BILL ANALYSIS Ó
AB 681
Page 1
ASSEMBLY THIRD READING
AB
681 (Ting)
As Amended April 22, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+----------------------|
|Revenue & |7-0 |Ting, Brough, | |
|Taxation | |Gipson, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Mullin, Quirk, | |
| | |Wagner | |
| | | | |
|----------------+------+--------------------+----------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, | |
| | |Eggman, Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
AB 681
Page 2
| | | | |
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SUMMARY: Makes specified changes to survey requirements
applicable to the Board of Equalization (BOE) in determining the
adequacy of the procedures and practices employed by the county
assessors in their valuation of property. Specifically, this
bill:
1)Provides that the BOE shall proceed with the surveys of the
assessment procedures and practices in the 10 largest counties
as rapidly as feasible, and shall repeat or supplement each
survey at least once in five years.
2)Requires, commencing on or after January 1, 2016, and each of
the next four calendar years, to survey the assessment
procedures of one qualified county and conduct a sample of
assessments on the local assessment roll of another qualified
county. For purposes of conducting one survey and one
assessment on two separate counties, a "qualified county or city
and county" means the eleventh to twentieth largest counties.
3)Requires, commencing on or after January 1, 2016, and each of
the next four calendar years, to survey the assessment
procedures of three qualified counties and conduct a sample of
assessments on the local assessment roll of two other qualified
counties. For purposes of conducting the three surveys and two
samples, a qualified county or city and county" means the 21st
to the 58th largest counties.
4)Requires that the size of the counties be determined based upon
the total value of locally assessed property located in the
counties on the lien date that falls within the 2016 calendar
year and each of the next four calendar years.
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5)Provides that qualified counties shall be stratified and
selected at random by the board, in consultation with the
California Assessors' Association (CAA).
6)Provides that changes to the survey requirements shall remain in
effect until January 1, 2021, and as of that date is repealed.
7)Require the BOE, before preparing its written survey report, to
notify the former assessor if the survey reviews the former
assessor's procedures and practices, and meet with the former
assessor to discuss and confer on those matters that may be
included in the survey report.
8)Provides that an addendum to the final survey report shall be
published to include a former assessor's written response to the
findings and recommendations in the survey report that reviewed
the former assessor's procedures and practices along with the
BOE's comments, if any.
9)Requires the BOE to issue the final survey report within one
year after the date the BOE began the survey, except as follows:
a) For a survey commenced on or after July 1, 2016, to June
30, 2017, within 15 months after the date the board began the
survey; and,
b) For any survey commenced on or after July 1, 2017, within
12 months after the date the board began the survey.
FISCAL EFFECT: According to the Assembly Appropriations
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Committee, annual General Fund costs of approximately $400,000 to
BOE to increase staffing needed to comply with the compressed
periods for issuing the final reports.
COMMENTS:
1)Author's Statement: The author has provided the following
statement in support of this bill:
AB 681 improves the efficiency of performance audits
conducted on every county assessor's office throughout the
State by allowing BOE to focus its energy on a larger
portion of the assessment roll in a shorter period of time.
Under a new three-tiered system, the BOE will be able to
reduce the time needed to complete a survey report by 50%
to a full year. Performance audits are further improved by
providing former assessors with an opportunity to address
issues relating to the former assessor's procedures and
practices. By reducing the time needed to finalize a
survey report and allowing former assessors to address
issues that may have occurred during their term, AB 681
will ensure performance audits reveal meaningful and timely
information that can immediately be incorporated into
existing assessment practices.
2)Arguments in Support: The BOE states that the "law requires the
BOE to conduct surveys of all 58 county assessor's offices every
five years. This schedule requires the BOE to use the two full
years the law allows to publish the final reports. While the
BOE has always met the two-year deadline, the agency supports
reducing the number of surveys to achieve the goal of publishing
surveys within one year."
3)Arguments in Opposition: None submitted.
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4)Background. The assessment practices survey program is one of
California's ways of promoting uniformity, fairness, and
integrity in the property tax assessment process. The BOE
periodically reviews the practices and procedures of every
county assessor's office. Although local governments are
primarily responsible for assessing local property taxes,
assessment practices surveys fulfill the state's public policy
interest of addressing the inherent subjective nature of
assessing property, and the financial interest that comes from
state law requiring minimum funding for schools. The BOE must
proceed with the surveys as rapidly as feasible, and must repeat
the survey at least once every five years.
Assessors are required to respond to the survey and provide an
explanation as to how they have implemented, intend to
implement, or the reasons for not implementing recommendations
made by the BOE. A copy the response is then made available to
the Assembly, Senate, BOE, and the local county board of
supervisors. Annual responses are required until all of the
issues expressed by the BOE have been resolved.
5)Scope of Assessment. Under Government Code Sections 1564 and
15642, the scope of assessment shall include the adequacy of the
procedures and practices employed by the assessor in the
valuation of property for tax purposes. The survey shall assess
the practices as they relate to the uniform treatment of
property so that all property is treated equitably and no class
of property systematically undervalued or overvalued.
Additionally, the survey must show the volume of assessment
work, the responsibilities of the assessor, and the extent to
which the practices of the assessor is consistent with or
different from law and regulation.
6)Current Length of Survey. The survey process, from the initial
field work to the publication process, takes on average 24
months. Quality control and the write-up take up the most
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amount of time, 4.8 months and 3.9 months, respectively.
On-site field work is generally completed in a little over two
months. Over the last year, the BOE has been working on
improving the way in which surveys are conducted so as to
complete them in a shorter period of time. Last year, in an
effort to reduce time for the assessment surveys from two years
to 18 months, the BOE implemented the following changes: a)
reducing the size of the survey report, b) providing
questionnaires to assessors prior to commencement of field work
on non-core assessment topics to determine if further inquiry is
required, c) rearranging and having simultaneous internal
reviews of the report by different BOE divisions and
county-assessed properties divisions, and d) shortening review
times where appropriate. In general, it is unclear to committee
staff whether the current two-year timeframe is an appropriate
length of time for completing audits of county assessment
procedures and practices. The benefits of a speedy audit must
be weighed against any possible degradation in quality.
7)What Does this Bill Do? This bill creates a three-tiered survey
program that focuses BOE's energy on the largest portion of the
assessment role. The first tier, in general, maintains existing
law by requiring a survey of the assessment procedures and
practices and a sampling of assessments for two of the ten
largest counties. The 10 largest counties will receive a survey
and a sampling within five years. The second tier consists of
the next 10 largest counties (i.e. counties 11 through 20). For
tier two, a survey will be conducted for one county and a
sampling of the assessments will be conducted on another county.
All of the tier two counties will be either surveyed or
assessed within five years. For the remaining 38 counties,
three surveys and two samples will be conducted on five separate
counties every year. In general, the BOE should be able to
either survey or sample all 38 counties in a little over seven
years. The counties shall be stratified and selected at random
by the BOE, in consultation with the CAA. Finally, the BOE is
required to issue the final survey report within one year for
surveys commenced on or after July 1, 2017.
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This three-tiered system allows BOE to survey and sample nearly
all of the state's assessment roll within five years, focusing
BOE's resources on the largest portion of the assessment roll.
The biggest benefit is that the BOE is now able to complete
survey reports within one year instead of two. Unfortunately,
because this bill expedites the completion rate of survey and
sample reports, it will take the BOE a little over seven years
to cycle through the bottom 38 counties.
Analysis Prepared by:
Carlos Anguiano / REV. & TAX. / (916) 319-2098
FN: 0000668