Amended in Senate September 4, 2013

Amended in Senate June 3, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 701


Introduced by Assembly Memberbegin delete John A. Pérezend deletebegin insert Quirk-Silvaend insert

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(Coauthors: Assembly Members Allen, Daly, Hagman, Harkey, Mansoor, and Wagner)

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(Coauthors: Senators Correa, Huff, Walters, and Wyland)

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February 21, 2013


begin deleteAn act to amend Section 63021.5 of, and to add Section 63024.2 to, the Government Code, relating to economic development. end deletebegin insertAn act to amend Section 97.70 of, and to repeal Section 97.80 of, the Revenue and Taxation Code, relating to local government finance.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 701, as amended, begin deleteJohn A. Pérezend delete begin insertQuirk-Silvaend insert. begin deleteCalifornia Infrastructure and Economic Development Bank. end deletebegin insertGeneral Subject: Local government finance: property tax revenue allocation: vehicle license fee adjustments: County of Orange. end insert

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Existing property tax law requires the county auditor, in each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, and generally requires that each jurisdiction be allocated an amount equal to the total of the amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction’s portion of the annual tax increment, as defined.

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Existing property tax law requires that, for purposes of determining property tax revenue allocations in each county for the 1992-93 and 1993-94 fiscal years, the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities, and special districts be reduced in accordance with certain formulas. It requires that the revenues not allocated to the county, cities, and special districts as a result of these reductions be transferred to the Educational Revenue Augmentation Fund in that county for allocation to school districts, community college districts, and the county office of education.

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For the 2004-05 fiscal year and each fiscal year thereafter, existing law requires that each city, county, and city and county receive additional property tax revenues in the form of a vehicle license fee adjustment amount, as defined, from a Vehicle License Fee Property Tax Compensation Fund that exists in each county treasury. Existing law requires that these additional allocations be funded from ad valorem property tax revenues otherwise required to be allocated to each county’s Educational Revenue Augmentation Fund for the benefit of educational entities.

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This bill would modify these reduction and transfer provisions by increasing the vehicle license fee adjustment amount for the County of Orange by $53,000,000 for the 2013-14 fiscal year and requiring that amount to be included in the calculation of the vehicle license fee adjustment amount for that county for each fiscal year thereafter.

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This bill would direct the Department of Finance and the Chancellor of the California Community Colleges to work with the County of Orange, the county auditor-controller for the County of Orange, and intervenors in obtaining a judgment that is a final and complete resolution to a specified case in which all parties agree not to seek appellate review. The bill would include findings and declarations that an appropriate resolution would be for the County of Orange to repay specified amounts over a specified period.

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By changing the manner in which property tax revenues are allocated by the county officials in the County of Orange, this bill would impose a state-mandated local program.

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Existing law, for the 2009-10 fiscal year and for each fiscal year thereafter, requires the auditor of a qualified county, as defined, to increase the total amount of ad valorem property tax revenue otherwise required to be allocated to that county by the county equity amount, as defined, and to commensurately reduce the total amount of ad valorem property tax revenue otherwise required to be allocated to the Educational Revenue Augmentation Fund in the county, as specified.

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This bill would repeal these provisions.

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This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Orange.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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Existing law establishes the California Infrastructure and Economic Development Bank in the Business, Transportation and Housing Agency. Existing law establishes that the board of directors of the bank consists of 5 members, as specified.

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This bill would add a Member of the Assembly, or a designee of the member, and a Member of the Senate, or a designee of the member, as advisory members of the board. This bill would require the bank to serve as the primary state agency for purposes of developing an application for, and applying to, any federal infrastructure bank or financing authority.

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This bill also would incorporate additional changes made by the Governor’s Reorganization Plan No. 2 of 2012.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 97.70 of the end insertbegin insertRevenue and Taxation Codeend insert
2begin insert is amended to read:end insert

3

97.70.  

Notwithstanding any otherbegin delete provision ofend delete law, for the
42004-05 fiscal year and for each fiscal year thereafter, all of the
5following apply:

6(a) (1) (A) The auditor shall reduce the total amount of ad
7valorem property tax revenue that is otherwise required to be
8allocated to a county’s Educational Revenue Augmentation Fund
9by the countywide vehicle license fee adjustment amount.

10(B) If, for the fiscal year, after complying with Section 97.68
11there is not enough ad valorem property tax revenue that is
12otherwise required to be allocated to a county Educational Revenue
13Augmentation Fund for the auditor to complete the allocation
P4    1reduction required by subparagraph (A), the auditor shall
2additionally reduce the total amount of ad valorem property tax
3revenue that is otherwise required to be allocated to all school
4 districts and community college districts in the county for that
5fiscal year by an amount equal to the difference between the
6countywide vehicle license fee adjustment amount and the amount
7of ad valorem property tax revenue that is otherwise required to
8be allocated to the county Educational Revenue Augmentation
9Fund for that fiscal year. This reduction for each school district
10and community college district in the county shall be the percentage
11share of the total reduction that is equal to the proportion that the
12total amount of ad valorem property tax revenue that is otherwise
13required to be allocated to the school district or community college
14district bears to the total amount of ad valorem property tax revenue
15that is otherwise required to be allocated to all school districts and
16community college districts in a county. For purposes of this
17subparagraph, “school districts” and “community college districts”
18do not include any districts that are excess tax school entities, as
19defined in Section 95.

20(2) The countywide vehicle license fee adjustment amount shall
21be allocated to the Vehicle License Fee Property Tax Compensation
22Fund that shall be established in the treasury of each county.

23(b) (1) The auditor shall allocate moneys in the Vehicle License
24Fee Property Tax Compensation Fund according to the following:

25(A) Each city in the county shall receive its vehicle license fee
26adjustment amount.

27(B) Each county and city and county shall receive its vehicle
28license fee adjustment amount.

29(2) The auditor shall allocate one-half of the amount specified
30in paragraph (1) on or before January 31 of each fiscal year, and
31the other one-half on or before May 31 of each fiscal year.

32(c) For purposes of this section, all of the following apply:

33(1) “Vehicle license fee adjustment amount” for a particular
34city, county, or a city and county means, subject to an adjustment
35under paragraph (2) and Section 97.71, all of the following:

36(A) For the 2004-05 fiscal year, an amount equal to the
37difference between the following two amounts:

38(i) The estimated total amount of revenue that would have been
39deposited to the credit of the Motor Vehicle License Fee Account
40in the Transportation Tax Fund, including any amounts that would
P5    1have been certified to the Controller by the auditor of the County
2of Ventura under subdivision (j) of Section 98.02, as that section
3read on January 1, 2004, for distribution under the law as it read
4on January 1, 2004, to the county, city and county, or city for the
52004-05 fiscal year if the fee otherwise due under the Vehicle
6License Fee Law (Pt. 5 (commencing with Section 10701) of Div.
72) was 2 percent of the market value of a vehicle, as specified in
8Section 10752 and 10752.1 as those sections read on January 1,
92004.

10(ii) The estimated total amount of revenue that is required to be
11distributed from the Motor Vehicle License Fee Account in the
12Transportation Tax Fund to the county, city and county, and each
13city in the county for the 2004-05 fiscal year under Section 11005,
14as that section read on the operative date of the act that amended
15this clause.

16(B) (i) Subject to an adjustment under clause (ii), for the
172005-06 fiscal year, the sum of the following two amounts:

18(I) The difference between the following two amounts:

19(Ia) The actual total amount of revenue that would have been
20deposited to the credit of the Motor Vehicle License Fee Account
21in the Transportation Tax Fund, including any amounts that would
22have been certified to the Controller by the auditor of the County
23of Ventura under subdivision (j) of Section 98.02, as that section
24read on January 1, 2004, for distribution under the law as it read
25on January 1, 2004, to the county, city and county, or city for the
262004-05 fiscal year if the fee otherwise due under the Vehicle
27License Fee Law (Part 5 (commencing with Section 10701) of
28Division 2) was 2 percent of the market value of a vehicle, as
29specified in Sections 10752 and 10752.1 as those sections read on
30January 1, 2004.

31(Ib) The actual total amount of revenue that was distributed
32from the Motor Vehicle License Fee Account in the Transportation
33Tax Fund to the county, city and county, and each city in the county
34for the 2004-05 fiscal year under Section 11005, as that section
35read on the operative date of the act that amended this
36sub-subclause.

37(II) The product of the following two amounts:

38(IIa) The amount described in subclause (I).

39(IIb) The percentage change from the prior fiscal year to the
40current fiscal year in gross taxable assessed valuation within the
P6    1jurisdiction of the entity, as reflected in the equalized assessment
2roll for those fiscal years. For the first fiscal year for which a
3change in a city’s jurisdictional boundaries first applies, the
4percentage change in gross taxable assessed valuation from the
5prior fiscal year to the current fiscal year shall be calculated solely
6on the basis of the city’s previous jurisdictional boundaries, without
7 regard to the change in that city’s jurisdictional boundaries. For
8each following fiscal year, the percentage change in gross taxable
9assessed valuation from the prior fiscal year to the current fiscal
10year shall be calculated on the basis of the city’s current
11jurisdictional boundaries.

12(ii) The amount described in clause (i) shall be adjusted as
13follows:

14(I) If the amount described in subclause (I) of clause (i) for a
15particular city, county, or city and county is greater than the amount
16described in subparagraph (A) for that city, county, or city and
17county, the amount described in clause (i) shall be increased by
18an amount equal to this difference.

19(II) If the amount described in subclause (I) of clause (i) for a
20particular city, county, or city and county is less than the amount
21described in subparagraph (A) for that city, county, or city and
22county, the amount described in clause (i) shall be decreased by
23an amount equal to this difference.

24(C) For the 2006-07 fiscal year and for each fiscal year
25thereafter, the sum of the following two amounts:

26(i) The vehicle license fee adjustment amount for the prior fiscal
27year, if Section 97.71 and clause (ii) of subparagraph (B) did not
28apply for that fiscal year, for that city, county, and city and county.

29(ii) The product of the following two amounts:

30(I) The amount described in clause (i).

31(II) The percentage change from the prior fiscal year to the
32current fiscal year in gross taxable assessed valuation within the
33jurisdiction of the entity, as reflected in the equalized assessment
34roll for those fiscal years. For the first fiscal year for which a
35change in a city’s jurisdictional boundaries first applies, the
36percentage change in gross taxable assessed valuation from the
37prior fiscal year to the current fiscal year shall be calculated solely
38on the basis of the city’s previous jurisdictional boundaries, without
39regard to the change in that city’s jurisdictional boundaries. For
40each following fiscal year, the percentage change in gross taxable
P7    1assessed valuation from the prior fiscal year to the current fiscal
2year shall be calculated on the basis of the city’s current
3jurisdictional boundaries.

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4(2) For the 2013-14 fiscal year, the vehicle license fee
5adjustment amount that is determined under subparagraph (C) of
6paragraph (1) for the County of Orange shall be increased by
7fifty-three million dollars ($53,000,000). For the 2014-15 fiscal
8year and each fiscal year thereafter, the calculation of the vehicle
9license fee adjustment amount for the County of Orange under
10subparagraph (C) of paragraph (1) shall be based on a prior fiscal
11year amount that reflects the full amount of this one-time increase
12of fifty-three million dollars ($53,000,000).

end insert
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13(2)

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14begin insert(3)end insert “Countywide vehicle license fee adjustment amount” means,
15for any fiscal year, the total sum of the amounts described in
16begin delete paragraphend deletebegin insert paragraphsend insert (1)begin insert and (2)end insert for a county or city and county,
17and each city in the county.

begin delete

18(3)

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19begin insert(4)end insert On or before June 30 of each fiscal year, the auditor shall
20report to the Controller the vehicle license fee adjustment amount
21for the county and each city in the county for that fiscal year.

22(d) For the 2005-06 fiscal year and each fiscal year thereafter,
23the amounts determined under subdivision (a) of Section 96.1, or
24any successor to that provision, shall not reflect, for a preceding
25fiscal year, any portion of any allocation required by this section.

26(e) For purposes of Section 15 of Article XI of the California
27Constitution, the allocations from a Vehicle License Fee Property
28Tax Compensation Fund constitute successor taxes that are
29otherwise required to be allocated to counties and cities, and as
30successor taxes, the obligation to make those transfers as required
31by this section shall not be extinguished nor disregarded in any
32manner that adversely affects the security of, or the ability of, a
33county or city to pay the principal and interest on any debts or
34obligations that were funded or secured by that city’s or county’s
35allocated share of motor vehicle license fee revenues.

36(f) This section shall not be construed to do any of the following:

37(1) Reduce any allocations of excess, additional, or remaining
38funds that would otherwise have been allocated to county
39superintendents of schools, cities, counties, and cities and counties
40pursuant to clause (i) of subparagraph (B) of paragraph (4) of
P8    1subdivision (d) of Sections 97.2 and 97.3 or Article 4 (commencing
2with Section 98) had this section not been enacted. The allocations
3required by this section shall be adjusted to comply with this
4paragraph.

5(2) Require an increased ad valorem property tax revenue
6allocation or increased tax increment allocation to a community
7redevelopment agency.

8(3) Alter the manner in which ad valorem property tax revenue
9growth from fiscal year to fiscal year is otherwise determined or
10allocated in a county.

11(4) Reduce ad valorem property tax revenue allocations required
12under Article 4 (commencing with Section 98).

13(g) Tax exchange or revenue sharing agreements, entered into
14prior to the operative date of this section, between local agencies
15or between local agencies and nonlocal agencies are deemed to be
16 modified to account for the reduced vehicle license fee revenues
17resulting from the act that added this section. These agreements
18are modified in that these reduced revenues are, in kind and in lieu
19thereof, replaced with ad valorem property tax revenue from a
20Vehicle License Fee Property Tax Compensation Fund or an
21Educational Revenue Augmentation Fund.

22begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 97.80 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
23repealed.end insert

begin delete
24

97.80.  

(a) Notwithstanding any other provision of law, for the
252009-10 fiscal year and for each fiscal year thereafter, the auditor
26of a qualified county shall do both of the following:

27(1) Increase the total amount of ad valorem property tax revenue
28that is otherwise required to be allocated to that county by the
29county equity amount.

30(2) (A) Decrease the total amount of ad valorem property tax
31 revenue that is otherwise required to be allocated to the county
32Educational Revenue Augmentation Fund by the county equity
33amount.

34(B) If, for any fiscal year, there is not enough ad valorem
35property tax revenue that is otherwise required to be allocated to
36a county Educational Revenue Augmentation Fund for the auditor
37to complete the allocation reduction required by subparagraph (A),
38the auditor shall additionally reduce the total amount of ad valorem
39property tax revenue that is otherwise required to be allocated to
40all school districts in the county for that fiscal year by an amount
P9    1equal to the difference between the county equity amount and the
2amount of ad valorem property tax revenue that is otherwise
3required to be allocated to the county Educational Revenue
4Augmentation Fund for that fiscal year. This reduction for each
5school district in the county shall be the percentage share of the
6total reduction that is equal to the proportion that the total amount
7of ad valorem property tax revenue that is otherwise required to
8be allocated to the school district bears to the total amount of ad
9valorem property tax revenue that is otherwise required to be
10allocated to all school districts in a county. For purposes of this
11subparagraph, “school districts” do not include any districts that
12are excess tax school entities, as defined in Section 95.

13(C) Any reduction in the amount of ad valorem property tax
14revenues deposited in the county’s Educational Revenue
15Augmentation Fund as a result of subparagraph (A) shall be applied
16exclusively to reduce the amounts that are allocated from that fund
17to school districts and county offices of education, and shall not
18be applied to reduce the amounts of ad valorem property tax
19revenues that are otherwise required to be allocated from that fund
20to community college districts.

21(b) For purposes of this section:

22(1) “Qualified county” means the county that, of all the counties
23in the state, was allocated the lowest percentage of countywide ad
24valorem property tax revenue for the 2006-07 fiscal year.

25(2) “County equity amount” means thirty-five million dollars
26($35,000,000) for each of the 2009-10 and 2010-11 fiscal years,
27and fifty million dollars ($50,000,000) for the 2011-12 fiscal year
28and each fiscal year thereafter.

29(c) For the 2009-10 fiscal year and for each fiscal year
30thereafter, ad valorem property tax revenue allocations made
31pursuant to Sections 96.1 and 96.5 shall not incorporate the
32allocation adjustments made by this section.

end delete
33begin insert

begin insertSEC. 3.end insert  

end insert

begin insert(a)end insertbegin insertend insertbegin insertThe Legislature hereby directs the Department of
34Finance and the Chancellor of the California Community Colleges
35to work with the County of Orange, the county auditor-controller
36for the County of Orange, and the intervenors in obtaining a
37judgment that is a final and complete resolution to Department of
38Finance v. Grimes (Superior Court of California, Orange County
39Case No. 30-2012-005595920-CU-WM-CJC) in which all parties
40agree not to seek appellate review.end insert

begin insert

P10   1(b) The Legislature finds and declares that an appropriate
2resolution would be for the County of Orange to repay the amounts
3owed pursuant to the Department of Finance v. Grimes as follows:

end insert
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4(1) Five million dollars ($5,000,000) in fiscal year 2014-15.

end insert
begin insert

5(2) Fifteen million dollars ($15,000,000) in fiscal year 2015-16.

end insert
begin insert

6(3) Twenty-five million dollars ($25,000,000) in fiscal year
72016-17.

end insert
begin insert

8(4) Fifty million dollars ($50,000,000) in fiscal year 2017-18.

end insert
begin insert

9(5) Fifty-five million dollars ($55,000,000) in fiscal year
102018-19.

end insert
11begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

The Legislature finds and declares that a special law
12is necessary and that a general law cannot be made applicable
13within the meaning of Section 16 of Article IV of the California
14Constitution because of the unique fiscal pressures being
15encountered by the County of Orange due to the decrease in the
16county’s allocation of Vehicle License Fee revenues as a result of
17Chapter 35 of the Statutes of 2011.

end insert
18begin insert

begin insertSEC. 5.end insert  

end insert
begin insert

If the Commission on State Mandates determines that
19this act contains costs mandated by the state, reimbursement to
20local agencies and school districts for those costs shall be made
21pursuant to Part 7 (commencing with Section 17500) of Division
224 of Title 2 of the Government Code.

end insert
begin delete
23

SECTION 1.  

Section 63021.5 of the Government Code is
24amended to read:

25

63021.5.  

(a) The bank shall be governed and its corporate
26power exercised by a board of directors that shall consist of the
27following persons:

28(1) The Director of Finance or his or her designee.

29(2) The Treasurer or his or her designee.

30(3) The Director of the Governor’s Office of Economic and
31Business Development or his or her designee, who shall serve as
32chair of the board.

33(4) An appointee of the Governor.

34(5) The Secretary of Transportation or his or her designee.

35(6) A Member of the Assembly appointed by the Speaker of the
36Assembly and a Member of the Senate appointed by the Senate
37Committee on Rules. The Members of the Legislature shall be
38nonvoting and shall meet with and, except as otherwise provided
39by the California Constitution, advise the board, to the extent that
40their advisory participation is not incompatible with their duties
P11   1as Members of the Legislature. A Member of the Legislature
2appointed under this paragraph may select a designee to serve in
3his or her place.

4(b) Any designated director shall serve at the pleasure of the
5designating power.

6(c) Three of the members shall constitute a quorum and the
7affirmative vote of three board members shall be necessary for
8any action to be taken by the board.

9(d) A member of the board shall not participate in any bank
10action or attempt to influence any decision or recommendation by
11any employee of, or consultant to, the bank that involves a sponsor
12of which he or she is a representative or in which the member or
13a member of his or her immediate family has a personal financial
14interest within the meaning of Section 87100. For purposes of this
15section, “immediate family” means the spouse, children, and
16parents of the member.

17(e) Except as provided in this subdivision, the members of the
18board shall serve without compensation, but shall be reimbursed
19for actual and necessary expenses incurred in the performance of
20their duties to the extent that reimbursement for these expenses is
21not otherwise provided or payable by another public agency, and
22shall receive one hundred dollars ($100) for each full day of
23attending meetings of the authority.

24

SEC. 2.  

Section 63024.2 is added to the Government Code, to
25read:

26

63024.2.  

The bank shall serve as the primary state agency for
27the purposes of developing an application for, and applying to,
28any federal infrastructure bank or financing authority.
29

end delete

CORRECTIONS:

Digest--Page 2.




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Corrected 9-9-13—See last page.     97