BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1952

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          Date of Hearing:  May 4, 2016


                               Lorena Gonzalez, Chair

          1952 (Gordon) - As Introduced February 12, 2016

          |Policy       |Local Government               |Vote:|9 - 0        |
          |Committee:   |                               |     |             |
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          |             |                               |     |             |
          |             |Revenue and Taxation           |     |9 - 0        |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          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)   


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            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  


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          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.   


          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  


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            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  

          Analysis Prepared by:Luke Reidenbach / APPR. / (916)