BILL ANALYSIS Ó
AB 1952
Page 1
Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1952 (Gordon) - As Introduced February 12, 2016
-----------------------------------------------------------------
|Policy |Local Government |Vote:|9 - 0 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Revenue and Taxation | |9 - 0 |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill modifies the Senior Citizens and Disabled Citizens
Property Tax Postponement Program (PTP Program). Specifically,
this bill:
1)Modifies the existing funding cap for the Senior Citizens and
Disabled Citizens Property Tax Postponement Fund (PTP Fund)
AB 1952
Page 2
so that on June 30, 2018, any money in excess of $20 million
instead of the current $15 million, that is not otherwise
needed to pay PTP Program claims must be transferred to the
General Fund.
2)Requires the Department of Finance (DOF), up until January 1,
2019, to transfer from the General Fund to the PTP Fund an
amount necessary to pay claims after providing written notice
to the chairs of legislative committees, as specified.
3)Specifies the order with which a payment received shall be
applied, as follows;
a) To any interest due on the loan;
b) To the principal property tax amount;
c) The remaining balance, if any, to administrative fees.
1)Requires, upon receipt of the electronic fund transfer by the
State Controller's Office (SCO), 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.
FISCAL EFFECT:
An estimated transfer in the range of $2 million to $6 million
from the General Fund to the PTP Fund in FY 2018-19. Current
AB 1952
Page 3
projections of the PTP Fund balance, based on the last five
years of data, show that in FY 2017-2018, between 1,000 and
3,000 applicants will be rejected because of insufficient funds.
This bill will require DOF to transfer an amount from General
Fund necessary to support these claims.
COMMENTS:
1)Background. The PTP Program was originally enacted by Chapter
1242 of 1977 to provide property tax relief to eligible senior
citizens, and was later expanded to include blind and disabled
persons. Eligible persons could defer payment of property
taxes by requesting that the SCO pay the amount deferred to
the county. The SCO recovers payment by securing a lien on the
property, ensuring repayment of deferred property taxes with
accrued interest upon sale of the home, when the title changed
hands, or when the homeowner died or moved. The PTP Program
was funded by an annual General Fund allocation of $12.7
million appropriated to the SCO to pay the face amount of all
certificates of eligibility. The PTP Program was permanently
suspended in FY 2008-9 to address severe General Fund
shortfalls during the recession.
2)PTP reinstated. AB 2231 (Gordon), Chapter 703,2014,
re-enacted the PTP Program, with modifications that were
intended to improve the solvency over the long-term and better
protect the state's interests. For instance, the PTP Program
now requires applicants to have a 40 percent equity stake in
their homes, rather than 20 percent, and requires a loan to be
due and payable when the taxpayer refinances the home or
enters into a reverse mortgage.
AB 2231 also established the PTP Fund, transferring any
outstanding loan repayment amounts to the PTP Fund and
continuously appropriating revenues to the SCO to fund the
program, including administrative costs and property tax
postponement disbursements. The PTP Fund has a cap of $20
AB 1952
Page 4
million in 2016-17, which is lowered to $15 million in 2017-18
and each year thereafter. Any amounts that exceed this cap
are transferred to the General Fund.
3)PTP Fund woes. According to SCO, who supports the bill,
beginning in 2017-18 PTP claims will exceed the fund that
year, resulting in applicants being rejected.
4)Purpose. This bill is intended to help make the existing PTP
Program more sustainable and more accessible for eligible
applicants.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081