BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 825| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 825 Author: Senate Governance and Finance Committee Amended: 8/5/13 Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 5/1/13 AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 37-0, 5/16/13 (Consent) AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller, Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Roth, Steinberg, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Price, Vacancy, Vacancy ASSEMBLY FLOOR : 78-0, 8/30/13 (Consent) - See last page for vote SUBJECT : Committee on Governance and Finance SOURCE : California Assessors Association California Association of County Treasurer-Tax Collectors DIGEST : This bill enacts technical changes to property tax collection law. CONTINUED SB 825 Page 2 Assembly Amendments add one more technical change and make clarifying changes. ANALYSIS : Each year, the former Senate Revenue and Taxation Committee authored a measure to enact several changes to Property Tax Law sponsored by the California Assessors' Association and the California Association of County Treasurer-Tax Collectors, who administer the property tax. Many of these measures are technical in nature, and enacting them in separate measures is not warranted. Although omnibus bills like this one may not be germane under a strict interpretation of the single-subject and germaneness rules presented in Californians for an Open Primary v. McPherson (2006), it implements important and necessary changes to property tax laws. I. Property tax bills . Existing law requires the county tax collector (collector) to include specified information as part of the property tax bill, including the taxpayer's right to request an informal review of the assessor's valuation of the property, and to apply to the assessment appeals board for a reduction in valuation if the taxpayer does not agree with the valuation after the informal review. Last year, AB 2643 (Ma, Chapter 161, Statutes of 2012) clarified the law to provide that penalty relief is limited solely to the difference between the assessor's initial valuation and the value that results from the appeal or from informal review, ensuring that taxpayers cannot escape penalties from failing to pay tax. This bill requires the penalty relief limitation information to appear on the property tax bill. II. Tax sale reporting . Existing law requires the collector to report the sale of a tax-defaulted property to the assessor within 10 days of the sale. This bill extends this deadline from 10 to 30 days. III. Code conformity . The Revenue and Taxation Code (RTC) specifies the forms of payment county tax collectors can accept. However, the Government Code does not include all the forms of payment specified in the RTC. CONTINUED SB 825 Page 3 This bill conforms the list of acceptable forms of payment in the two codes, and extends the authority for a collector to charge a fee equal to their reasonable costs whenever payment is offered, but returned without payment. This bill also requires the charge to become an underlying obligation, but not a lien on real property, and allows the tax collector to prescribe a different form of payment in the future. IV. Builder's exclusion . Generally, an assessor only values a property for tax purposes based on its degree of completion on the lien date of January 1, and the assessor issues a supplemental assessment based on its value when completed later in the year. The builder's exclusion additionally relieves builders of supplemental assessments on properties constructed for sale that the builder does not intend to occupy or use. Builders must file with the assessor for the exclusion within 30 days of commencing construction, and additionally notify the assessor within 45 days of renting, selling, or using the property. When the owner fails to notify the assessor that he/she does not intend to occupy or use the property within 30 days of beginning construction, the exclusion does not apply, and the assessor issues the supplemental assessment. However, the owner does not need to notify the assessor, and is rebuttably presumed not to intend to occupy or use the property, if the property has been subdivided into more than five parcels in accordance with the subdivision Map Act, the map describing the parcels has been recorded, and zoning regulations require the parcels be used for single-family residences. The law explicitly requires builders who have notified the assessor to provide the second notification within 45 days of renting, selling, or using the property, but does not explicitly require the notification of builders who rely on the rebuttable presumption. This bill explicitly requires builders relying on the rebuttable presumption to inform the assessor within 45 days of renting, selling, or using the property, and also applies the existing penalty for failing to notify the assessor of the change. V. Contiguous parcels . Local agencies impose the property tax to all non-exempt properties within its jurisdiction. However, assessors occasionally assess a single property that is situated in more than one "revenue district," where one CONTINUED SB 825 Page 4 agency's boundaries encompass part of the property, but not all of it. In such a case, each property must be separately assessed unless the full value of any parcel is less than $25,000, in which case the parcel may be combined with the contiguous one with the highest value. The smallest parcel in a tracts of land used for single-family residences of less than 15,000 square feet may also be combined with the largest contiguous parcel. This bill increases the amount from $25,000 to $50,000. VI. Property tax postponement programs . California has several property tax programs benefiting the elderly and disabled individuals, including property tax reappraisal relief, property tax assistance, and property tax postponement. The Senior Citizens Homeowners and Renters Property Tax Assistance (Assistance) Law program provides a direct grant to qualifying seniors and disabled individuals who own or rent a residence. This program, administered by the Franchise Tax Board, was established in 1967 to provide direct property tax relief to seniors living on a fixed income. It was later expanded to include renters who meet the income requirement, and to homeowners who are blind or disabled, regardless of their age. Unlike the Assistance program that refunds a percentage of property taxes paid, the postponement program allows eligible homeowners to defer payment of all, or a portion, of the property taxes on their residence. The program was enacted in 1977, after the passage of a constitutional amendment authorizing the postponement of property taxes (California Constitution, Article 13, Section 8) and is administered by the State Controller's Office. The constitutional amendment was in response to concerns that senior homeowners on fixed incomes could lose their homes because of the inability to pay raising property tax bills. Originally designed for individuals over 62 years of age, the program is now also available to eligible blind and disabled persons, regardless of age. The state has not provided funding for the Assistance program since the 2007-08 Budget, so the state has not paid claims more recently than those made in 2008. On February 20, 2009, the postponement program was indefinitely suspended as part CONTINUED SB 825 Page 5 of the budget reductions to the state's General Fund programs. (SB 8X3 (Ducheny), Chapter 4, Statutes of 2009). The funding of the program was eliminated and the Controller was prohibited from accepting new applications after February 20, 2009. Governor Brown signed AB 1090 (Blumenfield, Chapter 369, Statutes of 2011), creating the County Deferred Property Tax Program for Senior Citizens and Disabled Citizens. Under this new program, counties may join the program by adopting a resolution indicating the county's intention to participate. Participating counties must establish a Property Tax Deferral Fund within its Treasury, which will be used to make payments equivalent to the amount of deferred property taxes. Payments from the Property Tax Deferral Fund will be made to the county and will be processed in the same manner as all other property tax payments. As of the enactment of the program, only one county adopted a resolution indicating its intention to participate but the program is not currently operative. The current postponement notice, as required by law, creates unnecessary work for the Controller's Office. Specifically, it requires the Controller to answer a flood of inquiries about a program that has not been funded since 2009. Since notice is required by law, taxpayers receive information about the program, prompting questions. This bill suspends the notice requirement of both the assistance program and the Senior Citizens Postponement program, as long as they remain unfunded. Therefore, suspension of the notice requirement in RTC Section 2615.6 would also eliminate the additional workload created by property owners interested in the program. Comments According to the Senate Governance and Finance Committee analysis, this bill consolidates items that make minor, technical changes to property tax law sponsored by the California Association of County Treasurer-Tax Collectors and the California Assessors Association. This bill improves the administration of property tax laws to help both taxpayers and counties. Consolidating the measures into a single bill negates CONTINUED SB 825 Page 6 the need for individual bills to enact each change. Additionally, this bill only contains items with universal agreement; the Senate Governance and Finance Committee will remove items should anyone object to one. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 8/30/13) California Assessors Association (co-source) California Association of County Treasurer-Tax Collectors (co-source) ASSEMBLY FLOOR : 78-0, 08/30/13 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Vacancy, Vacancy AB:k 8/30/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED