BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1494|
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UNFINISHED BUSINESS
Bill No: SB 1494
Author: Senate Revenue and Taxation Committee
Amended: 8/16/10
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 5-0, 4/14/10
AYES: Wolk, Walters, Alquist, Ashburn, Padilla
SENATE FLOOR : 33-0, 4/22/10 (Consent)
AYES: Alquist, Ashburn, Calderon, Cedillo, Corbett,
Correa, Denham, DeSaulnier, Ducheny, Dutton, Florez,
Hancock, Hollingsworth, Huff, Kehoe, Leno, Liu,
Lowenthal, Maldonado, Negrete McLeod, Oropeza, Padilla,
Pavley, Price, Romero, Simitian, Steinberg, Strickland,
Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Aanestad, Cogdill, Cox, Harman, Runner,
Wiggins, Vacancy
ASSEMBLY FLOOR : 78-0, 8/19/10 - See last page for vote
SUBJECT : Property taxation
SOURCE : Board of Equalization
DIGEST : This bill, relating to property taxation, makes
the following changes including correcting a cross
reference and renumbering errors: (1) allowing trustees to
apply for and inspect parent-child transfers and base year
value transfers, (2) enacting general language precluding
assessors from revoking homeowners' exemptions for
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disaster-affected property upon a declaration of disaster
from the Governor, (3) extends the sunset on intercounty
pipeline valuation methodology, (4) clarifying language to
assessment appeals statutes, (5) providing clarifying
language to assessment appeals board conflict of interest
provisions, and (6) clarifying assessment roll statutes.
Assembly Amendments amend both the Public Resources Code
and the Rev. & Tax. Code to reflect recent changes in the
state government's organizational structure, and include
double-jointing language to avoid chaptering out conflicts
with AB 2408 (Torlakson).
ANALYSIS : This bill makes eight changes to property tax
law:
I.Renumbering Error .
Existing law (California Constitution) provides that all
property is taxable unless explicitly exempted by the
Constitution or federal law, and imposes property tax on
all taxable real and personal property. The Constitution
provides that taxation of "real" property (structures
affixed to the ground, etc.) is limited to the 1975
valuation adjusted for new construction plus an annual
inflation factor of no more than two percent. When a
change in ownership takes place, or the property is newly
constructed, assessors revalue real property at full market
value as of the year the transaction or construction takes
place.
Existing law provides that the creation, termination, and
transfer of certain leasehold interests with a term of more
than 35 years can be a change in ownership resulting in
reassessment.
This bill corrects a drafting error inadvertently created
by recent amendments made by Chapter 364, Statutes of 2006
(AB 3076, Revenue and Taxation Committee) by adding
paragraph designations (R&T 61).
II. Allowing Trustees to Apply for and Inspect
Parent-Child Transfers and Base Year Value Transfers.
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Existing law (California Constitution) provides an
exception to "change of ownership" for property transfers
between spouses under specified circumstances, for
transfers between parents and children (Proposition 58,
1986), and for transfers between grandparents and
grandchildren (Proposition 193, 1996), subject to certain
limits.
Existing law provides that a change of ownership has not
occurred when parents transfer the principal residence and
the first $1 million of full cash value of all other real
property to their children when a claim is filed. Existing
law defines "children" as:
A. Any child born of the parent or parents except
a child adopted by another person.
B. Any stepchild of the parent or parents and the
spouse of that stepchild while the relationship of
stepparent and stepchild exists.
C. Any son or daughter-in-law of the parents.
D. Any child adopted by the parent or parents
pursuant to statute.
Claims for the parent-child change in ownership must be
filed, signed, and may be inspected only by the persons
specified above. Trustees are not expressly listed;
however, the State Board of Equalization (BOE) has opined
that trustees may file for parent-child transfers as part
of their fiduciary duty.
This bill adds a trustee of a trust to that list (R&T
63.1).
Existing law allows homeowners over the age of 55 and
disabled persons one opportunity to transfer their base
year values to homes of equal or lesser value within the
same county (Proposition 60, 1988), or to homes in counties
that adopt ordinances allowing the transfer (Proposition
90, 1990), under specified conditions. Currently, Alameda,
Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and
Ventura Counties allow these out-of-county transfers. Base
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year transfers allow taxpayers to continue to pay property
taxes at the amount and rate of growth of their previous
home and prevent reassessments to the cash value of their
newly purchased home. Coowners who are joint tenants, a
tenant in common, or a community property owner may claim a
base year value transfer. BOE has opined that the present
beneficial owner of the trust, not the trustee, may claim
the base year value transfer.
This bill adds present beneficial trustees to the list of
eligible base year value claimants.
III. Relieving the Disaster of Disaster Relief .
Existing law provides a homeowners' exemption from property
taxes equal to $7,000 in assessed value (at a one percent
property tax rate, the exemption reduces property taxes by
roughly $70) for owner-occupied homes. Once granted,
homeowners' exemptions are generally permanent. However,
an Assessor may deny a homeowner's exemption if the
property becomes vacant or is under construction as of the
January 1st lien date. The homeowners' exemption is
disallowed if, on the January 1 lien date, a home
previously receiving the exemption has been totally
destroyed and has not been rebuilt and reoccupied by its
owners. However, when there is a Governor declared state
of emergency for a natural disaster, legislation is usually
enacted for each disaster to allow the exemption to remain,
the Code now contains 22 separate protections for taxpayers
from the assessor revoking the homeowners' exemption in
such a case, occasionally referred to as "the sadistic
assessor provision."
This bill enacts general language precluding assessors from
revoking homeowners' exemptions for disaster-affected
property upon a declaration of disaster from the Governor,
thereby avoiding the need for special purpose legislation
for each individual disaster.
IV.Extending Sunset on Intercounty Pipeline Valuation
Methodology .
Existing law requires that assessors value intercounty
pipeline rights-of-way according to a codified assessment
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valuation methodology (AB 1286, Takasugi, 1996), codifying
an agreement between assessors and intercounty pipeline
right-of-way owners after litigation transferred the
assessment duty from BOE to assessors in 1993 ( Southern
Pacific Pipe Lines, Inc. v. State Board of Equalization , 14
Cal.App.4th 42). Essentially, assessors determine value
based on the density classification of the pipeline on a
per-mile basis, and that value is rebuttably presumed to be
correct. The Legislature has once before extended the
methodology (AB 2612, Brewer, 2000).
This bill extends this methodology for use to the 2015-16
fiscal year.
V.Cleanup to Assessment Appeals Statutes .
Existing law provides that assessment appeals boards must
hear and decide appeal applications within two years of the
filing of the application. If the two-year time period is
not met, then the taxpayer's opinion of value will be
enrolled for the tax year covered by the appeal and in some
cases will remain in effect until the appeals board makes a
final determination.
This bill makes clarifying nonsubstantive amendments
identified by a working group of the Tax Section of the
California State Bar.
VI.Cleanup to AB 824, Assessment Appeals Board Conflict of
Interest .
Existing law bars certain county officials and employees
from representing, for compensation, property owners in
assessment appeal hearings in the county where they work.
Last year, the Legislature consolidated all affected
individuals into one section of law (AB 824, Harkey, 2009).
This bill repeals provisions in R&T 1624.3, 1636.2, and
1636.5 rendered outdated and duplicative in AB 824.
VII.Cleanup to Roll Correction Statutes .
Existing law states that incorrect entries on the
assessment roll that has been completed by the county
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assessor and delivered to the county auditor may be
corrected within certain time limits depending upon the
nature of the error or omission.
This bill makes clarifying nonsubstantive amendments
identified by a working group of the Tax Section of the
California State Bar.
VIII.Deletes Erroneous Cross Reference .
Existing law requires that property taxes paid must be
refunded if the assessment appeals board reduces an
assessed value after an appeal, under R&T 1613. However,
R&T 1613 was repealed and its provisions imported into
R&T1610.8 (SB 1063, Committee on Revenue and Taxation,
2003)
This bill corrects the cross reference error.
IX. State Government's Organizational Structure .
This bill corrects responsible state agency references in
the Emergency Telephone Users Surcharge Act (R&T 41001 et
seq.) to conform to the Governor's Reorganization Plan No.
1 of 2009, which transferred duties of the Division of
Telecommunications in the Department of General Services to
the Office of the State Chief Information Officer. It would
also correct responsible state agency references in the
Integrated Waste Management Fee Law (R&T 45001 et seq.) to
conform to SB 63 (Strickland), Chapter 21, Statutes of
2009, which abolished the California Integrated Waste
Management Board and transferred its duties to the
Department of Resources Recycling and Recovery within the
California Natural Resources Agency. Finally, SB 1494 would
delete the obsolete definition of "board" contained in the
Electronic Waste Recycling Act of 2003 (PRC 42460 et
seq.).
Purpose of the Bill
SB 1494 consolidates eight items that make minor, technical
changes to property tax law sponsored by BOE. The bill
improves the administration of property tax laws to help
both taxpayers and tax administration agencies.
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Consolidating the measures into a single bill negates the
need for individual bills to enact each change.
Additionally, the measure only contains items with
universal agreement.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/19/10)
Board of Equalization (source)
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, De La
Torre, De Leon, DeVore, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, Norby, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: Davis, Vacancy
DLW:nl 8/20/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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