BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 468|
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THIRD READING
Bill No: AB 468
Author: Smyth (R)
Amended: 5/27/11 in Assembly
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 6/22/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
Kehoe,
La Malfa, Liu
SENATE APPROPRIATIONS COMMITTEE : 9-0, 7/11/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
ASSEMBLY FLOOR : 76-0, 6/1/11 - See last page for vote
SUBJECT : Property taxes: TEA formula allocation
SOURCE : City of Simi Valley
DIGEST : This bill prohibits a reduction in the tax
equity allocation payments to the City of Simi Valley as a
result of that city serving as the successor agency of a
dissolved maintenance district, and requires Simi Valley to
reimburse the county auditor for any administrative costs.
ANALYSIS :
Existing law:
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1. Allows, under the Improvement Act of 1911, local
officials to create an assessment district to fund
transportation systems, street paving, grading,
sidewalks, parks, recreation areas, sewers, drainage
systems, fire protection, flood control systems, water
systems, and other necessary improvements.
2. Requires the auditor of each county with qualifying
cities, as defined, to make certain property tax revenue
allocations to those cities in accordance with a
specified Tax Equity Act (TEA) formula established in
statute and to make corresponding reductions in the
amount of property tax revenue that is allocated to the
county.
3. Provides, whenever a jurisdictional change is not
required to be reviewed and approved by a local agency
formation commission, the local agencies whose service
area or service responsibilities would be altered by the
proposed change, shall give notice to the State Board of
Equalization and the assessor and auditor of each county
within which the territory subject to the jurisdictional
change is located.
This bill clarifies how property taxes will be distributed
to the City of Simi Valley once the City becomes the
successor agency after the dissolution of the City's
maintenance district. Specifically, this bill:
1. Prohibits the county auditor from reducing the City of
Simi Valley's TEA payment when the City receives
additional property tax revenue due to the consolidation
of a maintenance or improvement district, commencing in
fiscal year (FY) 2011-12.
2. Requires the City of Simi Valley to reimburse the
auditor for the actual and reasonable costs incurred by
the auditor to administer the provisions of this bill.
3. Provides that reimbursement is required because this
bill provides for reimbursement to a local agency in the
form of additional revenues that are sufficient in
amount to fund the new duties that this bill imposes.
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4. States that the Legislature finds and declares that a
special law is necessary and that a general law cannot
be made applicable because of the need to ensure that
the City of Simi Valley can meet established timelines
to begin the process of immediately dissolving a
maintenance district and serving as its successor, to
simplify city accounting, and to give the city maximum
budget flexibility.
5. States that this bill is an urgency statute necessary
for the immediate preservation of the public peace,
health, or safety in order to ensure that the City of
Simi Valley can meet established timelines to begin the
process of immediately dissolving a maintenance district
and serving as its successor, and to give the city
maximum budget flexibility.
Comments
According to the Senate Governance and Finance Committee
analysis:
"About 30 cities that never levied a property tax before
Proposition 13 are called no property-tax cities, and
about 60 cities that levied only low property tax rates
are known as low property-tax cities. Counties must
shift some of their own property tax revenues to these
no/low cities in the form of TEA payments. In most
counties, TEA payments to the no/low cities are equal to
7 percent of the property tax revenues generated within
their city limits.
"The Simi Valley Lighting Maintenance District was formed
by the Simi Valley City Council in 1969 under the
provisions of the Improvement Act of 1911 to serve as a
financing mechanism in order to provide lighting
maintenance services. The Improvement Act of 1911 allows
local officials to levy benefit assessments on property
owners to pay for those public improvements and services
that specifically benefit their property. A benefit
assessment is an involuntary charge that appears on a
property owner's annual property tax bill. The amount of
the assessment is directly related to the amount of the
benefit their property receives.
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"The City of Simi Valley wants to take over the
responsibilities and dissolve the Simi Valley Lighting
Maintenance District. In order to do this, Simi Valley
follows the process in existing law to dissolve the
district, and once dissolved, any remaining revenues will
be transferred to the general fund. If assessments have
been pledged to pay off bonds, then the assessments must
continue until the bonds are paid for.
"However, there is concern that since Simi Valley is
considered a no/low property city that the dissolution of
the Simi Valley Lighting Maintenance District will impact
the TEA payment that Simi Valley receives. This bill
remedies that problem by prohibiting, starting in FY
2011-12, the county auditor from reducing the TEA payment
by reason of the City of Simi Valley receiving property
taxes that were previously allocated to a maintenance or
improvement district."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Property tax allocations Allows for retention of
maintenance Local
district property tax revenues with
successor city while statutorily
protecting Simi Valley TEA payment
Auditor mandate non-reimbursable mandate, all
countyLocal
costs reimbursed by Simi Valley (local
fee disclaimer)
SUPPORT : (Verified 7/12/11)
City of Simi Valley (source)
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ASSEMBLY FLOOR : 76-0, 6/1/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Gatto, Gordon, Grove, Hagman,
Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill,
Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. Pérez
NO VOTE RECORDED: Garrick, Gorell, Jeffries, V. Manuel
Pérez
AGB:kc 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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