BILL ANALYSIS Ó
AB 681
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CONCURRENCE IN SENATE AMENDMENTS
AB
681 (Ting)
As Amended July 15, 2015
Majority vote
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|ASSEMBLY: |79-0 |(June 2, 2015) |SENATE: |40-0 |(September 1, |
| | | | | |2015) |
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Original Committee Reference: REV. & TAX.
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.
The Senate amendments:
1)Provide that if the board finds that a county or city and
county has 'significant assessment problems,' as provided in
Revenue and Taxation Code Section 75.60, a sample of
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assessments will be conducted in that county or city and
county.
2)Specify that a survey report is due within two years if the
survey commenced before July 1, 2016.
3)Strike out "2016 and each of the next four calendar years" and
insert "2015 and every fifth calendar year thereafter."
4)Make technical amendments.
AS PASSED BY THE ASSEMBLY, this bill:
1)Provided 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)Required, 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.
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3)Required, 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)Required 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.
5)Provided that qualified counties shall be stratified and
selected at random by the board, in consultation with the
California Assessors' Association (CAA).
6)Provided that changes to the survey requirements shall remain
in effect until January 1, 2021, and as of that date is
repealed.
7)Required 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)Provided 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)Required the BOE to issue the final survey report within one
year after the date the BOE began the survey, except as
follows:
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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 Senate Appropriations
Committee, the BOE indicates that it would require additional
staff to complete the proposed surveys and samples within one
year, as this bill requires. These costs are estimated to be
$629,000 in 2016-17 and $571,000 annually thereafter (General
Fund). This bill would not impact property tax revenues.
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
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practices.
2)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.
3)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.
4)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 amount of time, 4.8 months and 3.9 months,
respectively. On-site field work is generally completed in a
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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.
5)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.
This three-tiered system allows BOE to survey and sample
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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:
0001723