BILL ANALYSIS
AB 900
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 900 (De Leon)
As Amended August 27, 2010
2/3 vote. Urgency
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|ASSEMBLY: | |(June 2, 2010) |SENATE: |37-0 |(August 30, |
| | | | | |2010) |
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(vote not relevant)
Original Committee Reference: W.P. & W.
SUMMARY : Enacts property tax refund provisions related to
overpayment by citizens in the City of Bell (City).
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Prohibit the current law governing the allocation of property
tax revenue attributable to a rate in excess of the maximum
allowable rate from applying to the City and the County of Los
Angeles (County) in fiscal years (FYs) 2007-2008, 2008-2009,
and 2009-2010.
2)Require, instead, the City to pay the County, by December 31,
2010, an amount equal to the amount of excess ad valorem
property tax collected in FYs 2007-2008, 2008-2009, and
2009-2010, including interest calculated at the average rate
earned by the City on its idle funds during those years.
3)Require the County to refund the amount it receives from the
City to any property taxpayers of the City who overpaid, in a
manner generally consistent with the County tax refund
practices.
4)Require the City to reimburse the County for the actual and
reasonable costs of administering these provisions, including
applicable administrative and overhead costs as permitted by
federal standards.
5)Require, if the County is unable to locate a taxpayer to make
a refund by December 31, 2011, that the amounts remaining from
the amounts paid by the City to the County be allocated to
elementary, high school, and unified school districts as
AB 900
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provided under current law.
EXISTING LAW :
1)Limits ad valorem taxes on real property to 1% of the full
cash value of that property as set forth in the California
Constitution.
2)Provides that property taxes are collected by counties and
allocated to cities, counties, special districts,
redevelopment agencies, and school districts within the county
pursuant to statutory allocation formulas.
3)States that if a jurisdiction imposes a property tax rate in
excess of the maximum rate authorized by the Basic Revenue
Allocations contained in the Revenue & Taxation Code, the
amount of property tax allocated to the jurisdiction shall be
reduced by $1 for each $1 of property tax revenue attributable
to the excess rate.
4)Freezes the extraordinary property tax rates imposed by a
local jurisdiction to make for pensions approved by voters
before the passage of Proposition 13 at their 1982-83 levels.
5)Provides that any property tax revenue that has been
subtracted from a jurisdiction's allocation pursuant to #3
above shall be allocated to elementary, high school, and
unified school districts within the jurisdiction's
jurisdiction in proportion to the average daily attendance of
each district.
AS PASSED BY THE ASSEMBLY , this bill required measurement and
reporting of water diversions within the Sacramento-San Joaquin
Delta to the State Water Resources Control Board.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill represents a General Fund impact of
approximately $2.9 million in foregone savings. Any amounts not
returned to taxpayers by December 31, 2011, would be reallocated
to schools, which would reduce this impact to the extent
taxpayers cannot be located. By imposing new duties on the Los
Angeles County Auditor related to the allocation of property
taxes, this bill creates a reimbursable state-mandated local
program. The bill specifies, however, that all county auditor
costs would be reimbursed instead by the City of Bell.
AB 900
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COMMENTS : An audit being conducted by the State Controller
determined that officials in the City (Los Angeles County),
during the three fiscal years between 2007 and 2010, levied an
extraordinary property tax rate to pay the City's pension
obligations that exceeded the rate allowed under state law. For
over two decades, since the passage of AB 13 (Roos), Chapter
112, Statutes of 1985, which limited extraordinary property tax
rates, the City levied an extraordinary tax rate of 0.187554% to
pay for the City's pension obligations. In 2007, City officials
began raising this extraordinary property tax rate above the
limit imposed by state law, levying rates of 0.237554% in
2007-08, 0.257554% in 2008-09, and 0.277554% in 2009-10. As a
result, property owners in the City paid approximately $2.9
million in excessive property taxes during those three years.
Under current law, the Los Angeles County Auditor must lower the
City's property allocation by this amount and pay the amount
subtracted from the City's allocation to the Los Angeles Unified
School District and the Montebello Unified School District,
which serve the City.
This bill prohibits the current law governing the allocation of
property tax revenue attributable to a rate in excess of the
maximum allowable rate from applying to the City and the County
in FYs 2007-2008, 2008-2009, and 2009-2010. Instead, this bill
requires the City to pay the County, by December 31, 2010, an
amount equal to the amount of excess ad valorem property tax
collected in FYs 2007-2008, 2008-2009, and 2009-2010, including
interest calculated at the average rate earned by the City on
its idle funds during those years.
This bill requires the County to refund the amount it receives
from the City of Bell to any property taxpayers of the City who
overpaid, in a manner generally consistent with the County's tax
refund practices. This bill also requires the City to reimburse
the county for the actual and reasonable costs of administering
the bill's provisions, including applicable administrative and
overhead costs as permitted by federal standards. If the County
is unable to locate a taxpayer to make a refund by December 31,
2011, the bill requires the amounts remaining from the amounts
paid by the City to the County to be allocated to elementary,
high school, and unified school districts as provided under
current law.
This bill is not the Legislature's only response to the City's
fiscal decisions and practices which became public this summer.
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There are at least five other bills, including AB 192 (Gatto),
AB 194 (Torrico), AB 827 (De La Torre), AB 1955 (De La Torre),
AB 2064 (Huber), and SB 501 (Correa).
Support arguments: This bill promptly corrects an injustice by
returning the unlawfully obtained property tax revenues, with
accrued interest, directly to those taxpayers who paid the
excessive amounts.
Opposition arguments: Opposition may argue that existing law
provides for a reimbursement methodology in which property
owners may file a claim directly with the county to seek
reimbursement for overpayment. Utilizing the provisions of this
bill will result in a state General Fund hit of $2.9 million,
while the existing methodology avoids any cost to the General
Fund.
The subject matter of this bill has not been heard by an
Assembly policy committee this legislative session.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
FN: 0006850