, the state also decided to reduce a tax whose proceeds went entirely to counties and cities, the Vehicle License Fee.

To reimburse counties and cities for these reductions to their taxes, the state directed county auditor-controllers to reallocate a portion of K-14 property taxes to counties and cities. Due to Proposition 98, the schools are made whole by the state General Fund. Thus, the end result of these accounting maneuvers is that the state pays its debt with its own money and locals don’t suffer tax revenue losses because the state reduced the rate.

However, basic aid schools don’t receive state General Fund money, so to avoid cutting schools the deal stipulated that county auditor-controllers may not allocate property taxes away from these basic aid schools for these purposes. No one foresaw at the time that any county would one day contain only basic aid schools. But that has now occurred.

Amador County finds itself in the unfortunate situation of having no source to reimburse itself for the taxes the state redirected and reduced.

AB 1191 outlines a process by which county auditors could present information to the State Controller that identifies the amount of reimbursement owed to each local agency pursuant to the deals the state made with locals. 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.

This is money that the state has already been counting on spending, but instead of reimbursing counties and cities indirectly through Proposition 98, it would be reimbursing locals directly in the same amount.

The Senate Appropriations Committee will consider AB 1191 at its meeting next Monday, June 25.

Property Taxes

SB 314 (Vargas) – Oppose
As Amended on February 9, 2012

SB 314, by Senator Juan Vargas, would extend the welfare exemption from property taxes to a property owner that does not operate as a non-profit.

The California Constitution states that all real property in the state is to be taxed at an equal level, with certain exemptions. One exemption is for entities that are charitable, non-profit, and whose earnings in no part benefit a private shareholder. SB 314 would grant a property tax exemption to at least one for-profit corporation whose earnings do benefit individual shareholders, and is therefore unconstitutional. The entity in question purposely designed itself to apply for federal tax credits, which would not be possible if it was entirely exempt from taxes.

SB 314 failed passage with a 3-4 vote in the Assembly Revenue and Taxation Committee on Monday, June 18.

AB 2643 (Ma) – Support
As Amended May 29, 2012

AB 2643, by Assembly Member Fiona Ma, would make a number of clarifications to property tax administration.

Property taxes are already the most efficiently administered of all California taxes, and the clarifications and improvements contained in AB 2643 will help make it more so. The bill would allow treasurer-tax collectors to issue refunds promptly when they are due, and likewise clarify that taxpayers must pay their taxes when due. It would allow overpayments to be charged against underpayments on the same property, and gives county officials a little more time to calculate and report pool rates to the State Controller.

The Senate Governance and Finance Committee will consider AB 2643 at its hearing next Wednesday, June 27.

Telecommunications

SB 379 (Fuller) – Support
As Amended on June 12, 2012

Senate Bill 379, by Senator Jean Fuller, would modify the California High-Cost Fund-A (CHCF-A) to support technology deployment to rural California.

Specifically, SB 379 would amend the statutes governing the CHCF-A program to reflect the reforms of the Federal Communications Commission (FCC). Last year, the FCC changed the focus and goals of the USF to recognize that telephone and broadband have become unified systems. As part of that change, the FCC will require rural telecommunications companies to achieve broadband speeds of 4 Mbps downstream and 1 Mbps upstream, reaching higher speeds in future years, as a requirement to receive federal high cost support. To achieve that goal, the CHCF-A governing statutes must be revised to conform to the federal program or California’s efforts to provide basic phone service to residents in hard to reach areas could lose roughly $25 million annually in federal support. 

Both the CHCF-A and the California High-Cost Fund B (CHCF B), were established to subsidize both small independent telephone companies and large telephone corporations to provide service in the rural and smaller metropolitan communities. These subsidies, paid for by surcharges on telephone bills, promote the goal of universal service by providing reasonable rates for basic telephone service in many rural and hard-to-reach areas of the state. Access to reliable, high-speed internet service is the next generation of universal service. SB 379 would help bring the state’s policies in line with the goal of broadband deployment to the most rural areas of the state while also protecting access to affordable basic telephone service. 
Affordable telephone and other telecommunication rates are vital to both residential and business customers in rural areas.

The Assembly Utilities and Commerce Committee passed SB 379 on Monday, June 18, with no ‘no’ votes. The bill now moves to the Assembly Appropriations Committee.

Elections

SB 1272 (Kehoe) – Support
As Amended on June 12, 2012

SB 1272, by Senator Christine Kehoe, would extend the term of central committee members to four years from two. This change, though minor on its face, would be a major benefit for county election offices, for two main reasons.

First, under the new top two primary system, the only partisan races remaining on the ballot are for U.S. President and for central committee members. Therefore, in years of gubernatorial elections, with no presidential contest, central committees would be the sole partisan contests, and would force major cost increases associated with preparing and printing partisan ballots.

Second, central committee candidates constitute a disproportionately large percentage of the candidates to whom election officials must provide service. In most counties, they constitute at least half of candidates, and in several counties they are two-thirds to three-fourths of the total. Many central committee contests do not end up on the ballot because the number of candidates is fewer than the number of available spots. However, the central committees still have the option of forcing the question on the ballot, requiring the space for listing the candidates and a number of write-in spaces. Furthermore, many voters do not even vote on the question of central committee members.

Last, counties are required to pay all the costs of central committee elections with county general funds, even though central committees are private entities.

The Assembly Elections and Redistricting Committee passed SB 1272 unanimously on Tuesday, June 19. The bill now moves to the Assembly Appropriations Committee.

SB 1331 (Kehoe) – Support
As Introduced on February 23, 2012

SB 1331, also by Senator Kehoe, would create an independent redistricting commission to draw the supervisorial districts in the County of San Diego.

Californians generally have shown their desire for political districts to be drawn by those who do not hold office by passing the two ballot measures that created the state’s independent commission and giving it power over all the state’s legislative, congressional, and Board of Equalization districts.

The citizens of San Diego County and that county’s Board of Supervisors want a similar process for their own county. The commission contemplated by SB 1331 would ensure transparency by subjecting the commission to the Brown Act and requiring public hearings throughout the county. It requires the county to provide financial support and would be made up of retired judges.

The Assembly Elections and Redistricting Committee passed SB 1331 on a 5-1 vote at its meeting on Tuesday, June 19. The bill now moves to the Assembly Appropriations Committee, which will consider it next Wednesday, June 27.

Sales 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 avoid 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 Senate Governance and Finance Committee passed AB 2618 unanimously when it considered the bill on Wednesday, June 20. The bill now moves to the Senate Appropriations Committee.

County Budgets

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 Senate passed AB 1253 on Monday, June 18. It now moves to the Governor for his consideration.

Local Revenue

SB 954 (Liu) – Support
As Amended on March 1, 2012

SB 954, by Senator Carol Liu, would authorize the State Controller to, at the request of a county or city, offset any payments due to people from the unclaimed property held by the state in order to pay debts those people owe the county or city.

This authority already exists for offsetting tax refunds and lottery winnings. The bill would provide an appeal process for people who believe the billing was in error, ensuring the process is fair to all parties. All current protections for those billed would be retained from the current process.

SB 954 extends a proven, efficient system for recovery of money due to local agencies, and in doing so will ensure millions of dollars owed to counties and cities are paid.

The Assembly Appropriations Committee will consider SB 954 at its hearing next Wednesday, June 27.