BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 308|
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THIRD READING
Bill No: AB 308
Author: Cook (R)
Amended: 8/19/10 in Senate
Vote: 27 - Urgency
PRIOR SENATE VOTES NOT RELEVANT
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 6/30/10
AYES: Cox, Aanestad, Kehoe, DeSaulnier, Price
SENATE APPROPRIATIONS COMMITTEE : 11-0, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland, Yee
ASSEMBLY FLOOR : Not relevant
SUBJECT : Property tax revenue allocations:
state-assessed property
SOURCE : Inland Valley Development Agency
DIGEST : This bill, for 2010-11 and the following fiscal
years, requires property tax revenues from utility-owned
state-assessed unitary property that meets the specified
conditions to be allocated entirely to the county in which
the facility is located and to the tax rate area in the
county in which the property is located. The revenues must
be allocated among the jurisdictions in that tax rate area
in the same percentage shares as tax revenues from
locally-assessed property are allocated to those
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jurisdictions, subject to any allocation of property tax
increment revenues and subject to other specified
modifications or adjustments.
Senate Floor Amendments of 8/19/10 add double-jointing
language.
ANALYSIS : The California Constitution requires the Board
of Equalization (BOE) to assess public utilities for
property tax purposes. The BOE assesses utility property
as a unit, instead of assessing the individual value of
separate properties owned by the utility. State law
allocates the property tax revenues from state-assessed
public utilities differently than the property tax revenues
from locally-assessed properties.
Until 1988-89, state law allocated property tax revenues
from all state-assessed property on a situs basis among tax
rate areas. The complexity and administrative cost of
tracking property holdings and allocating property tax
revenues among thousands of small geographic locations led
the Legislature to create the current countywide method for
allocating unitary property tax revenues (AB 2890
[Hannigan], Chapter 1457, Statutes of 1986).
Under the countywide method, the BOE allocates the unitary
assessed value of utility property among the counties based
on the amount of property within each county. County
auditors allocate the property tax revenues from unitary
properties using a formula based on the amount of unitary
revenues received by the county's taxing jurisdictions in
1987-88. For years after 1987-88, each taxing jurisdiction
receives up to 102 percent of its prior year unitary
property tax revenues. The county auditor allocates the
remaining property tax revenue from the county's unitary
roll to all taxing jurisdictions in proportion to their
shares of property tax revenues derived from
locally-assessed property.
This bill, for 2010-11 and the following fiscal years,
requires property tax revenues from utility-owned
state-assessed unitary property that meets the specified
conditions to be allocated entirely to the county in which
the facility is located and to the tax rate area in the
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county in which the property is located. The revenues must
be allocated among the jurisdictions in that tax rate area
in the same percentage shares as tax revenues from
locally-assessed property are allocated to those
jurisdictions, subject to any allocation of property tax
increment revenues and subject to other specified
modifications or adjustments.
This bill allows the BOE to amend the tax rolls for the
2010-11 fiscal year to provide the property tax allocations
that the bill requires.
If utility-owned state-assessed unitary property was
constructed by a wholly owned subsidiary of a utility
before January 1, 2007, and placed in service by the
utility on or after January 1, 2007, and the property is
located in a redevelopment project area of a joint powers
authority comprised of cities and a county that adopts a
resolution stating that the property is subject to a
redevelopment plan, and the joint powers authority
transmits a copy of the resolution stating that the
property is subject to a redevelopment plan to the BOE and
the county auditor before January 1, 2011, then, for
2010-11 and following fiscal years, this bill requires that
property tax revenues from that utility-owned
state-assessed unitary property must be allocated under
requirements enacted by AB 81 (Migden), Chapter 57,
Statutes of 2002.
This bill is double-jointed with SB 1398 (DeSaulnier).
Background
The California Constitution prohibits special legislation
when a general law can apply (Article IV, Section 16).
This bill contains findings and declarations explaining the
need for legislation that applies only to the Inland Valley
Development Agency (IVDA).
To direct a greater share of property tax revenues to local
agencies in which some state-assessed facilities are
located, the Legislature has created some exceptions to
this countywide unitary tax allocation method for:
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An electrical power plant in the City of Chula Vista (San
Diego County) (AB 1108 [Peace], Chapter 1045, Statutes of
1993).
An electrical power plant in the City of Escondido (San
Diego County) (AB 2558 [Plescia], Chapter 640, Statutes
of 2004).
A PG&E education and training center in the City of
Livermore (Alameda County) (SB 53 [Lockyer], Chapter 465,
Statutes of 1991).
A PacBell computer center in the City of Fairfield
(Solano County) (AB 454 [Klehs], Chapter 921, Statutes of
1987).
The Legislature also created an exception to the countywide
unitary tax allocation method for all newly constructed
public-utility-owned large-scale electrical generation,
substation, and transmission facilities. That exception
allocates a greater share of unitary property tax revenues
to the city or county in which a qualified electrical
facility is located (SB 1317 [Torlakson], Chapter 872,
Statutes of 2006).
After the Legislature deregulated California's electric
utility industry in 1996, regulated public utilities sold
many of their electric generating facilities to unregulated
private companies. Unregulated private companies also
began building new electric generation facilities.
Regulations adopted by the BOE in 1999, made county
assessors responsible for assessing electric facilities
owned by unregulated private companies. County auditors
allocated property tax revenues from those locally-assessed
facilities, on a situs-basis, to the local jurisdictions in
which the facilities were located. In 2002, the
Legislature transferred the responsibility for assessing
electric facilities owned by unregulated private companies
back to the BOE and retained the situs-based allocation of
property tax revenues from those facilities (AB 81
[Migden], Chapter 57, Statutes of 2002).
Formed in 1990, the IVDA is a joint powers authority
comprised of the County of San Bernardino and the cities of
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Colton, Loma Linda, and San Bernardino. The IVDA is
responsible for redeveloping the non-aviation portion of
the former Norton Air Force Base and surrounding
properties. Southern California Edison's (SCE's)
Mountainview power plant is located in the City of Redlands
(San Bernardino County) within an IVDA redevelopment
project area. Until this year, an unregulated subsidiary
of SCE owned the Mountainview power plant. In March 2010,
SCE took ownership of the plant. Because it is now owned
by a regulated utility company, the plant's property tax
revenues will be allocated using the 2006 Torlakson
allocation method rather than under the 2002 Migden
allocation method. Because this change reduces property
tax revenues that the IVDA and other local agencies receive
from the Mountainview power plant, IVDA officials want the
county auditor to continue to allocate property tax
revenues from the plant using the Migden bill's allocation
method.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Foregone property tax Likely in the range of
$2,000 annually General
revenues to schools ---see staff comments
below---
Reimbursable local mandate Likely minor costs as the
bill continues General
the historical allocation methodology
Staff notes that this bill results in approximately $2
million less property tax revenue for K-14 schools
(primarily the Redlands Unified School District) than they
would otherwise receive beginning in the 2010-11 fiscal
year. The state General Fund is generally required to
backfill any property tax losses to schools. Some of this
impact would be mitigated by continued pass-through
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payments made by the IVDA to school districts, but these
payments are not subject to Proposition 98. It should be
noted that schools that would benefit in the absence of
this bill would not receive any of the increased revenues
if it were not for a simple corporate transfer of the power
plant property from an unregulated subsidiary to a
regulated public utility.
SUPPORT : (Verified 8/16/10)
Inland Valley Development Agency (source)
Colton Joint Unified School District
Hillwood
Mayor Pat Gilbreath, City of Redlands
Mayor Patrick J. Morris, City of San Bernardino
Neighborhood Housing Services of the Inland Empire, Inc
Redlands Unified School District
San Bernardino City Unified School District
San Bernardino Community College District
San Bernardino County Superintendent of Schools
San Bernardino County Supervisor Josie Gonzalez
San Bernardino County Supervisor Neil Derry
San Bernardino International Airport Authority
Stater Bros. Markets
Western Center on Law and Poverty
OPPOSITION : (Verified 8/16/10)
Department of Finance
AGB:mw 8/19/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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