BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 681 |Hearing |7/8/15 |
| | |Date: | |
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|Author: |Ting |Tax Levy: |No |
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|Version: |4/22/15 |Fiscal: |Yes |
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|Consultant|Grinnell |
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State Board of Equalization: surveys: assessment procedures
and practices: county assessor
Changes BOE's process for surveying counties' assessment
practices.
Background and Existing Law
In 1850, the Legislature first directed county assessors to tax
property; however, assessors in different counties often applied
different tax rates and methods of assessment. The California
Constitution of 1879 created BOE to equalize rates and
assessment practices among counties. BOE enacts rules and
regulations which generally bind county assessors.
As part of its oversight role, BOE surveys each county assessor
to determine whether a county's practices and procedures are
adequate, as well as its general performance. The results of
BOE's survey are published into public documents known as
"Assessment Practices Surveys." BOE's survey:
Must include a review with respect to the uniformity
of treatment, of all classes of property to ensure that no
class receives a systematic overvaluation or
undervaluation,
May include a sampling from assessment rolls, so long
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as it's of adequate size and dispersion to determine
adequate representation of the several classes of property
within the county. BOE assesses the property on its own,
and then compares its value to the assessor's.
BOE staff can access and make copies of any of the assessor's
records, or audit any book or record provided by a taxpayer in
the survey. Assessors have a right to appeal BOE appraisals
within his or her county where differences haven't been resolved
before a field review.
State law directs BOE to complete survey reports as rapidly as
possible, but requires them of all counties every five years.
BOE must sample assessments from the ten largest counties or
cities and counties in the state each year plus three other
counties selected at random, determined by assessed value of
property. BOE must sample assessments from a county if it finds
that it has significant problems as a result of the last survey
instead of a large county selected at random.
BOE sends the survey report to the assessor once complete,
setting forth specific findings and recommendations; however,
before preparing the survey report, BOE must meet with the
assessor to discuss matters included therein. After receiving
the survey report, the assessor may file a written response with
BOE within 30 days, unless the BOE extends the period for good
cause, which is included in the final survey report. Within a
year after receiving the final report, assessors must file a
report with the Board of Supervisors indicating the manner in
which the assessor implemented, intends to implement, or reasons
for not implementing recommendations in the final survey report.
The assessor's response is then sent to the Governor, the
Attorney General, BOE, the Senate, and the Assembly, as well as
any grand jury and assessment appeals board in the county. The
survey report, the assessor's response, and any additional BOE
notes constitute the final report, which must be completed
within two years after BOE begins the survey.
Assessors can only direct auditors to allocate supplement costs
of assessment of 5% when BOE certifies that the county's
assessment ratio exceeds 95% based on the most recent survey.
BOE may continue to certify following a survey that does not
include sampling if the board finds in the survey conducted
without sampling that there are no significant assessment
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problems, as defined by BOE. The author wants to make several
changes to BOE's assessment survey process.
Proposed Law
Assembly Bill 681 reforms BOE's assessment practices surveys by:
Requiring BOE to survey and sample assessments from the
ten largest counties by assessed value each year, and
sample assessments once every five years, instead of all
counties every five years,
Survey one county ranking in size from 11th to 20th by
assessed value each year, and sample assessments from
another county from that group each year too. BOE must
stratify and select these counties at random in
consultation with the California Assessors Association.
Survey three counties ranking in size from 21st to 58th
by assessed value each year, and sample assessments from
two others from that group too. BOE must again stratify
and select these counties at random in consultation with
the California Assessors Association.
Deleting the requirement for BOE to sample assessments
from counties with significant assessment problems, as
determined by BOE's most recent survey.
On January 1, 2021, AB 681's above changes to BOE's survey and
sampling selection process sunset, thereby restoring existing
law.
AB 681 directs BOE to distinguish between surveys of former
assessors and current ones by notifying the former assessor if
the survey applies to that former assessor's assessment
practices, and meet and confer on matters in the survey report
at his or her request. The bill also allows an addendum to the
final survey report to include a former assessor's written
response, and the board's comments, if any.
The bill also requires BOE to issue the final survey report
within one year of beginning the survey, except for surveys BOE
begins on or after July 1, 2016, to June 30, 2017, within 15
months, or any survey commenced on or after July 1, 2017, within
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12 months after the date the board began.
State Revenue Impact
According to BOE, AB 681 doesn't impact property tax revenues.
Comments
1. Purpose of the bill . According to the author, "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. Better, faster, cheaper ? Currently, BOE has 22 surveys in
the pipeline, after which, the timeline accelerates should AB
681 be enacted. After the current 22 are finished, BOE would
have 15 months instead of two years to complete 2016 surveys,
and 12 months to finish reports on or after 2017. To
compensate, BOE will be surveying fewer counties (58 to 30 over
five years), but sampling the same (26 to 25), because the
measure replaces the requirement to survey all counties every
five years with a statutory schedule. Under the schedule, BOE
either samples or surveys each of the 11th through 20th largest
counties in a five year period, and then survey three and
samples two from the remaining counties over that same time. As
such, BOE would only survey 47 of 58 counties every five years,
but would both survey and sample the counties with the
overwhelming share of the state's value, and do either for most
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of the rest.
3. Technicals . BOE and Committee staff recommends the
following technical amendments:
On Page 3, Lines 22-23 and 37-38, strike out "2016 and
each of the next four calendar years" and insert "2015 and
every fifth calendar year thereafter."
On Page 4, before Line 1, insert: "(b)(3) If the board
finds that a county or city and county has 'significant
assessment problems,' as provided in Section 75.60 of the
Revenue and Taxation Code, a sample of assessments will be
conducted in that county or city and county."
On Page 6, before line 3, insert "(A) for any survey
commenced before July 1, 2016, within two years after the
date the board began the survey," and re-letter as
appropriate.:
Assembly Actions
Assembly Floor 79 - 0
Assembly Appropriations 17 - 0
Assembly Revenue and Taxation 7 - 0
Support and
Opposition
Support : Board of Equalization, California Assessors
Association.
Opposition : None received.
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