BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 2109 (Daly) - Controller: Reports: Parcel Taxes
          
          Amended: May 6, 2014            Policy Vote: G&F 7-0
          Urgency: No                     Mandate: Yes
          Hearing Date: August 4, 2014                            
          Consultant: Robert Ingenito     
          
          This bill meets the criteria for referral to the Suspense File.


          Bill Summary: AB 2109 would require (1) the State Controller's  
          Office (SCO) to report annually on locally assessed parcel taxes  
          and (2) local governments to provide information required by SCO  
          to complete the report

          Fiscal Impact: 
                 SCO indicates that the bill would result in estimated  
               first-year General Fund costs of $450,000 and ongoing costs  
               of up to $200,000 annually to collect, process, analyze and  
               publish parcel tax data.

                 Potentially significant reimbursable costs to cities,  
               counties and special districts (local governments) that  
               assess parcel taxes to report the specified information to  
               SCO.


          Background: A parcel tax is a special tax on property, and is  
          generally not computed based on the property's value.  Instead,  
          parcel taxes are often flat fees imposed by a local government  
          on each "parcel" of real property, both residential and  
          commercial.  Because a parcel may be a small residential plot or  
          a 100-acre estate, parcel taxes are generally regressive,  
          meaning owners of small parcels pay a larger percentage of tax  
          compared with the land owned. Existing law does not impose  
          limits on the use of special tax proceeds, allowing local  
          governments to specify a particular use for parcel taxes in the  
          relevant ballot measure.  Generally, local parcel taxes provide  
          funding for schools and other local building projects.  Counties  
          collect parcel taxes with property taxes, and then remit funds  
          to the district imposing the tax.  Property tax law generally  
          guides parcel tax collection.








          AB 2109 (Daly)
          Page 1



          Current law requires SCO to compile and publish on its internet  
          site annual reports summarizing local agencies' finances,  
          including their revenue sources.  The reports are based on  
          financial data submitted to SCO by local governments; SCO  
          compiles the data reported by local governments but does not  
          verify the information. The SCO reports detail the aggregate  
          amount of various taxes collected by each local governmental  
          entity, including the allocation of ad valorem taxes on real  
          property, voter approved taxes, property assessments, and  
          special assessments.

          The Legislative Analyst's Office (LAO) reported in late 2013  
          that parcel taxes generally represent a significant and growing  
          source of revenues for local governments.  Between 2001 and  
          2012, voters approved about 180 parcel tax measures to fund  
          cities, counties, and special districts, and about 135 measures  
          to fund K-12 districts. As the LAO noted, information on the  
          statewide amount of parcel tax revenue collected by cities,  
          counties, and special districts is not available.

          Proposed Law: This bill would require SCO to include specified  
          information regarding parcel taxes in its annual report  
          summarizing financial data for local governmental entities,  
          including (1) the type and rate of the tax, (2) the number of  
          impacted and exempted parcels, (3) the sunset date of the tax,  
          (4) the revenue generated by the tax, and (5) the manner in  
          which the revenue is being used. The bill would require each  
          impacted city, county, and special district to furnish the  
          pertinent information in the form and manner specified by the  
          SCO. 

          Related Legislation: This bill is similar to AB 892 (Daly) of  
          2013; however, AB 892 placed the parcel tax data collection and  
          reporting requirements inside the Board of Equalization as  
          opposed to SCO. AB 892 was held in the Assembly Appropriations  
          Committee.

          Staff Comments: This bill's data requirements would require a  
          modification to SCO's Local Government Reporting System (LGRS).  
          SCO anticipates needing additional information technology  
          resources on a limited term basis to accommodate the new parcel  
          tax data reported by local governments. SCO would need .5  
          permanent PY on an ongoing basis thereafter.








          AB 2109 (Daly)
          Page 2



          The California Constitution requires the State to reimburse  
          local governments for the costs of new or expanded  
          state-mandated local programs.  Because AB 2109 imposes new  
          requirements on counties, cities, and special districts,  
          Legislative Counsel says that it imposes a new state mandate.   
          AB 2109 requires the state to reimburse local agencies if the  
          Commission on State Mandates determines that the bill imposes a  
          reimbursable mandate.