Amended in Senate June 11, 2013

Amended in Senate May 30, 2013

Amended in Senate April 23, 2013

Amended in Senate March 4, 2013

Senate Bill No. 56

Introduced by Senators Roth and Emmerson

January 7, 2013

An act to amend Section 97.70 of the Revenue and Taxation Code, relating to local government finance, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 56, as amended, Roth. Local government finance: begin insert property tax revenue allocation: end insert vehicle license fee adjustments.

begin insert

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 provides that each jurisdiction shall 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.

end insert begin insert

Existing property tax law also 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.

end insert begin delete

The Vehicle License Fee Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state. Beginning

end delete

begin insert Beginning end insert with the 2004-05 fiscal year and for each fiscal year thereafter, existing law requires that each city, county, and city and county receive begin insert additional property tax revenues in the form of end insert 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 begin delete amounts end delete begin insert additional allocations end insert be funded from ad valorem property tax revenues otherwise required to be allocated to educational entities.

This bill would begin insert modify these reduction and transfer provisions end insert , for the 2013-14 fiscal year and for each fiscal year thereafter, begin delete provide end delete begin insert by providing end insert for a vehicle license fee adjustment amount calculated on the basis of changes in assessed valuation. This bill would also begin insert end insert begin insert modify these reduction and transfer provisions end insert , for the 2013-14 fiscal year and for each fiscal year thereafter, begin delete provide end delete begin insert by providing end insert for a vehicle license fee adjustment amount for certain cities incorporating after a specified date, as provided.

By imposing additional duties upon local tax officials with respect to the allocation of ad valorem property tax revenues, this bill would impose a state-mandated local program.

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.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 97.70 of the Revenue and Taxation Code
is amended to read:

97.70.  

Notwithstanding any other law, for the 2004-05 fiscal
year and for each fiscal year thereafter, all of the following apply:

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

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

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

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

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

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

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

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

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

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

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

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

(B) (i) Subject to an adjustment under clause (ii), for the
2005-06 fiscal year, the sum of the following two amounts:

(I) The difference between the following two amounts:

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

(ib) The actual total amount of revenue that was distributed
from the Motor Vehicle License Fee Account in the Transportation
Tax Fund to the county, city and county, and each city in the county
for the 2004-05 fiscal year under Section 11005, as that section
read on the operative date of the act that amended this
begin delete sub-subclause end delete begin insert subsubclause end insert .

(II) The product of the following two amounts:

(ia) The amount described in subclause (I).

(ib) The percentage change from the prior fiscal year to the
current fiscal year in gross taxable assessed valuation within the
jurisdiction of the entity, as reflected in the equalized assessment
roll for those fiscal years. For the first fiscal year for which a
change in a city’s jurisdictional boundaries first applies, the
percentage change in gross taxable assessed valuation from the
prior fiscal year to the current fiscal year shall be calculated solely
on the basis of the city’s previous jurisdictional boundaries, without
regard to the change in that city’s jurisdictional boundaries. For
each following fiscal year, the percentage change in gross taxable
assessed valuation from the prior fiscal year to the current fiscal
year shall be calculated on the basis of the city’s current
jurisdictional boundaries.

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

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

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

(C) For the 2006-07 fiscal year to the 2012-13 fiscal year,
inclusive, the sum of the following two amounts:

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

(ii) The product of the following two amounts:

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

(II) The percentage change from the prior fiscal year to the
current fiscal year in gross taxable assessed valuation within the
jurisdiction of the entity, as reflected in the equalized assessment
roll for those fiscal years. For the first fiscal year for which a
change in a city’s jurisdictional boundaries first applies, the
percentage change in gross taxable assessed valuation from the
prior fiscal year to the current fiscal year shall be calculated solely
on the basis of the city’s previous jurisdictional boundaries, without
regard to the change in that city’s jurisdictional boundaries. For
each following fiscal year, the percentage change in gross taxable
assessed valuation from the prior fiscal year to the current fiscal
year shall be calculated on the basis of the city’s current
jurisdictional boundaries.

(D) For the 2013-14 fiscal year, the vehicle license fee
adjustment amount shall be equal to the sum of the following two
amounts:

(i) The amount described in clause (i) of subparagraph (B) if
Section 97.71 and clause (ii) of subparagraph (B) did not apply
for that fiscal year, for that city, county, and city and county.

(ii) The product of the following two amounts:

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

(II) The percentage change from the 2004-05 fiscal year to the
2013-14 fiscal year, inclusive, in gross taxable assessed valuation
within the jurisdiction of the entity, as reflected in the equalized
assessment roll for those fiscal years.

(E) For the 2014-15 fiscal year and each fiscal year thereafter,
the sum of the following two amounts:

(i) The vehicle license fee adjustment amount for the prior fiscal
year.

(ii) The product of the following two amounts:

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

(II) The percentage change from the immediately preceding
fiscal year to the current fiscal year in gross taxable assessed
valuation within the jurisdiction of the entity, as reflected in the
equalized assessment roll for those fiscal years.

(2) Notwithstanding paragraph (1), “vehicle license fee
adjustment amount,” for begin insert the 2013-14 fiscal year and each fiscal
year thereafter for end insert a city incorporating after January 1, begin delete 2014, end delete begin insert 2004, end insert
means the following:

(A) For the 2013-14 fiscal year, or the first year of incorporation
of the city, whichever is later, the quotient derived from the
following fraction:

(i) The numerator is the product of the following two amounts:

(I) The sum of the most recent vehicle license fee adjustment
amounts determined for all cities in the county incorporated prior
to 2005.

(II) The population of the incorporating city.

(ii) The denominator is the sum of the populations of all cities
in the county.

(B) For begin delete the 2014-15 fiscal year, and for end delete each fiscal year
thereafter, the sum of the following two amounts:

(i) The vehicle license fee adjustment amount for the prior fiscal
year.

(ii) The product of the following two amounts:

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

(II) The percentage change from the prior fiscal year to the
current fiscal year in gross taxable assessed valuation within the
jurisdiction of the entity, as reflected in the equalized assessment
roll for those fiscal years.

(3) “Countywide vehicle license fee adjustment amount” means,
for any fiscal year, the total sum of the amounts described in
paragraphs (1) and (2), for a county or city and county, and each
city in the county.

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

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

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

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

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

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

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

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

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

SEC. 2.  

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

SEC. 3.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to provide timely fiscal relief to preserve the public
peace, health, and safety in incorporated cities and cities that
annexed inhabited areas that lost revenue as a result of the passage
of Senate Bill 89 of the 2011-12 Regular Session (Chapter 35 of
the Statutes of 2011), it is necessary that this act take effect
immediately.