Senate Bill 378 (Beall) – Pending

Current law provides seniors and individuals with permanent disabilities with an option to move dwellings and transfer their base year value to a new home of equal or lesser value. Senate Bill 378 (Beall) would enhance this benefit at the detrimental loss to county revenues by allowing the base transfer to apply to properties of greater value as well.

This bill is a modified version of SB 274 (Dutton) from 2009 that CSAC adopted an oppose unless amended position on to preserve the local share of property tax. The Board of Equalization estimated the 2009 version of the bill would cost state and local governments $6.9 million annually.

Proponents offered that allowing those on fixed incomes to transfer a lower assessment to properties of greater value will stimulate economic activity. They also suggested that it will entice property owners who otherwise would not seek to buy a home because of the possible property tax increase. If existing homeowners can avoid property tax increases, they will buy new houses, and new homeowners will purchase the existing homeowners’ homes at higher prices, leading to increased property taxes because the new base year values would exceed the old ones. Builders will build more homes to accommodate increased demand, boosting economic activity and boosting local property tax bases. While this may be true during housing market inflation, the additional cost pressure could serve as a deterrent for other potential homebuyers who are not eligible for the base value transfer.
 

Governor Takes Action on Rev and Tax Measures

Counties May Benefit From Tax Data Sharing with State

CSAC-supported AB 279 (Dodd) was signed by Governor Brown and would allow counties to enter in to a data sharing agreement with the State Franchise Tax Board to more efficiently collect back taxes owed by businesses. Cities have had this data sharing agreement authority since 2001, building on mandatory reporting requirements for cities to the FTB that begun in 1984 in an effort to collect from locally licensed businesses that failed to file state tax returns. Cities that currently participate in the data sharing agreement report collecting significant additional revenue from back taxes.

Transaction and Use Tax Combined Rate Frozen at Two Percent
Governor Brown vetoed CSAC supported Assembly Bill 464 (Mullin), which would have uniformly raised the combined local transaction and use tax rate cap from 2% to 3%. Several counties and transportation agencies have individually requested and received through legislation a rate increase when cities and the county reached the ceiling. The Governor’s veto message stated he vetoed the bill in light of the significant tax proposals tentatively heading to the 2016 ballot.

Background
The governor has twelve days to sign or veto a measure after it is presented to him or her, or it becomes law without his or her signature. However, if the 12th day is a weekend or a holiday, the governor has until the next working day to act. For any bill in the governor’s possession on or before the adjournment of session, the governor has 30 days to act. This year, the deadline is October 11 for signatures or vetoes. Stay tuned for additional reports on action reports from Governor Brown in the CSAC Bulletin.