BILL ANALYSIS Ó
AB 1952
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Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
AB 1952
(Gordon) - As Introduced February 12, 2016
2/3 vote. Fiscal committee.
SUBJECT: Property tax postponement
SUMMARY: Increases the amount of funds authorized to be used by
the State Controller (Controller) to pay approved claims for the
postponement of property taxes under the Senior Citizens and
Disabled Citizens Property Tax Postponement Program (PTP
Program). Specifically, this bill:
1)Provides that the Controller, on June 30, 2018, and on June 30
each year thereafter, may retain moneys in the PTP fund in
excess of $15 million, instead of transferring the moneys to
the General Fund (GF), if needed to pay claims approved by the
Controller for the postponement of property taxes, as
specified.
2)Authorizes the Director of the Department of Finance (DOF),
upon receiving the notification from the Controller, to
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authorize expenditures from the GF in an amount necessary to
pay all approved claims for the postponement of property
taxes, if there are insufficient moneys in the PTP fund.
3)Requires the DOF to notify the chairpersons of the fiscal
committees of each house of the Legislature and the
chairperson of the Joint Legislative Budget Committee in
writing, at least 30 days prior to the authorization of the
expenditures.
4)Requires a county recorder to provide the county assessor with
a copy of the notice of lien which has been executed;
5)Specifies the order in which a payment received by the
Controller shall be applied to reduce the amount of the
obligation secured by the lien against the real property, as
follows;
a) To any interest due on the loan;
b) To the principal property tax amount; and,
c) The remaining balance, if any, to administrative fees.
6)Deletes the reference to the subordination of a lien for
postponed property taxes, as authorized by the PTP Law, from
the list of documents that may be recorded without
acknowledgment, certificate of acknowledgment, or further
proof.
7)Requires the county tax collector, upon receipt of the
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electronic fund transfer by the Controller with respect to a
payment of property taxes under the PTP Law, to enter the fact
that taxes on the property have been postponed in the
appropriate columns on the roll. In the case of the secured
roll, the tax collector may enter this information in that
portion of the roll which has been designated for tax default
information, as specified.
8)Requires the county auditor, treasurer, or disbursing officer,
with respect to a claimant whose property taxes are paid by a
lender from an impound, trust, or other type of account, to
refund a replicated payment, which is based on the electronic
fund transfer by the Controller, to the claimant, instead of
the Controller, as provided.
9)Revises the date, by which a blind or disabled claimant must
qualify as "blind" or "disabled," to the earlier of: (i) the
time of application; or, (ii) February 10th, instead of
December 10th, of the fiscal year (FY) for which postponement
is claimed.
10)Updates statutory references to the PTP Program, deletes
obsolete references to certificates of eligibility and
postponement of mobile homes, and makes other minor, technical
changes.
11)Imposes a state-mandated local program and provides that, if
the Commission on State Mandates determines that the bill
contains costs mandated by the state, reimbursement for the
costs mandated by the state shall be made as specified.
EXISTING LAW:
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1)Establishes the Senior Citizens and Disabled Citizens Property
Tax Postponement Law (or the PTP program), the Senior Citizens
Tenant-Stockholder Postponement Law, and the Senior Citizens
Possessory Interest Holder Postponement Law in the R&TC, all
of which allow the Controller to pay property taxes to county
tax collectors on behalf of individuals over the age of 62 or
disabled persons making less than $35,500. (R&TC Sections
20581- 20641.)
2)Establishes the Senior Citizens Homeowners and Renters
Property Tax Assistance Law, administered by the Franchise Tax
Board (FTB), which is a direct grant program to income
eligible senior citizens. (R&TC Sections 20501 - 20564.)
3)Establishes the County Deferred PTP for Senior and Disabled
Citizens, with participating counties, to pay property taxes
to county tax collectors on behalf of individuals over the age
of 62 or disabled persons making less than $35,500. (R&TC
Sections 20800 - 20825.)
4)Allows the Controller to start accepting new applications for
the PTP Program on July 1, 2016.
5)Establishes the Senior Citizens and Disabled Citizens PTP Fund
("PTP Fund") in the State Treasury and continuously
appropriates moneys in the PTP Fund 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.
6)Requires, on or after January 1, 2015, any loan repayments
relating to the PTP Program to be deposited into the PTP Fund.
7)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,
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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.
8)Authorizes the Controller to secure repayment by recording a
lien against the claimant's property, which is satisfied when
the home is sold or refinanced.
FISCAL EFFECT: Unknown
COMMENTS:
1)Author's Statement . The author has provided the following
statement in support of this bill:
"AB 1952 will help make the existing Property Tax Postponement
Program more sustainable and accessible for eligible
applicants. By permitting the Department of Finance 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."
2)PTP Program: Background . California has several property tax
programs benefiting the elderly and disabled individuals,
including property tax assistance program and property tax
postponement. The property tax assistance program, which is
administered by the Franchise Tax Board, was established in
1967 to provide direct property tax relief to seniors living
on a fixed income. Unlike the assistance program that
provides a direct grant to qualifying seniors and disabled
individuals, 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
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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.
3)Suspension and Subsequent Reinstatement of the PTP program .
On February 20, 2009, the PTP Program was indefinitely
suspended as part of the budget reductions to the state's
General Fund programs [SBx3 8 (Ducheny), Chapter 4, Statutes
of 2009]. The funding for the program was eliminated and the
Controller was prohibited from accepting any new applications
after February 20, 2009. However, in 2014, the Governor
signed AB 2231 (Gordon), Chapter 703, Statutes of 2014, which
reinstated a modified PTP program to provide property tax
deferment to seniors and disabled persons and to allow
income-eligible senior citizens and disabled persons to apply
to the Controller to defer payment of property taxes,
beginning on July 1, 2016.
AB 2231 tightened eligibility criteria and required the
Controller to transfer to the General Fund repayments in
excess of a total of $20 million. AB 2231 also increased the
amount of equity required in the home from 20% to 40%, and
eliminated mobilehomes, manufactured homes, houseboats, and
floating homes from the definition of "residential dwelling."
Increasing the necessary equity in the home was thought to
help ensure that California is made whole in case of
foreclosure or a forced sale. Additionally, AB 2231
modernized and streamlined payment methods by establishing the
Senior Citizens and Disabled Citizens PTP Fund within the
State Treasury, utilizing electronic fund transfer in place of
certificates and eliminating the impound account. In 2015, SB
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801 (Senate Governance and Finance Committee), Chapter 391,
Statutes of 2015, made several technical changes to the PTP
program to ensure that it is implemented correctly.
4)The Implementation of the PTP Program . The PTP program
operates on a "first-come, first-served basis," which is
determined by the postmark date. All applications postmarked
after the cutoff date are denied. According to the
Controller's office, if an applicant does not provide all the
required information or documentation, the Controller will
contact the applicant requesting that the additional
information be submitted within 30 days. If the applicant
timely submits the requested information, he/she will maintain
his/her "place in line." In a case where the number of
applications received on one day exceeds the overall number of
applications that may be funded, the Controller will cut off
approvals as of the prior day. As of April 1, 2016, the PTP
fund balance was $17,756,940.79, which reflects 18 months of
collection but does not factor in the Controller's
administrative costs.
5)Unresolved Funding Problems . Under existing law, all PTP loan
repayments must be deposited in the PTP Fund. However, the
State Controller is required to transfer to the GF any amounts
in the PTP Fund in excess of $20 million as of June 30, 2017,
and any amounts in excess of $15 million as of each June 30
thereafter. The State Controller's Office projects that by
Fiscal Year (FY) 2017-18, the PTP Fund will be exhausted and
the Program will be unable to fund program loans because the
reinstated program limits the annual amount that may remain in
the PTP Fund. At that point, the PTP Program will no longer
be able to fund loans to qualified California homeowners in
need of assistance.
6)What Does This Bill Do ? The PTP Program was funded by an
annual GF appropriation to the Controller's Office to pay the
face amount of all certificates of eligibility for the
program. Administrative costs for the PTP program were paid
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through the Controller's operating budget as part of the
annual Budget Act. As discussed, the PTP was permanently
suspended in 2009 and all funding was eliminated to address
severe GF shortfalls during the recession. In 2014, AB 2231
reinstated the PTP program but deleted the previous program's
funding source - an annual GF appropriation. Instead, AB 2231
created the PTP Fund, an interest bearing fund, which is
continuously appropriated to the Controller to fund the PTP
program, including administrative costs and property tax
postponement disbursements. The money in the PTP Fund comes
from collections on existing PTP accounts from the old
program; no GF money is currently appropriated to support the
reinstated PTP Program.
This bill allows the DOF to authorize expenditures from the GF
to pay the claims for postponement of property taxes approved
by the Controller when the PTP Fund does not have enough money
to make payments on behalf of eligible and approved claimants.
Although this bill requires the DOF to notify the Legislature
in writing at least 30 days prior to authorizing the GF
expenditures, it gives DOF full discretion to decide whether
or not to transfer moneys to the PTP Fund. The language of
this bill states that DOF may authorize expenditures, thus
leaving the final decision regarding the transfer as well as
the amount of expenditures to DOF. In essence, this bill
provides for a continuous appropriation from the GF to the PTP
Fund, but at the same time reserves the right of the Executive
Branch to refuse to transfer GF moneys to the PTP program.
The Committee may wish to consider whether the Legislature
should provide for a de facto appropriation of the PTP program
by removing the DOF's discretion to decide how and whether to
fund the PTP Program.
7)Double-referral . This bill was double-referred to the
Assembly Committee on Local Government. This bill passed the
Assembly Committee on Local Government on a 9 - 0 vote on
April 6, 2016. For additional discussion of this bill's
provisions, please refer to that committee's analysis.
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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:Oksana Jaffe / REV. & TAX. / (916) 319-2098