BILL ANALYSIS Ó
AB 1322
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1322 (Patterson) - As Amended: May 1, 2013
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill reinstates the Senior Citizens' Property Tax
Postponement (PTP) program that provided property tax deferment
to seniors and disabled persons. Specifically, this bill:
1)Reinstates the PTP program by repealing the suspension of the
program and allowing the State Controller (Controller) to
consider applications for the property tax postponement
program beginning July 1, 2014.
2)Establishes the Senior Citizens and Disabled Citizens PTP Fund
within the State Treasury and annually appropriates moneys in
the Fund for the purposes of paying costs and disbursements
related to the postponement of property taxes of eligible
senior citizens and disabled citizens.
3)Requires the transfer of funds in excess of $10 million that
accumulate in the Fund to the General Fund (GF) and deletes
any GF appropriation for the program.
FISCAL EFFECT
1)The Controller estimates restarting this program will require
one-time costs of approximately $1.5 million, chiefly for a
new integrated accounting system. Ongoing program costs are
estimated to be $3.5 million.
2)With loan repayments no longer being transferred to the GF in the
budget year 2013-14, this bill would lead to less GF revenues
of approximately $7 million to $10 million.
AB 1322
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COMMENTS
1)Purpose . The author states many seniors and Californians with
disabilities on fixed incomes are faced with tax bills they
cannot afford. Until 2009, California had a program in place
that would allow seniors and disabled Californians to defer
their property tax bills until sale of the home. According to
the author, when the PTP program was eliminated in 2009 as a
result of budget negotiations, thousands of seniors and
disabled Californians were left with nowhere to turn and were
faced with having to choose between buying food and medicine
or paying their bills to the state. The author argues AB 1322
would fix this problem by reinstating the PTP program and
giving seniors some flexibility with their property tax bills.
2)Support . The proponents of this bill, including the
California Association of County Treasurers and Tax Collectors
state the PTP program had minimal start-up costs and generated
revenue for the state General fund in most years. They argue
PTP is a valuable program that had been instrumental in
keeping thousands of seniors, blind and disabled individuals
in their homes, and nearly 6000 homeowners benefited from the
program across nearly all counties in California. Proponents
assert that, with the elimination of the funding for the PTP
program, seniors and disabled persons risk going into
foreclosure, putting the state at risk regarding those liens
it already holds.
3)Background . The PTP program allows eligible homeowners to
defer payment of all, or a portion of, the property taxes on
their residences. The PTP program was a loan program from the
state to eligible property owners. Claimants had to be over
62 years of age or be blind or disabled persons. Claimants
had to meet other additional criteria, including having 20%
equity in their homes and annual household income of $39,000
or less. Claimants had to file a claim with the Controller.
In exchange for paying a claimant's property taxes, the state
placed a lien on the property for which state funding was
used. The loan was secured by the property and was repaid,
with interest, when the property owner died, sold the home,
moved, or allowed a "senior lien" to become delinquent. Each
year, interest accrued on the amount that the State paid to
the county on behalf of the property owner. Interest rates
were set each year based on the annual yield received by the
state on its Pooled Money Investment Account.
AB 1322
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On February 20, 2009, the PTP program was indefinitely
suspended as part of the budget reductions to the state's GF
programs. [SB x3 8 (Ducheny), Chapter 4, Statutes of 2009].
4)Review of the Program . The PTP program helped thousands of
low and moderate income elderly, blind and disabled
individuals to remain in their homes. Historically, the loan
repayments, with few exceptions, have equaled or exceeded the
annual program expenditures and administrative costs. Over
the long-term, the program has been self-supporting. For
example, in 2007-08 FY and 2008-09 FY, the Controller's Office
collected less money than it disbursed in loans. However, the
overall cumulative fiscal impact of the program has been
positive: The PTP program collected $41 million more in PTP
loan repayments than it disbursed in PTP loans. In addition
to allowing program participants to remain in their homes, the
PTP program has also reduced county property tax default rates
and increased county tax collection revenues.
5)Vote . This bill is a two-thirds vote bill as it shifts money
from the General Fund to the Senior Citizens and Disabled
Citizens PTP Fund.
6)Prior Legislation .
a) AB 1090 (Blumenfield), Chapter 369, Statutes of 2011,
established the County Deferred Property Tax Program for
Senior Citizens and Disabled Citizens and allowed each
county to elect to participate in the program.
b) ABx1 34 (Budget Committee), of 2011 was identical to
this bill. AB x1 34 was vetoed by the Governor.
7)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081