Tax Abatement Disclosure Required by GASB 77

Counties and other government agencies must begin reporting how much revenue they lose to tax abatements for economic development and other purposes, according to a new requirement issued by the Governmental Accounting Standards Board (GASB) earlier this month. The rule goes into effect for the periods beginning after December 15, 2015.

The new rules known as “GASB 77” will cover not only the amount of revenue foregone, but any promises made in connection with tax abatements by recipients, the purposes of the abatements, any provisions for recapturing abated taxes, and other commitments made by a government, such as to build infrastructure. Government agencies will also begin reporting on abatements entered into by other levels of government that affect their bottom line.

Common purposes for tax abatements include promoting economic development, job growth, and area revitalization. The reports and new levels of detail are relevant to the assertion that certain tax abatements merely move economic activity from one nearby area to another instead of increasing overall activity. Counties can go online to find the text of the new requirement, GASB’s fact sheet, and their press release.

Broadband Merger May Impact County Service

A new proposed merger of broadband high speed internet and cable providers is now before the California Public Utilities Commission (CPUC) and could impact county service levels. Charter Communications, Time Warner Cable, and Bright House Networks submitted a merger proposal to create a single telecommunications provider called New Charter that would serve 24 million customers – the second largest provider in the country. The companies also filed with the Federal Communications Commission (FCC).

The proposed merger may have implications for counties, though the potential impacts will likely vary by location. The filing raises concerns about access to broadband, particularly for unserved and underserved communities and low-income citizens, and about enhancing existing networks and infrastructure to stay current with technology upgrades. However, the application submitted by the corporations argues that the merger would have numerous public benefits including improved service, no reduction in competition, and the benefits of utilizing best practices from all three existing companies. The filings also cite good corporate citizenship and management, and more U.S. jobs. The filings present an opportunity for local governments to weigh in with concerns and to request conditions that would make the proposed merger more acceptable.

Proceedings may take several months but there will be numerous opportunities for counties to provide comments. Several local agencies and stakeholder groups have filed documents requesting party status or protesting the proposed merger. They include Los Angeles County, the California Emerging Technology Fund, the Media Alliance, the Office of Ratepayer Advocates, the National Diversity Coalition, and an alliance that includes the Center for Accessible Technology, the Greenlining Institute, the Utility Reform Network, and Common Cause.

CSAC will continue to monitory these proceedings and analyze possible impacts to different regions in the state. This September CSAC will also host a webinar with broadband experts on mergers.

For more information:

CPUC’s website posts all publically available documents related to the filing, including the initial application, motions for status, and protests – search here for proceeding A1507009. The initial application filed by Charter, Time Warner, and Bright House is here.

Best Best & Krieger has published several articles about the proposed merger and its potential impacts. For more information, see article with details about the merger and its potential impacts, and article about the FCC proceeding,

Legislative Hot Bills Remain Following Fiscal Deadline

Below are the key outcomes for revenue, elections, and economic development bills following action be the Senate and Assembly Appropriations Committees. The fiscal committees often serve as the final stop for many bills with significant general fund impacts but this year the Senate and Assembly passed the vast majority of CSAC priority legislation through to the floor of each house.

CSAC Supported Measures

AB 363 (Steinorth). Closing Of the Polls

Authorizes county elections officials, on election day, to begin accounting and processing polling place ballots during the day, instead of waiting until the closing of the polls, to expedite tallying and reduce overtime costs.

AB 1157 (Nazarian). Commercial Air Carrier Property Tax Assessments

Extends the sunset on the current lead-county system for commercial air carrier property assessment by 1 year, until December 1, 2016, and creates streamlined appeals process for contested assessments.

SB 25 (Roth). Vehicle License Fee Adjustments

Provides a vehicle license fee (VLF) adjustment amount for California’s newest cities impacted by the SB 89 (2011) calculations, ensuring those cities’ continued viability following the loss of general fund revenues due to realignment funding shifts.

CSAC Opposed Measures

AB 974 (Bloom). Redevelopment Dissolution Bond Proceeds

Authorizes a successor housing entity to designate the use of, and commit, proceeds from indebtedness that was issued by a redevelopment agency prior to June 28, 2011, and would require the proceeds from bonds issued between January 1, 2011, and June 28, 2011, to be used for certain specified projects, rather than redistributing those funds to impacted taxing entities, including counties. Nearly identical bills in previous legislative sessions have been vetoed by Governor Brown.

AB 88 (Gomez). Sales and Use Tax Exemptions – (Oppose Unless Amended )

Exempts from state and local sales and use taxes an energy or water efficient home appliance purchased by a public utility that is provided at no cost to a low-income participant in a state, or ratepayer-funded energy efficiency program for use by that low-income participant in the energy efficiency program. Could results in millions of dollars of lost revenue, including a portion of the dedicated share of 2011 realignment dollars.

SCA 8 (Mendoza) . Supervisorial Districts by Statewide Vote – (Oppose Unless Amended)

Would place a statewide ballot measure before voters in 2018 that would expand counties from five to seven or more supervisorial districts if they have a population greater than 2 million based on the 2020 census. Caps spending for supervisor staff and resources at FY 2020-2021 spending levels. One-time costs for counties could be as high as $43 million, with ongoing costs in the several millions annually. CSAC is requesting amendments to change statewide ballot to county-wide ballot for the impacted counties and remove the spending cap provisions.