BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 681 (Ting) - State Board of Equalization: surveys: assessment  
          procedures and practices: county assessor.
          
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          |Version: July 15, 2015          |Policy Vote: GOV. & F. 7 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary: AB 681 would make specified modifications to the Board  
          of Equalization's (BOE's) county assessment practices survey  
          cycle.


          Fiscal  
          Impact: BOE indicates that it would require additional staff to  
          complete the proposed surveys and samples within one year, as  
          the bill requires. These costs are estimated to be $629,000 in  
          2016-17 and $571,000 annually thereafter (General Fund). The  
          bill would not impact property tax revenues.









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          Background: In 1850, the Legislature first directed county assessors to tax  
          property; however, assessors in different counties often applied  
          different tax rates and methodologies. Inconsistencies were  
          especially acute between counties dominated by mining and  
          agriculture. In 1879, BOE was created to equalize rates and  
          assessment practices among counties. Additionally, the Board  
          enacts rules and regulations which generally bind county  
          assessors.  
          As part of its oversight role, BOE surveys each county assessor  
          to assess that county's practices, procedures, and 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.  
          Additionally, BOE's survey may include a statistical sampling  
          from a county's assessment rolls to determine adequate  
          representation of the several classes of property within the  
          county. Specifically, BOE staff draws a sample of representative  
          parcels, assesses the property on its own, and then compares its  
          value to the assessor's.


          BOE staff, during the course of a survey, can access and make  
          copies of any of the assessor's records, or audit any book or  
          record provided by a taxpayer. Assessors have a right to appeal  
          BOE appraisals within his or her county where differences  
          haven't been resolved before a field review.  


          Current law directs BOE to complete survey reports as rapidly as  
          possible, but requires surveys 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 level of 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  








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          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.  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.


          After the survey is complete, BOE is required to prepare a  
          written survey report setting forth its findings and  
          recommendations. Before preparing its written survey report, the  
          law requires the BOE to meet with the assessor to discuss and  
          confer on those matters that may be included in the written  
          survey report. Existing law requires the BOE to issue the final  
          survey report within two years after the date the BOE begins the  
          survey.


          Current law does not require BOE to meet with the former county  
          assessor if the survey reviews the former assessor's  
          administration. In addition, it does not provide a process for  
          the former assessor to formally respond to a BOE survey.


          Proposed Law: This bill would make several changes to BOE's  
          survey process. First, it would require the Board, for surveys  
          started on or after July 1, 2017, to issue a final survey report  
          within 12 months after the date the survey was begun. The bill  
          would permit a gradual transition from 24 months down to 12  
          months, as specified. Second, the bill would make specified  
          modifications to the survey cycle to reduce the number of  
          surveys that BOE is required to conduct. Finally, the bill would  
          (1) require BOE to notify and meet with the former assessor  
          whose administration is being reviewed upon request, prior to  
          publishing its written survey report, and (2) allow the former  
          assessor to prepare a written response to the BOE report that  
          must be published as an addendum to the final survey report.




          Related  
          Legislation: AB 2234 (Ting) would have made similar changes to  
          survey requirements applicable to BOE in determining the  








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          adequacy of the procedures and practices by used by county  
          assessors. The bill was held on the Assembly Appropriations  
          Committee's Suspense File.


          Staff  
          Comments: Without modifying the survey schedule, publishing  
          written surveys within one year would not be possible. The bill  
          would ultimately shorten the time to complete the written survey  
          report from two years to one year. To mitigate this impact, the  
          bill would reduce the number of county surveys that BOE must  
          complete over a 5-year cycle, from 58 to 30. The bill reduces  
          the number of county samplings the BOE must undertake as well. 
          To complete the surveys in the allotted time using existing  
          staff resources would require the BOE to curtail each audit's  
          scope and depth. Thus, additional staff would be needed to meet  
          the compressed schedule and maintain the audit's scope. BOE  
          notes that hiring and retaining qualified staff could be  
          difficult, as the state's compensation package for individuals  
          with the proper skill set has lagged behind those offered at the  
          county level.


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