BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1952


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          Date of Hearing:   April 6, 2016


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                           Susan Talamantes Eggman, Chair


          AB 1952  
          (Gordon) - As Introduced February 12, 2016


          SUBJECT:  Property tax postponement.


          SUMMARY:  Makes a number of changes to the Senior Citizens and  
          Disabled Citizens Property Tax Postponement Program.   
          Specifically, this bill:  


          1)Makes a number of changes to the Senior Citizens and Disabled  
            Citizens Property Tax Postponement Program (PTP Program), as  
            follows:


             a)   Requires the Controller, on June 30, 2018, and on June  
               30 each year thereafter, to transfer any moneys in the PTP  
               fund in excess of $15 million not otherwise needed to pay  
               claims approved by the Controller for the postponement of  
               property taxes, as specified, to the General Fund (GF);


             b)   Allows, if the Controller determines that there are  
               insufficient moneys in the fund to pay all approved claims  
               for the postponement of property taxes, the Director of the  
               Department of Finance (DOF), upon receiving the  
               notification from the Controller, to authorize expenditures  
               from the GF in an amount necessary to pay those claims not  








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               sooner than 30 days after providing written notification of  
               the necessity of authorizing those expenditures to the  
               chairpersons of the fiscal committees of each house of the  
               Legislature and the chairperson of the Joint Legislative  
               Budget Committee;


             c)   Requires the recorder to provide the county assessor  
               with a copy of the notice of lien which has been executed;


             d)   Specifies the order with which a payment received shall  
               be applied, as follows;


               i)     To any interest due on the loan;


               ii)    To the principal property tax amount; and,


               iii)   The remaining balance, if any, to administrative  
                 fees.


             e)   Requires, upon receipt of the electronic fund transfer  
               by the Controller, the tax collector to enter the fact that  
               taxes on the property have been postponed in the  
               appropriate columns on the roll.  Provides, in the case of  
               the secured roll, that this information may be entered in  
               that portion of the roll which has been designated for tax  
               default information, as specified; and,


             f)   Makes several other minor, technical changes.


          EXISTING LAW:  









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          1)Creates the PTP Program in the State Treasury, which is  
            continuously appropriated to the Controller for purposes of  
            administering the PTP Program, including, but not limited to,  
            necessary administrative costs and disbursements relating to  
            the postponement of property taxes pursuant to the PTP Law.


          2)Requires the Controller, pursuant to the PTP Program, to do  
            both of the following:


             a)   On June 30, 2017, transfer any moneys in the fund in  
               excess of $20 million to the GF; and,


             b)   On June 30, 2018, and on June 30 each year thereafter,  
               transfer any moneys in the fund in excess of $15 million to  
               the GF.


          3)Requires, on or after January 1, 2015, any loan repayments  
            relating to the PTP Program to be deposited into the PTP Fund.


          4)Requires all sums paid by the Controller to be secured by a  
            lien in favor of the State of California when funds are  
            transferred to the county by the Controller upon the real  
            property for which property taxes have been postponed.


          5)Allows the Controller to start accepting new applications for  
            the PTP Program on July 1, 2016.


          FISCAL EFFECT:  This bill is keyed fiscal.  


          COMMENTS:  








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          1)Bill Summary.  This bill makes a number of changes to the PTP  
            Program.  First, the bill specifies that moneys in the PTP  
            Fund are only transferred to the GF if they are not needed to  
            pay claims approved by the Controller for the postponement of  
            property taxes.  The bill also gives DOF the authority to  
            augment the PTP Fund to pay all the claims, and designates how  
            payments on PTP loans will be applied to existing PTP  
            accounts.  AB 1952 makes a number of other technical and  
            clarifying changes to the PTP Program, including the removal  
            of erroneous code section references, and modifying  
            application dates. 


            This bill is sponsored by State Controller Betty Yee.


          2)Author's Statement.  According to the author, "The PTP  
            program, as reestablished by 


          AB 2231 (Gordon), Chapter 703, Statutes of 2014, allows  
            California's seniors over 62 or disabled persons with an  
            income of less than $35,000 per year to receive a loan from  
            the state to pay their property taxes.  Any repayments to  
            these loans are deposited into the PTP Fund, but the State  
            Controller must transfer to the GF any amounts in the PTP Fund  
            that exceed $20 million as of June 30, 2017, and $15 million  
            each June 30 thereafter.
            "Since the current program limits the amount of money that can  
            be in the PTP Fund, the PTP program will eventually run out of  
            money.  Estimates from the State Controller's Office project  
            that this will likely occur in the 2017-18 fiscal year.  At  
            that point, the PTP program will not be able to fund new loans  
            to qualified California homeowners in need of assistance.


            "AB 1952 will help make the existing PTP Program more  








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            sustainable and accessible for eligible applicants.  By  
            permitting DOF to augment the budget or authorize additional  
            funding for the PTP program, this bill will ensure that the  
            PTP program is able to fulfill the purpose for which it was  
            developed, and assist as many qualified Californians as  
            possible."


          3)Background.  California has several property tax programs  
            benefiting elderly and disabled individuals, including  
            property tax reappraisal relief, property tax assistance, and  
            the PTP program.  Unlike the property tax assistance program  
            that refunds a percentage of property taxes paid, the PTP  
            program allows eligible homeowners to defer payment of all or  
            a portion of the property taxes on their residences.  The  
            program was enacted in 1977, after the passage of a  
            constitutional amendment authorizing the postponement of  
            property taxes (California Constitution Article XIII, Section  
            8) and is administered by the Controller's Office.  The  
            constitutional amendment was in response to concerns that  
            senior homeowners on fixed incomes could lose their homes  
            because of the inability to pay rising property tax bills.   
            Originally designed for persons over 62 years of age, the  
            program is now also available to eligible blind and disabled  
            persons, regardless of age.  


            Suspension of the PTP Program.  On February 20, 2009, the PTP  
            Program was indefinitely suspended as part of the budget  
            reductions to the state's GF programs [SB 8 X3 (Ducheny),  
            Chapter 4, Statutes of 2009-10 Third Extraordinary Session].   
            The funding for the program was eliminated and the Controller  
            was prohibited from accepting any new applications after  
            February 20, 2009.  In response to the negative impacts of the  
            suspension of the PTP Program, AB 1718 (Blumenfield) of 2010  
            was introduced.  AB 1718 would have established the County  
            Deferred Property Tax Program for Senior Citizens and Disabled  
            Citizen, but was vetoed by Governor Schwarzenegger.   
            Subsequently, the Legislature enacted AB 1090 (Blumenfield),  








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            Chapter 369, Statutes of 2011, creating the County Deferred  
            Property Tax Program.  AB 1090 was substantially similar to AB  
            1718, except that it did not allow the county treasurer-tax  
            collector to secure the deferral with a superior priority  
            status lien.  

            In contrast to the PTP program that was funded exclusively by  
            GF moneys, the County Deferred PTP program was self-financing.  
             It was funded by a participating county through a fund to be  
            established within its treasury.  Upon adoption of a  
            resolution by the county's governing body, and with the  
            consent of the county treasurer, excess county funds are  
            deposited in the fund for the purpose of providing property  
            tax postponement loans to qualified claimants.  AB 1090  
            established uniform statewide eligibility criteria for the  
            claimants and certain rules and guidelines for a County  
            Deferred Property Tax program.   Since the passage of AB 1090,  
            the Legislature was only aware of one county (Santa Cruz  
            County) that implemented the optional program.  

            AB 2231 (Gordon), Chapter 703, Statutes of 2014, reinstated a  
            modified PTP Program to provide property tax deferment to  
            seniors and disabled persons and allows income-eligible senior  
            citizens and disabled persons to apply to the Controller to  
            defer payment of property taxes, beginning on July 1, 2016.   
            Though the funding for the previous program was eliminated in  
            2009, the statute remained.  This bill was sponsored by the  
            California Association of County Treasurers and Tax  
            Collectors.  

          1)Arguments in Support.  Supporters argue that this bill will  
            ensure the sustainability of the PTP Program while protecting  
            the General Fund during times of economic uncertainty.


          2)Arguments in Opposition.  None on file.


          3)Double-Referral.  This bill is double-referred to the Revenue  








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            and Taxation Committee.





          REGISTERED SUPPORT / OPPOSITION:




          Support


          State Controller Betty Yee [SPONSOR]


          California Association of Treasurers and Tax Collectors


          California Special Districts Association


          California State Association of Counties


          Rural County Representatives of California


          Santa Clara County Board of Supervisors




          Opposition


          None on file









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          Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958