BILL ANALYSIS Ó
AB 654
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
654 (Brown) - As Amended April 22, 2015
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|Policy |Housing and Community |Vote:|6 - 0 |
|Committee: |Development | | |
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| |Local Government | |9 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill prohibits a county auditor from allocating to the
Redevelopment Property Tax Trust Fund (RPTTF), except as
specified, revenues derived from a property tax rate approved by
AB 654
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voters in a city, county, or special district, to pay for the
State Water Project.
FISCAL EFFECT:
Significant General Fund costs, likely in excess of $5 million
annually, beginning in 2016-17, due to the diversion of revenues
from State Water Project tax rates from the RPTTF to the city,
county, or special district that imposed the tax rate. Any
amount of property tax revenue diverted away from schools would
typically result in corresponding General Fund expenditures to
meet the minimum funding guarantees of Proposition 98. On
average, schools receive 50% of property tax revenues in each
county.
COMMENTS:
1)Purpose. According to the author, "The measure would remedy
the situation in which the revenues derived from
voter-approved property tax overrides are being misallocated
in the course of the RDA dissolution process in the County of
San Bernardino. Currently the San Bernardino County Auditor-
Controller is allocating the residual balances from each
former RDA's Redevelopment Property Tax Trust Fund to taxing
entities based on each agency's share of the 1% County General
Tax levy without taking into account any specific debt service
override tax. This results in Valley District's Debt Service
Tax Override proceeds that are not needed for the payment of
approved former RDA expenses to be allocated out to all taxing
entities ignoring that a certain portion of that residual
balance was derived directly from Valley District's tax
override rate."
AB 654
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2)Background. In the 1960s, the voters of San Bernardino County
approved a tax increase to fund State Water Projects in the
county. After the creation of redevelopment, the Valley
Municipal Water District (Valley District) entered into pass
through agreements with the RDAs to receive some or all of the
property taxes they would have received pre-redevelopment.
According to Valley District, they had 23 negotiated
agreements with ten RDAs for project areas throughout its
service area. Although Valley District is receiving a portion
of the payment, Valley District indicates that it is not
receiving its entire pass through payment and is entitled to
an additional $10 million which is being distributed by the
San Bernardino county-auditor to other taxing entities out of
the residual balance remaining after all the obligations of
the RDA are paid.
Local water agencies can levy ad valorem rates above the 1%
rate to pay their annual obligations for water deliveries from
the State Water Project. State courts have concluded that
such costs were voter-approved debt because voters approved
the construction, operation, and maintenance of the State
Water Project in 1960. As a result, most water agencies that
have contracts with the State Water Project levy a
voter-approved debt rate. It is not clear how many, in
addition to Valley District, have pass through agreements with
former RDAs and could qualify for additional tax revenues
under this bill.
3)Amendment. The bill needs an amendment to fill in the blank
date by which a county auditor-controller must deem as correct
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the allocation of revenues derived from the imposition of the
State Water Project property tax rate. The author has
indicated plans to add the date July 1, "2015."
4)Related Legislation. AB 1009 (Garcia), pending in this
Committee, authorizes a city or county that levies a property
tax rate, approved by the voters, to make payments in support
of pension programs and levied in addition to the general
property tax rate, to make a request to an oversight board to
prohibit revenues derived from that property tax rate from
being deposited into a Redevelopment Property Tax Fund.
This bill takes the same approach as AB 1009, but instead,
deals with property tax override rates approved by voters in
support of the State Water Project.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081