BILL ANALYSIS Ó
SB 1353
Page 1
Date of Hearing: July 2, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1353 (Nielsen) - As Amended: May 15, 2014
Policy Committee: AgricultureVote:7
- 0
Local Government 8 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill repeals the January 1, 2016 sunset date that allows
counties to increase the assessed values of Williamson Act land,
and divert the resulting property tax revenues to counties.
FISCAL EFFECT
Negligible immediate state General Fund impact because schools
receive the same amount of property tax revenues regardless of
whether counties participate in the program. Although the bill
allows for an increase in the assessed valuation of Williamson
Act properties, participating counties retain any increase in
property tax revenues.
In the long run, unknown potential GF impacts, either positive
or negative, to the extent that a county stays under contract
rather than non-renews, or alternatively, a county non-renews
sooner due to the shorter contract lengths allowed under this
bill. Under non-renewal, schools receive an increase in property
tax revenues when the contract expires and the assessed
valuation increases accordingly. When the school share of
property tax revenue increases, there is a corresponding
reduction in GF obligations related to the minimum funding
guarantees in Proposition 98.
COMMENTS
1)Purpose . According to supporters, primarily county, rural and
agriculture groups, this bill will give participating counties
the option to continue the Williamson Act alternative funding
SB 1353
Page 2
mechanism enacted by AB 1256 (Nielsen, 2011) which allows for
shorter contract lengths and increased property tax revenues
to counties. By eliminating the sunset, this bill removes the
economic uncertainty surrounding the program, thereby
encouraging both continued and greater participation in the
program.
2)The Williamson Act . Created to conserve agricultural and open
space land, the Williamson Act allows landowners and local
officials to enter into voluntary contracts that restrict land
uses to agriculture, open space, and compatible uses. These
contracts generally run for 10 years, but run for 20 years
under more restrictive Farmland Security Zones. The contracts
automatically renew each year unless an action is taken to
non-renew or cancel the contract. Approximately 16.6 million
acres are under Williamson Act contracts.
Williamson Act lands benefit landowners with reduced property
tax assessments for the duration of the contracts. The
assessments reflect the use of the land as agriculture or open
space instead of the market value. As a result, counties
receive reduced property tax revenues. The state has
historically provided subvention payments from the General
Fund to counties for the loss of these county property tax
revenues, but in the 2009-10 budget, these payments were
effectively eliminated.
3)Mitigating the loss of state funding . To mitigate the impact
on counties for the loss of state subvention funds, the
Legislature passed AB 2530 (Nielsen), Chapter 391 of 2010,
which allowed county officials to increase the assessed values
of Williamson Act lands and divert the resulting property tax
revenues to the county. To address technical issues with AB
2530, the Legislature re-enacted the provisions in a budget
trailer bill (SB 863 (Budget and Fiscal Review Committee),
Chapter 722 of 2010, which also appropriated $10 million to
the subvention program. In March 2011, however, the
Legislature repealed SB 863, eliminating both the $10 million
subvention payment and the provisions that allowed counties to
shorten Williamson Act contracts. To accommodate the eight
counties that had initiated implementation of the program, the
Legislature reinstated the provisions without the
appropriation for subvention payments in AB 1265 (Nielsen),
Chapter 90 of 2011.
SB 1353
Page 3
Under current law, as enacted by AB 1265, a county is
authorized to reduce the duration of a Williamson Act contract
by ten percent and increase the assessed value by ten percent,
if the state's subvention payment to the county is less than
half of the county's foregone property tax revenue. The
additional property tax revenues are directed to the county.
According to the Department of Conservation, 11 counties
participate in this alternative funding program: Butte, Kings,
Lassen, Madera, Mendocino, Merced, Shasta, Stanislaus, Sutter,
Tulare, and Yolo. The program is scheduled to sunset on
January 1, 2016.
Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081