BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 681| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 681 Author: Ting (D) Amended: 7/15/15 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 7/8/15 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/27/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen ASSEMBLY FLOOR: 79-0, 6/2/15 - See last page for vote SUBJECT: State Board of Equalization: surveys: assessments procedures and practices: county assessorState Board of Equalization: surveys: assessment procedures and practices: county assessor. SOURCE: Author DIGEST: This bill changes Board of Equalization's (BOE's) process for surveying counties' assessment practices. ANALYSIS: Existing law: 1)Establishes BOE to equalize rates and assessment practices among counties. AB 681 Page 2 2)Allows BOE to enact rules and regulations which generally bind county assessors. 3)Requires BOE to survey each county assessor to determine whether a county's practices and procedures are adequate, as well as its general performance, as part of this oversight role, the results of which BOE publishes as public documents known as "Assessment Practices Surveys." 4)Requires Assessment Practices Surveys to 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, and allows BOE to include a sampling from assessment rolls, so long 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. 5)Allows BOE to access and make copies of any of the assessor's records, or audit any book or record provided by a taxpayer in the survey, but grants assessors a right to appeal BOE appraisals within his or her county where differences haven't been resolved before a field review. 6)Directs BOE to complete survey reports as rapidly as possible, but requires them of all counties every five years, and additionally requires: a) BOE to sample assessments when surveying the ten largest counties or cities and counties in the state, plus samples from three other counties selected at random. b) BOE to sample assessments from a county if it finds that AB 681 Page 3 it has significant problems in its last survey. 1)Establishes a process for BOE to interact with the assessor regarding the survey prior to publishing: a) BOE must send 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. b) 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. c) Within a year after receiving the final survey 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 its recommendations. d) The assessor's response must be 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. e) 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. 1)Allows assessors to 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, AB 681 Page 4 and allows BOE to continue to certify following a survey that does not include sampling if the board finds in the survey that there are no significant assessment problems. This bill: 1)Reforms the assessment practices survey county selection process, effective January 1, 2016, by instead requiring BOE to: a) Survey and sample assessments from each of the ten largest counties by assessed value once every five years, instead of all counties every five years. b) 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. c) 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. d) Stratify and select counties at random within each category in consultation with the California Assessors Association. e) Sunsets these changes on January 1, 2021. 1)Directs BOE to distinguish between surveys of former assessors and current ones by requiring it to: a) Notify the former assessor if the survey applies to that former assessor's assessment practices. b) Meet and confer on matters in the survey report at the former assessor's request. c) Allow an addendum to the final survey report to include AB 681 Page 5 a former assessor's written response, and the board's comments, if any. 1)Requires BOE to issue the final survey report within one year of beginning the survey, except for: a) Surveys BOE begins before July 1, 2016, which BOE must complete in two years. b) Surveys BOE begins after July 1, 2016, but before to June 30, 2017, which BOE must complete in 15 months. Comments Currently, BOE has 22 surveys in the pipeline, after which, the timeline accelerates should AB 681 be enacted. 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 of the rest. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to Senate Appropriations, AB 681 has costs estimated to be $629,000 in 2016-17 and $571,000 annually thereafter (General Fund). The bill would not impact property tax revenues. SUPPORT: (Verified8/28/15) Board of Equalization California Assessors Association AB 681 Page 6 OPPOSITION: (Verified8/28/15) None received 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." ASSEMBLY FLOOR: 79-0, 6/2/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Chávez Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119 8/31/15 15:46:32 **** END **** AB 681 Page 7