BILL ANALYSIS
AB 1662
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Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Anthony J. Portantino, Chair
AB 1662 (Portantino) - As Amended: April 7, 2010
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Disaster relief
SUMMARY : Adds the wildfires that occurred in the Counties of
Los Angeles and Monterey in 2009 (2009 Wildfires) and the severe
winter storms that occurred in the Counties of Calaveras,
Imperial, Los Angeles, Orange, Riverside, San Bernardino, San
Francisco, and Siskiyou in 2010 (2010 Storms) to the list of
disasters eligible for full state reimbursement of local
property tax losses, beneficial homeowners' property tax
exemption treatment, and special "carry forward" treatment of
excess disaster losses. Specifically, this bill :
1)Provides that, notwithstanding existing law, the state share
shall be up to 100% of total state eligible costs connected
with the severe winter storms, flooding, and debris and mud
flows that occurred in Northern, Central, and Southern
California from January 17, 2010, to February 6, 2010, as
specified in agreements between this state and the United
States for federal financial assistance.
2)Provides a mechanism for reimbursing eligible counties for
property tax losses resulting from the reassessment of
properties damaged by the 2009 Wildfires and the 2010 Storms.
3)Provides that any dwelling that qualified for a homeowners'
property tax exemption before the commencement dates of the
2009 Wildfires, that was damaged or destroyed by the 2009
Wildfires, and that has not changed ownership since the
commencement dates of the 2009 Wildfires, 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.
4)Provides identical homeowners' property tax exemption
treatment for victims of the 2010 Storms.
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5)Provides that any taxpayer's excess disaster loss resulting
from the 2009 Wildfires and/or 2010 Storms shall be carried
forward to each of the five taxable years following the
taxable year for which the loss is claimed. However, if there
is any excess disaster loss remaining after this five-year
period, then the applicable percentage of that excess disaster
loss shall be carried forward to each of the next 10 taxable
years.
6)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.
7)Takes immediate effect as an urgency measure.
EXISTING LAW :
1)Property Tax Reassessment : Allows each county, by ordinance,
to provide for the reassessment of properties damaged by a
calamity, disaster, or misfortune. Taxpayers owning damaged
property must apply for a reassessment within the time period
specified in the applicable county's ordinance or within 12
months of the misfortune or calamity, whichever is later. The
application for reassessment must show the condition and value
of the property after the damage and the dollar value of the
damage. Once the property is reassessed, the taxpayer is
entitled to a refund of any excess property tax paid on the
property. If the affected property is subsequently repaired,
its value is subject to an upward reassessment by the county.
2)Homeowners' Exemption :
a) Exempts the first $7,000 of the full value of a dwelling
from property tax, when the dwelling is occupied by an
owner as his/her principal residence. However, if a
property is no longer owner-occupied or is vacant on the
lien date (January 1), the property is not eligible for the
exemption for the succeeding tax year.
b) Provides certain disaster-related exceptions to the
general rule that a property must be owner-occupied on the
lien date to receive the homeowners' exemption. Under
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these exceptions, properties that were eligible for the
homeowners' exemption immediately before the disaster, do
not change ownership after the disaster, and are vacant
solely because of damage incurred during the disaster,
continue to be eligible for the homeowners' exemption.
3)Income Tax Losses:
a) Allows non-business taxpayers with casualty losses that
are not reimbursed by insurance and that exceed $100 plus
10% of the taxpayer's adjusted gross income (AGI) to claim
these losses as itemized deductions on their tax return.
Taxpayers may carry forward 100% of any remaining losses
for up to 10 years. Corporate taxpayers with casualty
losses that are not reimbursed by insurance are not subject
to the $100 plus 10% of AGI threshold, but are subject to
the same carry forward rules that apply to individual
taxpayers.
b) Allows both individual and corporate taxpayers who
experience losses as a result of certain named disasters to
claim these losses either in the year in which the loss
occurred or in the preceding year.
FISCAL EFFECT :
1)Property Tax Reassessment and Homeowners' Exemption : The
Board of Equalization (BOE) estimates that the cost of
reimbursing the counties' property tax losses and of extending
the homeowners' exemption would be less than $500,000.
2)Income Tax Losses : The Franchise Tax Board has not yet
provided a revenue estimate for the carry forward provisions
of this bill.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
On August 26, 2009, the Station Fire in Los Angeles County
was reported burning in the Angeles Forest. This mostly
rural area contains forested and chaparral vegetation and
abuts many foothill communities in Los Angeles County.
Aided by winds and hot temperatures the fire quickly spread
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out of control. A report issued by the U.S. Department of
Agriculture subsequently attributed extremely dry
vegetation, extremely steep terrain and inaccessible fire
locations to the spread of the fire and the inability of
fire personnel to contain it.
Ultimately the fire consumed over 160,000 acres, destroyed
209 structures of which 89 were homes and caused the deaths
of two fire fighters. Because the Station Fire denuded the
hillsides and steep terrain of the Angeles Forest, heavy
rains in February of 2010 . . . caused mudslides and flash
flooding that has destroyed or damaged at least 86 homes.
AB 1662 would allow victims who lost homes and other
property to claim disaster loss treatment, for losses
sustained as a result of the August, 2009 Station Fire in
Los Angeles County. The purpose of this bill is to provide
immediate tax relief to individuals and businesses affected
by that wildfire. As an urgency measure, this bill would
be effective and operative immediately upon enactment.
AB 1662 would provide disaster-related tax relief for
losses sustained as a result of the wildfire that occurred
in Los Angeles County in August 2009. The legislation
would include state reimbursement to backfill property tax
revenue losses resulting from assessment reductions because
of these wildfires. These tax benefits are necessary tools
for these areas to recover from these disasters as quickly
as possible.
2)Proponents state, "Existing law authorizes a county board of
supervisors to declare a local emergency attributable to a
natural disaster, and to provide by ordinance for the
reassessment of property that is damaged or destroyed by the
disaster. Existing law provides for the continuing
appropriation of funds to the Special Fund for Economic
Uncertainties to pay for those reimbursement costs. AB 1662
is fully consistent with prior legislative action providing
for State reimbursement of lost local government property tax
revenues resulting from the disaster precipitating a
Governor's State of Emergency."
3)Committee Staff Comments
a) Double-referral: This bill was double-referred with the
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Assembly Local Government Committee, and passed out of that
committee by a vote of 8 to 0 on April 14, 2010. For
additional discussion of this bill's provisions, please
refer to that committee's analysis.
b) Related Legislation:
i) AB 1690 (Chesbro), of the current Legislative
Session, would provide disaster assistance for losses
sustained as a result of the earthquake that struck
Humboldt County on January 9, 2010. AB 1690 is set for
hearing in this Committee on May 3, 2010. AB 1690 was
double-referred with the Assembly Local Government
Committee, and passed out of that committee by a vote of
8 to 0 on April 14, 2010.
ii) AB 1782 (Harkey), of the current Legislative
Session, would provide automatic disaster tax relief to
counties affected by a Governor-declared disaster. AB
1782 is set for hearing in this Committee along with this
bill.
iii) Should these bills all continue to progress through
the legislative process, appropriate amendments should be
taken to prevent chaptering out issues.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles County Board of Supervisors
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098