BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |8SENATE RULES COMMITTEE           |                   AB 267|
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                                 THIRD READING


          Bill No:  AB 267
          Author:   Torlakson (D) et al
          Amended:  9/1/09 in Senate
          Vote:     21

           
           SENATE REVENUE & TAXATION COMMITTEE  :  5-3, 7/8/09
          AYES:  Wolk, Alquist, Florez, Padilla, Wiggins
          NOES:  Walters, Ashburn, Runner

           SENATE EDUCATION COMMITTEE  :  6-3, 7/8/09
          AYES:  Romero, Alquist, Hancock, Liu, Padilla, Simitian
          NOES:  Huff, Maldonado, Wyland

           ASSEMBLY FLOOR  :  46-30, 6/3/09 - See last page for vote


           SUBJECT  :    Education finance districts:  taxes

           SOURCE  :     Author


           DIGEST  :    This bill authorizes an education finance  
          district, as defined, to impose a qualified special tax, as  
          defined, within the district.

          Senate Floor Amendments  of 9/1/09 corrected subdivision  
          references.

           Senate Floor Amendments  of 8/24/09 clarified that school  
          districts with 70 percent or more of their pupils in  
          poverty, as defined, may not be excluded from an education  
          finance district if the high poverty district meets all  
                                                           CONTINUED





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          other qualifications.  The amendments also clarified that  
          elementary districts that have territory in another  
          participating (high school or unified) district may still  
          participate.

           ANALYSIS  :    Existing law authorizes cities, counties, and  
          special districts to impose a general tax for general  
          governmental purposes with the approval of a majority of  
          the voters.  Prohibits special purpose districts and  
          agencies, including schools districts, from levying a  
          general tax, authorizes cities, counties, and special  
          districts to impose a special tax for specified purposes  
          with the approval of two-thirds of the voters.  Does not  
          allow cities, counties, or special districts to impose an  
          ad valorem tax on real property, or a transactions tax or  
          sales tax on the sale of real property within that city,  
          county, or special district, and authorizes school  
          districts to impose qualified special taxes, in accordance  
          with specified procedures, including the approval of  
          two-thirds of the voters in the district, and provides that  
          "qualified special taxes" must apply uniformly to all  
          taxpayers or all real property within the school district  
          and do not include special taxes imposed on a particular  
          class of property or taxpayers.

          This bill:

          1. Provides that, subject to Section 4 of Article XIII A of  
             the California Constitution, an education finance  
             district may impose qualified special taxes within the  
             district.

          2. Authorizes the following school districts to create an  
             education finance district:

             A.    Three or more contiguous school districts  
                located wholly or partially within the same county.

             B.    Two school districts within a county containing  
                only two school districts.

             C.    If a county contains only one school district,  
                that school district may form an education finance  
                district with two or more contiguous school  







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                districts in adjoining counties.

          3. Requires the governing bodies of each school district  
             that participates in establishing an education finance  
             district to do both of the following:

             A.    Adopt a resolution to participate in the  
                education finance district.

             B.    Enter into a mutual agreement with the other  
                school districts participating in the education  
                finance district regarding the division and  
                expenditure of the revenue raised by a qualified  
                special tax.

          4. Specifies that three or more contiguous school districts  
             that decide to form an education finance district may  
             not deny participation in the education finance district  
             to a school district with a population of pupils 70  
             percent or greater from "lower income households", as  
             defined in Health and Safety Code (H&SC) Section  
             50079.5, or "very low income households", as defined in  
             H&SC Section 50105, provided that that school district  
             meets all of the applicable requirements.

           Background
           
          Prior to 1970, the state's K-12 schools relied largely on  
          local property taxes levied at different rates and yielding  
          different amounts per pupil in the more than 1,000 school  
          districts of the state.  State court rulings in the  Serrano  
          v. Priest  equalization lawsuit forced the state to revise  
          basic school finance and established the revenue limit  
          system that exists today.  Revenue limits had the effect of  
          making the level of local property taxes almost irrelevant  
          to schools since each additional dollar of property tax  
          within the revenue limit simply relieved the state of the  
          obligation to provide that dollar.  Similarly, if property  
          tax revenues declined, the state was obligated to replace  
          the dollar up to the district's revenue limit.  Property  
          taxes remained relevant to about 100 "basic aid" school  
          districts who were fortunate enough to receive more  
          property tax than required by their revenue limits, and all  
          districts were still able to levy property tax increments  







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          outside of revenue limits, if the override was locally  
          approved for a specific purpose. In 1978, Proposition 13  
          limited both tax rates and assessments thereby  
          significantly reducing property tax revenues and forcing  
          the state to replace the lost revenues in district revenue  
          limits.  However, Proposition 13's limit on tax rates ended  
          the ability of school districts to levy incremental rates.   
          Since that time, school districts have established some  
          ability to generate limited local revenues from (non ad  
          valorem) parcel taxes that must be approved by a 2/3 vote  
          locally, but most school funding is either received from  
          the state or federal governments, or controlled by the  
          state through revenue limits required to equalize per pupil  
          funding.

           Prior/Related legislation  .

          ACA 10 (Torlakson) of 2009, would, upon approval of a vote  
          of the people statewide, amend the California Constitution  
          to lower the constitutional vote requirement for approval  
          of a special tax to be levied by an education finance  
          district from two-thirds to a (50 percent+1) majority of  
          the district voters.

          SB 1430 (Torlakson) as amended on April 10, 2008, was  
          identical to this bill.  Its companion measure, SCA 18  
          (Torlakson) of 2008, would have reduced the vote threshold  
          for special taxes levied by an education finance district  
          from two-thirds to a majority of the electorate.  Both SB  
          1430 and SCA 18 died in the Senate.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  9/1/09)

          California Association of School Business Officials
          California school Boards Association
          California School employees Association, AFL-CIO
          California Teachers Association
          Riverside County Schools Advocacy Association
          San Francisco Unifies School District
          Small School Districts' Association








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           OPPOSITION  :    (Verified  9/1/09)

          California Taxpayers' Association
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    The author's office states that,  
          "California's budget crisis must be resolved without  
          breaking the state's commitment to education.  Local  
          revenue generation and local control for our schools must  
          be a component to how we get ourselves out of this budget  
          mess.  The lower school bond threshold has been  
          instrumental in reviving California's school facilities.  A  
          majority vote for local education finance districts  
          promises to similarly rebuild the education of our  
          children."

          The proponents argue that local communities should be able  
          to explore local resources to meet local priorities and  
          should be able to tax themselves, if needed, to invest in  
          education.  The proponents assert that the percentage of  
          school district revenues coming from the state has  
          increased significantly over the last 30 years, eroding  
          local control over resources and priorities.  As state  
          funding is being reduced, school districts have very few  
          options to cope with the loss of funding.  The proponents  
          believe that this bill, in partnership with ACA 10  
          (Torlakson) of 2009, would give education finance districts  
          the tools necessary to navigate these uncertain economic  
          times, by addressing their needs at the local level and  
          relying less on the timely passage of a State Budget. 

           ARGUMENTS IN OPPOSITION :    The opponents argue that  
          expanding the tax authority to education finance districts  
          could cause duplicative and/or increased taxation and  
          overburdening of taxpayers who already live and operate in  
          an enormously high-tax state.

           ASSEMBLY FLOOR  : 
          AYES:  Ammiano, Arambula, Beall, Blumenfield, Brownley,  
            Buchanan, Caballero, Charles Calderon, Carter, Chesbro,  
            Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer,  
            Fong, Fuentes, Furutani, Hall, Hayashi, Hernandez, Hill,  
            Huffman, Jones, Krekorian, Lieu, Bonnie Lowenthal, Ma,  
            Mendoza, Nava, John A. Perez, V. Manuel Perez,  







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            Portantino, Price, Ruskin, Salas, Saldana, Skinner,  
            Solorio, Swanson, Torlakson, Torres, Torrico, Bass
          NOES:  Adams, Anderson, Bill Berryhill, Tom Berryhill,  
            Blakeslee, Conway, Cook, DeVore, Duvall, Fletcher,  
            Fuller, Gaines, Galgiani, Garrick, Gilmore, Hagman,  
            Harkey, Huber, Jeffries, Knight, Logue, Miller, Nestande,  
            Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran,  
            Villines
          NO VOTE RECORDED:  Block, Emmerson, Monning, Yamada


          DLW:do  9/2/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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