BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: AB 2643 HEARING: 6/27/12 AUTHOR: Ma FISCAL: No VERSION: 5/29/12 TAX LEVY: No CONSULTANT: Grinnell PROPERTY TAXES Enacts three changes to laws guiding property tax payment and collection. Background and Proposed Law County Treasurer-Tax Collectors administer the billing and collection of the property tax, in addition to their fiduciary duties over county treasuries. Each year, the California Association of County Treasurer-Tax Collectors sponsor an omnibus bill that makes several technical changes to the laws guiding property tax administration I. Refunds and Replicated Payments. Currently, if a tax collector received a replicated payment, a payment of property taxes on a property where the taxes have already been paid, must be refunded to the taxpayer within 60 days. However, some taxpayers who own multiple properties make replicated payments on one property while being delinquent on another. Assembly Bill 2643 allows the tax collector to apply replicated payments toward delinquent taxes due for any property owned by that taxpayer, similar to refunds. II. Penalty relief. The California Constitution (Article XIIA, Section 2(b)) allows a temporary reduction in property tax when a property's fair market value declines below its assessed value (Proposition 8, 1978). Some taxpayers who applied for Prop 8 reassessments haven't been paying their existing bills, and then request cancellation of penalties that result from failing to pay. AB 2643 provides that when a taxpayer fails to pay property tax on a property subject to Prop 8 review, penalty relief only applies to the difference to the assessor's final determination of value and the value on the assessment roll for that fiscal year, not the entire penalty amount. The bill applies only to Prop 8 reassessments, and also AB 2643 - 5/29/12-- Page 2 provides that a taxpayer that paid 80% of the final amount of tax within 30 days of the Prop 8 application can pay the remainder without penalty. Tax collectors must inform taxpayers of this requirement, which only becomes operative if the county board of supervisors enacts an ordinance or ordinance, and the tax collector also consents. III. County Pool Rate. Existing law establishes an interest rate the county must pay to taxpayers who win refunds of overpaid property taxes, stated as the higher of three per cent per year or the county pooled money rate, which is interest the county makes on its own idle funds, and can rise or fall over time. The treasurer must calculate the pooled money rate at the annualized rate as of June 30 of the preceding fiscal year for which he or she calculates the refund. The treasurer must advise the Controller of the county pool rate no later than 60 days after the end of the fiscal year. AB 2643 extends the period of time for treasurers to report to the Controller from 60 to 90 days. State Revenue Impact No estimate. Comments 1. Purpose of the bill . According to the author, "AB 2643 makes some important changes to property tax collection procedures, to make the law clearer for taxpayers. Current law does not explicitly state what taxpayers' obligation is regarding property taxes during an informal assessment appeal. This bill will clarify that taxpayers must pay their property taxes during that time. Secondly, this measure authorizes tax collectors to apply duplicate payments made on the same property to delinquent bills, instead of returning the duplicate payment and then sending the delinquent notice. Finally, this bill clarifies that tax collectors may wait 90 days to report the pool rate, instead of the current 60 days. This modest change in law is reflective of the time needed to do the calculation. These changes in law are intended to improve the taxpayer's experience by making the procedures clear and reducing confusion regarding the status of property tax payments AB 2643 - 5/29/12-- Page 3 made." Assembly Actions Assembly Local Government Committee: 8-0 Assembly Revenue and Taxation Committee:7-0 Assembly Floor: 76-0 Support and Opposition (6/21/12) Support : California Association of County Treasurer-Tax Collectors, California State Association of Counties. Opposition : Unknown.