BILL ANALYSIS AB 1662 Page 1 Date of Hearing: April 14, 2010 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair AB 1662 (Portantino) - As Amended: April 7, 2010 SUBJECT : Disaster relief: County of Los Angeles. SUMMARY : Allows special tax treatment for losses sustained from winter storms in January of 2010, and fires in Monterey County and Los Angeles County in August of 2009, and increases from 75% to 100% the amount of the state share of eligible state costs related to the severe winter storms that occurred in Northern, Central, and Southern California during January 2010. Specifically, this bill : 1)Provides that the state share shall be up to 100% of the total state eligible costs connected with the severe winter storms, flooding, and debris and mud flows that occurred in Northern, Central, and Southern California during the period from January 17, 2010, to February 6, 2010, as specified in agreements between the state and the United States for federal financial assistance. 2)Requires, by October 30, 2010, the auditors of Los Angeles and Monterey Counties, which were the subject of the Governor's proclamation of a state of emergency for the wildfires that commenced on August 26-27, 2009, to certify to the Director of Finance an estimate for the total amount of the reduction in property tax revenues resulting from the reassessment of properties impacted by the fires. 3)Requires, by October 30, 2010, the auditors of the Counties of Calaveras, Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Francisco, and Siskiyou, which were the subject of the Governor's proclamations of a state of emergency for the severe winter storms that commenced in January 2010, to certify to the Director of Finance an estimate for the total amount of the reduction in property tax revenues resulting from the reassessment of the properties impacted by the severe winter storms. 4)Requires the Director of Finance, within 30 days after verification of the county auditor's property tax estimate, to certify the amount to the State Controller for allocation to AB 1662 Page 2 the County for reimbursement in property tax loss. 5)Provides that any dwelling that qualified for a homeowners' property tax exemption before either disaster event, that was damaged or destroyed by either disaster, and that has not changed ownership since the date of the disaster, shall not be denied a homeowners' exemption solely because that dwelling was temporarily damaged or destroyed, or was being reconstructed by the owner, or was temporarily uninhabited as a result of restricted access. 6)Provides that any taxpayer's excess disaster loss shall be carried forward to future years for any loss sustained in either disaster. 7)States the intent of the Legislature to provide in the annual Budget Act those additional reimbursements to local governments for the property tax revenue reductions due to disasters. 8)Specifies that if the Commission on State Mandates determines that this bill contains costs mandated by the state, local agencies and school districts will be reimbursed for those costs. 9)Makes findings and declarations that this act fulfills a statewide public purpose because of the Governor's declarations of a state of emergency for both disaster events, which constituted conditions of extreme peril to public health and safety to persons and property, thus qualifying affected persons for various forms of governmental assistance and relief. 10)Contains an urgency clause. EXISTING LAW : 1)Provides that for any eligible project, the state share shall amount to no more than 75% of total state eligible costs [Government Code 8686 (a)]. 2)Specifies a list of disasters for which the state share shall be up to 100% of total state eligible costs [Government Code 8686 (b)]. 3)Provides, for any federally-declared disaster subsequent to AB 1662 Page 3 January 1, 1995, that the Legislature has designated in Government Code 8686 (b), that the state shall assume the increased share in those cases where the Federal Emergency Management Agency (FEMA) or another applicable federal agency has approved the federal share of costs. 4)Provides, under the California Disaster Assistance Act, a list of disasters eligible for full state reimbursement of local agency costs. 5)Provides for state reimbursement to backfill property tax revenue loss resulting from assessment reductions in areas that the Governor has declared to be in a state of emergency. 6)Provides for a standard homeowners' property tax exemption of $7,000, and allows dwellings damaged in disasters declared by the Governor to continue eligibility for the exemption. 7)Allows losses sustained because of a Governor-declared disaster to be carried forward to each of the five taxable years following the loss, or if the loss remains after the five years, extends the loss for the next ten years. 8)Requires that the state share of reimbursement for local costs due to a disaster not exceed 75% of total state eligible costs unless the local agency is located within a city or county that has adopted a local Hazard Mitigation Plan in accordance with the federal Disaster Mitigation Act as part of the safety element. FISCAL EFFECT : Unknown COMMENTS : 1)On August 28, 2009, Governor Schwarzenegger declared a state of emergency as a result of the wildfires in both Los Angeles County and Monterey County. On January 21, 2010, Acting Governor Brown proclaimed a state of emergency for the Counties of Los Angeles, Orange, Riverside, San Francisco and Siskiyou due to a series of winter storms that brought high winds and significant amounts of precipitation statewide. On March 8, 2010, after a request by Governor Schwarzenegger was submitted to FEMA in February, President Obama declared a major disaster for California for the severe winter storms, flooding, and debris and mud flows AB 1662 Page 4 during the period of January 17 to February 6, 2010, in the Counties of Calaveras, Imperial, Los Angeles, Riverside, San Bernardino, and Siskiyou. A previous version of this bill dealt only with disaster loss provisions for Los Angeles County. Amendments taken on April 7, 2010, add the other affected counties of both the August 2009 fire and the winter storms in January of 2010. Also, because the winter storms in January 2010 received a presidential major disaster declaration under the Stafford Act, the amendments added the winter storms to Government Code 8686(b), which provides for a higher percentage (up to 100%) of the state share of eligible state costs. Staff notes that there are 13 disasters currently listed in Government Code 8686(b), ranging from 2006 back to 1989, and each of those disasters received a presidential major disaster declaration. 2)Support Arguments . AB 1662 specifically provides that all the counties involved in the two disasters are eligible for reimbursement due to the loss of property tax resulting from the lower reassessed property value caused by the disaster. Additionally, this bill will allow homeowners to carry forward losses resulting from the two disasters in August of 2009 and January of 2010 into future taxable years and ensure that standard property tax deductions continue for those displaced from their homes by the fires. 3)Opposition Arguments . None at this time. 4)Staff notes that AB 1662 is similar to other disaster relief bills including AB 1690 (Chesbro) and AB 1766 (Gaines), which are currently pending in the Committee, and several other disaster relief measures that passed out of the Committee last year. As these disaster relief bills move forward, each will need to be amended to avoid chaptering out issues. 5)This bill is an urgency measure and will take effect immediately upon the Governor's signature. 6)This bill is double-referred to the Committee on Revenue and Taxation. REGISTERED SUPPORT / OPPOSITION : AB 1662 Page 5 Support CA State Association of Counties CA Professional Firefighters Regional Council of Rural Counties Opposition None on file Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958