BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 92|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 92
Author: Assembly Budget Committee
Amended: 6/12/13 in Senate
Vote: 21
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Act of 2013: State Administration Trailer
Bill
SOURCE : Author
DIGEST : This bill makes various statutory changes necessary
to implement the state administration related provisions of the
Budget Act of 2013.
ANALYSIS : This bill includes the following key changes:
Housing and Infill Development: Liquidation of Encumbrances .
Existing law provides that there is a Transit-Oriented
Development Implementation Fund from which the Department of
Housing and Community Development may provide grants and loans
to cities, counties, transit agencies, and developers, for the
purpose of developing higher density uses within close proximity
to transit stations that will increase public transit
participation. Existing law provides that there is a Regional
Planning, Housing, and Infill Incentive Account in the Housing
and Emergency Trust Fund of 2006, from which funds shall be made
available upon appropriation of the Legislature. The funds are
available for infill incentive grants for capital outlay related
CONTINUED
AB 92
Page
2
to infill housing development and other related infill
development. Existing law appropriates various sums to both
funds for use by the department for liquidation of encumbrances
for limited periods of time.
This bill extends the period of time during which the
appropriated funds shall be available for liquidation for
encumbrance until June 30, 2017. This bill also extends the
period of time which appropriated funds from the Regional
Planning, Housing, and Infill Incentive Account shall be
available for liquidation of encumbrances until June 30, 2017.
Community Development . Existing law, the Housing and Emergency
Shelter Trust Fund Act of 2006, authorizes the issuance of
general obligation bonds in the amount of $2,850,000,000.
Proceeds of these bonds are used to finance various existing
housing programs, capital outlay related to infill development,
brownfield cleanup that promotes infill development,
housing-related parks, and transit-oriented development
administered by the Department of Housing and Community
Development. Existing law appropriates $50,000,000 of bond
revenues to the Department of Housing and Community Development.
From that amount, existing law allocates $25,000,000 from the
Regional Planning, Housing, and Infill Incentive Account for
infill incentive grants, and allocates $25,000,000 from the
Transit-Oriented Development Implementation Fund for
transit-oriented grants, loans and money allocated and
appropriated, that become disencumbered and redeposited in the
Transit-Oriented Development Account, during the 2012-13 fiscal
year, for the purpose of funding transit-oriented grants and
loans.
This bill allocates any funds that have been allocated and
appropriated, that became disencumbered and redeposited in the
Transit-Oriented Development Account during the 2013-14 fiscal
year, for the purpose of funding transit oriented grants and
loans.
Section 1031 "Like-Kind" Exchanges . Under the personal income
tax and the corporation tax, taxpayers are allowed to defer
income taxes pursuant to certain exchanges of property. In
conformity with federal law in the Internal Revenue Code Section
1031, California tax law allows that no gain or loss is
recognized on the exchange of property held for investment
CONTINUED
AB 92
Page
3
purposes, if that property is exchanged for property of
"like-kind" that is to be held for investment purposes.
Existing law also allows the Franchise Tax Board (FTB) to
propose an assessment upon failure to file a return, if
required.
This bill, effective January 1, 2014, requires taxpayers to file
an informational return with the FTB if the property purchased
in such "like-kind" exchange, is located out-of-state. In the
event the annual notice or a required tax return is not filed,
FTB is authorized to estimate net income and assess the tax owed
pursuant to existing law.
"Triple Flip" Clarification . The state issued Economic Recovery
Bonds (ERBs) in the amount of $15 billion in 2004. In order to
establish security on the bonds, legislation provided for a
dedicated sales tax funded by a shift of one-quarter-cent local
sales tax to the state. Local governments are compensated on a
dollar-for-dollar basis by an increase in property tax revenue
from Educational Revenue Augmentation Fund (ERAF), resources
that will otherwise have gone to K-12 education. Local
education, in turn, is made whole by an increase in the state
minimum funding guarantee under Proposition 98. This "triple
flip" is in place until the bonds are retired (estimated to be
2016), after which point, the one-quarter-cent sales tax will
revert to local governments, property tax shifts from ERAF to
local governments will cease, and the General Fund payments to
local education will decline by an amount equal to the
reinstated property tax revenues. Sales taxes are distributed
to local governments three months after collection, which
amounts are the basis of the ERAF property tax shift to
compensate local governments for the one-quarter-cent sales tax
reduction. Thus, during a fiscal year, the amounts actually
distributed to local governments correspond to a period of time
that includes one-quarter of the prior fiscal year and
three-quarters of the current fiscal year. The original
legislation was designed to hold local governments harmless
during the period the bonds are outstanding. However, because
of the three month lag period between the collection of the
sales tax and distribution to local governments, local
governments (under the current language) will come up short in
the amount of one-quarter's worth of revenue.
Because this lag was not incorporated in the original language,
CONTINUED
AB 92
Page
4
this bill clarifies that after the ERBs are paid-off, local
governments will be compensated for the final two quarters of
sales tax from the special one-quarter-cent sales tax.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Budget and Fiscal Review Committee, this
bill should not result in any changes to the Budget Act or
related Budget actions. This bill contains an appropriation and
has been identified as related to the Budget in the Budget Bill.
JJA:d 6/13/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****
CONTINUED