BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
------------------------------------------------------------------
|Bill No: |AB 1891 |Hearing | 6/15/16 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |Dababneh |Tax Levy: |No |
|----------+---------------------------------+-----------+---------|
|Version: |4/7/16 |Fiscal: |No |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Grinnell |
|: | |
-----------------------------------------------------------------
School districts: special taxes: exemptions
Ensures that taxpayers granted an exemption from a qualified
special tax based on age need not reestablish eligibility.
Background
The California Constitution requires 2/3 voter approval when a
local agency wants to impose or increase a special tax
(Proposition 13, 1978). The Legislature allowed school and
community college districts to impose qualified special taxes
that applied uniformly to all taxpayers or real property within
the district, and allowed districts to exempt persons over the
age of 65 from the tax (AB 1440, Hannigan, 1988). Soon after,
the Legislature also allowed 15 types of local agencies to
impose similar taxes, but without a similar exemption (SB 158,
Committee on Local Government, 1991). Subsequently, the
Legislature allowed school districts to also exempt persons
receiving Supplemental Security Income (SSI) regardless of age
(AB 385, Lieber, 2006), and then income-eligible persons
receiving Social Security Disability Insurance (SSDI) (SB 874,
Hancock, 2012).
Thus far, all qualified special taxes imposed by local agencies
have been parcel taxes, which are not ad valorem, or assessed
based on the value of a property like property taxes. Instead,
parcel taxes are generally measured a flat rate assessed per
AB 1891 (Dababneh) 4/7/16 Page 2
of ?
parcel or per square foot, regardless of its size. Some include
inflation adjustments. As such, they are basically a flat tax
on property ownership. Districts can use revenues in almost any
way that serves local needs, such as ongoing expenses, programs,
or buildings. Between 1983 and November 2012, voters approved
322 parcel taxes in 584 elections. In 2014, the Legislature
required entities imposing parcel taxes to report specified
information to the State Controller, who must add this
information in her local government financial transaction
reports (AB 2109, Daly, 2014).
Property tax law generally guides parcel tax collection, where
counties collect parcel taxes with property taxes, and then
remit funds to the school district imposing the tax. However,
school districts administer many aspects of the tax, including
processing exemption claims. Many school districts have enacted
the senior exemption; however, taxpayer groups want to ensure
that once taxpayers are exempt, they need not do so again.
Proposed Law
Assembly Bill 1891 states that if a school district imposes a
qualified special tax that provides for an exemption for persons
who are 65 years of age or older, and requires taxpayers
claiming that exemption to opt out of the qualified special tax,
the school district shall only require those taxpayers to opt
out of the qualified special tax once and shall grant the
exemption to those taxpayers for each subsequent taxable period
for which the taxpayer remains eligible for the exemption.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "AB 1891 is a
common sense bill that simply states once an individual has
turned 65 years old, and a school district has exempted them
from a parcel tax, districts should honor that request and not
have an overly burdensome system that can result in a
AB 1891 (Dababneh) 4/7/16 Page 3
of ?
surreptitious tax against those who often have difficulty
affording it. This is a simple way to maintain the exemption as
well as uphold current law and protect seniors."
2. Wordsmithing . AB 1891 advances a clear goal: once a school
district determines that a person is exempt from its
lawfully-imposed, voter-approved qualified special tax, the
taxpayer should remain exempt until they no longer meet its
requirements. A taxpayer who reaches 65 years age especially
should not have to reestablish his or her exemption when all
taxpayers above that age are exempt based on the school
district's ordinance. However, the measure doesn't apply to
other groups who may also be exempt, such as SSI and
income-eligible SSDI recipients. Additionally, the measure's
language isn't clear, using several terms that are defined by
either the Government or Revenue and Taxation Codes. The
Committee may wish to consider amending AB 1891 to clarify
exemption treatment and apply to all possible exempt groups.
3. Parcel taxes in California . For many years, little
aggregate information existed regarding parcel taxes, but a
recent report from the Public Policy Institute of California
collected a great deal of revealing data regarding the way in
which local agencies use parcel taxes. Cities placed 124 parcel
tax measures before voters between 2003 and 2012, with 54
receiving the required 2/3 vote, with almost all taxes imposed
by cities in the San Francisco Bay Area and Los Angeles County.
School districts placed 329 parcel tax measures before voters
during the same period, with 60% passing, mostly concentrated in
the Bay Area. The report argues that the higher frequency of
parcel taxes in the Bay Area is partly explained by higher
income levels. Special districts asked voters to enact parcel
taxes 238 times from 2003 to 2012, with 3 out of 4 winning.
PPIC argues that the use of the parcel tax is growing, and that
it has many advantages over other taxes: it has no deadweight
loss, and assigns taxes in line with benefits. However, PPIC
cautions that the tax has a major shortcoming in that many large
parcels have little value, and are limited in their capacity to
support a parcel tax.
Assembly Actions
AB 1891 (Dababneh) 4/7/16 Page 4
of ?
Assembly Revenue and Taxation 9-0
Assembly Floor 79-0
AB 1891 (Dababneh) 4/7/16 Page 5
of ?
Support and
Opposition (6/9/16)
Support : BOE Member George Runner, California Association of
Realtors, California Taxpayers Association, Howard Jarvis
Taxpayers Association
Opposition : None received.
-- END --