BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 681


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          Date of Hearing:  May 13, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          681 (Ting) - As Amended April 22, 2015


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          |Policy       |Revenue and Taxation           |Vote:|7 - 0        |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill makes the following changes to the survey requirements  
          applicable to the Board of Equalization (BOE) in determining the  
          adequacy of procedures and practices employed by county  
          assessors in their valuation of property:





          1)Requires BOE to proceed with surveys of the assessment  
            procedures and practices in the 10 largest counties as rapidly  
            as feasible, and requires the BOE to repeat or supplement each  








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            survey at least once in 5 years.  For purposes of the bill,  
            county size must be determined based on the total value of  
            locally assessed property.





          2)Requires BOE, commencing on or after January 1, 2016, and for  
            each of the next 4 calendar years, to survey the assessment  
            procedures of 1 county from the next 10 largest counties and 3  
            counties from the remaining counties, and conduct a sample of  
            assessments on the local assessment roll of 1 county from the  
            next 10 largest counties and 2 counties from the remaining  
            counties.  The bill requires that counties be selected at  
            random.





          3)Requires BOE, before preparing its written survey report, to  
            notify the former assessor if the survey reviews the former  
            assessor's procedures and practices, meet with the former  
            assessor to discuss and confer on those matters that may be  
            included in the survey report, and publish an addendum to the  
            final survey report with the former assessor's written  
            response to the findings and recommendations.





          4)Requires BOE to issue the final survey report within the  
            following periods from the date BOE commences the survey:












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            a)   For surveys commenced on or before June 30, 2016, within  
            two years.





            b)   For surveys commenced after July 1, 2016 to June 30,  
            2017, within 15 months.





            c)   For surveys commenced on or after July 1, 2017, within 12  
            months.





          5)Requires that changes to the survey to remain in effect until  
            January 1, 2021, and as of that date is repealed.





          FISCAL EFFECT:


          Annual GF costs of approximately $400,000 to BOE to increase  
          staffing needed to comply with the compressed periods for  
          issuing the final reports.


          COMMENTS:









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          1)Purpose.  According to the author, this bill will improve the  
            efficiency of performance audits conducted on county assessors  
            by having BOE focus its energy on a larger portion of the  
            assessment roll and complete audits in a shorter period of  
            time.  Under the proposed three-tiered system, the author  
            believes BOE will be able to reduce the time needed to  
            complete a survey report to one year.  The author asserts  
            performance audits will be further improved by providing  
            former assessors an opportunity to address issues relating to  
            their procedures and practices in the audits.  The author  
            believes AB 681 will result in more meaningful and timely  
            information for assessors, enhancing assessment practices  
            statewide.


          2)Existing Law on Assessor Surveys and Reports.  Current law  
            requires BOE to conduct surveys in each county and city to  
            determine the adequacy of practices and procedures used by the  
            county assessor in the valuation of property for purposes of  
            taxation.  BOE is required to conduct those surveys "as  
            rapidly as feasible" and repeat or supplement each survey at  
            least once every five years.


            Current law requires BOE to prepare a written report that  
            details its findings and recommendations upon completion of  
            the survey, and meet with the assessor to discuss and confer  
            on those matters that may be included in the report prior to  
            publication.  BOE is required to produce the final survey  
            report within two years of the date it began the survey.


          3)BOE Improvements to Survey Audits.  Over the past year, BOE  
            has been working to improve the manner in which surveys are  
            conducted and complete them faster.  In 2014, BOE implemented  
            the following changes to reduce completion time to 18 months:  
            (i) reduced the size of the survey report; (ii) provided  
            questionnaires to assessors prior to commencement of field  








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            work; (iii) simultaneously conducted BOE division and county  
            division reviews; and (iv) shortened review times where  
            appropriate.  In light of BOE efforts to address audit review  
            times and survey report quality, the Committee may wish to  
            consider whether mandating potentially redundant requirements  
            in statute is necessary or appropriate.


          4)Related Legislation.  AB 2234 (Ting) of 2014 would have made  
            similar changes to survey requirements applicable to BOE in  
            determining the adequacy of the procedures and practices  
            employed by county assessors in their valuation of property.   
            AB 2334 was held on the Suspense File of this committee.








          Analysis Prepared by:Joel Tashjian / APPR. / (916)  
          319-2081