BILL ANALYSIS AB 1690 Page 1 Date of Hearing: April 14, 2010 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair AB 1690 (Chesbro) - As Introduced: January 27, 2010 SUBJECT : Disaster relief: County of Humboldt earthquake. SUMMARY : Allows special tax treatment for losses sustained as a result of the earthquake that occurred on January 9, 2010, in Humboldt County. Specifically, this bill : 1)Provides reimbursement for property tax losses resulting from the reassessment of properties damaged by the January 2010 earthquake in Humboldt County. 2)Requires, by October 30, 2010, the auditor of Humboldt County 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 January 2010 earthquake. 3)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 the County for reimbursement in property tax loss. 4)Provides that any dwelling that qualified for a homeowners' property tax exemption before the January 2010 earthquake in Humboldt County, that was damaged or destroyed by that earthquake, 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. 5)Provides that a taxpayer's excess disaster loss shall be carried forward to future years for any loss sustained in Humboldt County as a result of the January 2010 earthquake. 6)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 the January 2010 earthquake in Humboldt County. AB 1690 Page 2 7)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. 8)Makes findings and declarations that this act fulfills a statewide public purpose because of the Governor's declarations of a state of emergency, which constituted conditions of extreme peril to public health and safety to persons and property within Humboldt County, thus qualifying affected persons for various forms of governmental assistance and relief. 9)Contains an urgency clause. EXISTING LAW : 1)Provides, under the California Disaster Assistance Act, a list of disasters eligible for full state reimbursement of local agency costs. 2)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. 3)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. 4)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. 5)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 AB 1690 Page 3 COMMENTS : 1)On January 12, 2010, Governor Schwarzenegger declared a state of emergency as a result of the earthquake that occurred in Humboldt County on January 9, 2010. Traditionally, when a disaster has occurred in California that receives a declaration of a state of emergency by the Governor, the state has enacted legislation to keep counties whole with respect to any loss of property tax revenue the local government experienced from reduced property values from the disaster. This bill follows a longstanding state policy of backfilling county losses resulting from reduced property values. 2)Support Arguments . AB 1690, sponsored by Humboldt County, specifically provides that Humboldt County is 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 earthquake into future taxable years and ensures that standard property tax deductions continue for those displaced from their homes by the earthquake. The California State Association of Counties (CSAC), in support, writes that "this type of disaster assistance is critical to the recovery of the area because it allows owners of homes and business damaged by natural disasters to be eligible to apply for property tax relief." 3)Opposition Arguments . None at this time. 4)AB 1690 is similar to AB 1662 (Portantino), and AB 1766 (Gaines), which are currently pending in the Committee, and other disaster bills 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 1690 Page 4 Support County of Humboldt [SPONSOR] CA Professional Firefighters CA State Association of Counties Opposition None on file Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958