BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1214 HEARING: 4/30/14
AUTHOR: Anderson FISCAL: Yes
VERSION: 4/23/14 TAX LEVY: No
CONSULTANT: Grinnell
PROPERTY TAX POSTPONEMENT
Reenacts the Property Tax Postponement Program with some
modification.
Background and Existing Law
The Senior Citizens and Disabled Citizens Property Tax
Postponement Law (PTP) allows the Controller to pay
property taxes to county tax collectors on behalf of
individuals over the age of 62 or disabled persons making
less than $39,000 in income per year. The claimant must
repay the Controller, who secures the loan by recording a
lien, upon sale of the home. Loans do not become due and
payable if the claimant or the claimant's spouse continues
to occupy the home secured by the lien. The Controller's
lien for a property tax postponement loan doesn't have
"super priority" status, similar to liens recorded by
county treasurer-tax collectors for unpaid property taxes,
which means that the county lien is paid before all others
if the secured property is sold.
When the Legislature enacted PTP in 1983, it continuously
appropriated $12.7 million annually to pay the face amount
of all certificates of eligibility for the PTP program. In
2009, due to budgetary constraints, the Legislature
prohibited persons from filing new claims for property tax
postponement, and the Controller from accepting
applications (SBX3 8, Ducheny, 2009).
PTP is distinct from the Senior Citizens Property Tax
Assistance Program (PTAP), administered by the Franchise
Tax Board, which is a direct grant program to
income-eligible senior citizens. The state has not funded
PTAP since the 2007-08 Budget, so the state has not paid
claims more recently than those made in 2007.
SB 1214 - 4/23/14 -- Page 2
In 2010, the Legislature enacted the County Deferred
Property Tax Program for Senior Citizens and Disabled
Citizens, which allowed participating counties to operate
property tax postponement programs using its own funds (AB
1090, Blumenfield). Under the bill, counties can enact an
ordinance participating in the program, set aside funds,
accept claims, and defer taxes for eligible claimants. The
County Auditor allocates the revenue to other local
agencies such as cities, special districts, and school
districts using county revenue as if the tax had been paid
until the house is sold and the lien can be satisfied. The
county opt-in program largely relies on eligibility
criteria used for the state program, with some updates, and
even allows counties to grant retroactive relief for
individuals who could not obtain deferment when the
Legislature defunded the program and precluded claimants
from filing new claims. So far, only Santa Cruz County
enacted an ordinance to grant postponements.
Proposed Law
Senate Bill 1214 largely recreates the Property Tax
Postponement Program. The bill:
Repeals SBx3 8's prohibition on the Controller
accepting applications for the program, allowing the
Controller's Office to start accepting new
applications on January 1, 2016,
Deletes the previous program's $12 million
continuous appropriation, and replaces it with the
Senior Citizens and Disabled Citizens Property Tax
Postponement Fund, an interest bearing fund,
continuously appropriated to the Controller to fund
the program, including administrative costs and
property tax postponement disbursements,
Directs the Controller to transfer any moneys in
the Fund that exceed $10 million to the General Fund,
generally from repayments upon sale of homes
previously benefitting from postponement,
Increases from $10 to $30 the feethe Controller can
charge to grant lien status information to a person or
entity having a legal and equitable interest in the
property,
Increases the equity value in homes required for
taxpayers to apply from 20% to 40%,
Delete references to and authority for impound
SB 1214 - 4/23/14 -- Page 3
accounts, and transfers any remaining amounts
currently in impound accounts to the Fund,
Deletes the requirement for tax collectors to
notify the Controller of collection procedures for
delinquent taxes on the unsecured roll,
Requires the Controller to provide information upon
request the tax collector needs to make a tax sale.
The tax collector must certify under penalty of
perjury that the information is needed, and the
measure provides that this information is not a public
record,
Clarifies that postponement only applies for
property taxes in the fiscal year in which the
taxpayer makes the claim, and not past delinquent
taxes,
Provides that taxpayers may file applications from
September 1st to April 10th of the fiscal year,
instead of May 15th to December 10th of the calendar
year,
Replaces references to certificates of eligibility
and warrants with references to electronic fund
transfers to properly reflect the modern information
technology involved,
Clarifies that applications timely filed and before
property taxes become delinquent that costs, fees, and
interest for that fiscal year are cancelled in
addition to the taxes,
In the event of willful neglect, requires the
Controller to notify the claimant and provide a copy
of the notification to the tax collector of the taxes
due and the 30-day deadline, and allows the tax
collector to return funds and deny the claim.
Requires the Controller to notify the claimant when
it electronically transfers property taxes after
initially reversing its decision to deny the claim,
Makes conforming changes,
Makes legislative findings and declarations
regarding taxpayer information not being public
records for purposes of the California Constitution's
provisions for public records,
State Revenue Impact
No estimate.
SB 1214 - 4/23/14 -- Page 4
Comments
1. Purpose of the bill . SB 1214 largely recreates the
Property Tax Postponement Program, thereby allowing
income-eligible seniors and disabled persons to stay in
their homes by using state funds to pay property taxes on
behalf of these individuals.
2. Best intentions . Created by the Legislature in 1977,
the Senior Citizens and Disabled Citizens Property Tax
Postponement Law has helped thousands of California
families stay in their homes by directing the Controller to
transfer state funds to counties to pay property taxes on
behalf of taxpayers who can't afford to pay them. The
state secures the investment with a lien, so when the
taxpayer dies or sells the home, the proceeds of the sale
repay the state's lien. However, given declines in
property values, proceeds of sales were falling short of
satisfying the liens, so the Legislature barred the
Controller from accepting new applications. With the
recent rebound in property values, SB 1214 seeks to restart
the program, with the added security of a higher equity
requirement of 40% to safeguard the state's investment.
However, if values decline again, the state may again face
losses, even with the higher requirement unless its liens
are afforded "super-priority" status, similar to county
property taxes.
3. More to do . Many previous participants in the program
haven't paid property taxes since 2009 because of the
program's repeal, and are soon facing tax sales of their
properties due to non-payment. These taxpayers often
contact county tax collectors, who can only offer
installment programs. SB 1214 doesn't currently assist
those taxpayers, but will at least reopen the program to
new applicants.
4. Appropriation . Legislative Counsel keyed SB 1214 a 2/3
vote because it contains a $10 million continuous
appropriation to reinvigorate the program.
5. Coming soon ? Assembly Bill 2231 (Gordon) is very
similar to this bill. The Assembly Committee on Local
Government approved the measure, and it's currently
awaiting hearing in the Assembly Revenue and Taxation
SB 1214 - 4/23/14 -- Page 5
Committee.
5. Technicals . Committee Staff recommend the following
technical amendments:
Delete references to impound accounts throughout
the law,
Replace references to certificates and warrants
with references to electronic funds transfers
throughout the law,
Require county assessors to notify the Controller
within 60 days of any changes in ownership or other
relevant information of property in the program,
Conform R&T Codes 20583 and 20621 to the equity
percentage change.
Support and Opposition (04/24/14)
Support : California Assessor's Association; California
Association of County Treasurers and Tax Collectors;
California Association of Realtors; California State
Association of Counties; California Taxpayers Association;
Howard Jarvis Taxpayers Association.
Opposition : None received.