BILL ANALYSIS Ó
AB 1891
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CONCURRENCE IN SENATE AMENDMENTS
AB
1891 (Dababneh)
As Amended June 22, 2016
Majority vote
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|ASSEMBLY: | 79-0 |(April 21, |SENATE: | 37-0 |(August 11, |
| | |2016) | | |2016) |
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Original Committee Reference: REV. & TAX.
SUMMARY: Provides that any exemption from a qualified special
tax granted to a taxpayer will remain in effect until the
taxpayer becomes ineligible for the exemption.
The Senate amendments:
1)Recast provisions of this bill to require any exemption
granted to remain in effect until the taxpayer becomes
ineligible for the exemption, and allow a new exemption to be
granted to the taxpayer if he or she once again becomes
eligible for the exemption.
2)Expand the scope of this bill to apply to all taxpayers who
may be exempt from a qualified special tax.
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EXISTING LAW:
1)Authorizes school districts to impose qualified special taxes,
in accordance with specified procedures, including the
approval of two-thirds of the voters in the district.
2)Provides that "qualified special taxes" must apply uniformly
to all taxpayers or all real property within the school
district and do not include special taxes imposed on a
particular class of property or taxpayers.
3)Authorizes a school district to exempt from a "qualified
special tax" any or all of the following persons:
a) Persons 65 years of age or older;
b) Persons receiving Supplemental Security Income (SSI) for
a disability; or,
c) Persons receiving Social Security Disability Insurance
(SSDI) benefits whose annual income is less than 250% of
2012 federal poverty guidelines.
4)Specifies in Revenue and Taxation Code (R&TC) Sections 60
through 69.5 what constitutes a "change in ownership," and
provides an exclusion from reassessment for transfers of real
property between parents and children, amongst others.
FISCAL EFFECT: None
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AS PASSED BY THE ASSEMBLY, this bill:
1)Specified that school districts, if imposing a qualified
special tax that provides an exemption for persons 65 years of
age or older and requires those persons to opt out of the
qualified special tax, shall only require those persons to opt
out of the qualified special tax once.
2)Specified that once a taxpayer is granted the exemption, the
school district shall grant the exemption to the taxpayer for
each subsequent taxable period he or she remains eligible for
the exemption.
COMMENTS:
1)Qualified Special Taxes: Proposition 13 (1978) not only
limited both the tax rates and assessments of property taxes,
but also eliminated the ability of school districts to levy an
incremental ad valorem tax on real property. However, school
districts still have limited authority to generate local
revenues from qualified special taxes as long as the special
tax applies uniformly to all taxpayers (other than persons
over the age of 65 or persons receiving SSI or SSDI) and real
property within the district. While Proposition 13 did not
define the term "special tax," over time the courts have
opined that a tax is a "special tax" whenever expenditure of
its revenues is limited to specific purposes, i.e., the
proceeds of the tax are earmarked or dedicated in some manner
to a specific project or projects. In contrast, a tax is a
"general tax" only when its revenues are placed into the
General Fund and are available for expenditure for any and all
governmental purposes. [Bay Area Cellular Telephone Co. v.
City of Union City (2008) 162 Cal. App.4th 686; Howard Jarvis
Taxpayers Assn. v. City of Roseville (2003) 106 Cal.App.4th
1178.] Because Proposition 218 (1996) prohibits school
districts and special districts from imposing general taxes,
thus, by definition, any tax levied by a school district is
considered to be a special tax subject to two-thirds voter
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approval. Thus far, school districts have only imposed
"qualified special taxes" under Government Code Section 50079
in the form of a parcel tax.
2)Parcel Taxes: A parcel tax is a flat fee imposed by a city,
county, or special district on each parcel, residential as
well as commercial, rather than on the assessed value of
property located within the local entity's jurisdiction.
Because the same dollar amount of tax is assessed on each
parcel of property, whether the parcel is one acre or 100
acres, parcel taxes are generally regressive, which means
owners of smaller parcels of land pay a larger percentage of
tax as compared to owners of larger parcels of land. Some
districts levy a rate at a fixed amount per square foot of
taxable land, and many include an annual inflation adjustment.
Although subject to certain requirements, parcel taxes are
flexible ways of raising revenues at the local level.
Existing law does not prescribe a maximum rate of tax nor does
it limit the period within which the qualified special tax may
be imposed and, therefore, the rate of tax varies
significantly among different school districts. Existing law
also does not limit how the special tax proceeds may be spent
and, therefore, a local school board can specify in the ballot
measure how the funds will be used. Generally, local parcel
taxes provide secure funding for teacher salaries, books,
materials and supplies, computers, and arts, music, and sports
programs.
3)Exemptions from Qualified Special Taxes: School districts are
currently authorized to exempt from qualified special taxes
persons over the age of 65, persons receiving SSI for a
disability regardless of age, and persons receiving SSDI with
a specified maximum annual income. The exemption is
permissive rather than mandatory, which allows the school
district to consider the need for, and impact of, an exemption
from special taxes imposed. For example, a school district
may choose to exempt all three classes of individuals from one
qualified special tax, but may choose to exempt only seniors
from another qualified special tax, while the neighboring
school district chooses to provide no exemptions. Any
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exemption, if provided, would be stipulated in the text of the
measure approved by voters. Most school parcel tax measures
have included the senior exemption to help garner more
widespread support, but only a small number of measures have
included the disability exemption.
4)Administrative Differences: There is significant variation in
how school districts administer any granted exemption.
Generally, school districts will require individuals who
qualify for the exemption to "opt out" of paying the tax by
completing an application demonstrating proof of age or
disability benefits, ownership of the property, and residence
at the property. While some school districts only require the
taxpayer to apply for the exemption once, other districts
require the taxpayer to fill out a new application every year
to maintain the exemption. For example, Campbell Union High
School District provides an exemption for both seniors and
individuals receiving SSI for a disability. To renew their
exemption, seniors must fill out an Exemption Renewal form
every year and individuals with a disability must fill out the
original application every year. In comparison, neighboring
Fremont Union High School District only provides the exemption
for seniors and automatically renews the exemption every year
- although the school district sends a letter to all exempted
seniors annually informing them that their exemption will
continue, unless they choose to end the exemption by
responding to the letter.
This bill provides that any exemption granted to a taxpayer
will remain in effect until the taxpayer becomes ineligible
for the exemption. It will either be the taxpayer's
responsibility to notify the school district if he or she is
no longer eligible for the exemption, or the school district's
responsibility to implement a strategy for determining whether
or not the taxpayer is eligible for the exemption.
Analysis Prepared by:
Irene Ho / REV. & TAX. / (916) 319-2098 FN:
0003575
AB 1891
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