BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1952 (Gordon) - Property tax postponement
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|Version: June 15, 2016 |Policy Vote: GOV. & F. 6 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1952 would make changes to implement the revived
Property Tax Postponement program, including allowing the State
Controller to exclude administrative costs before shifting funds
above specified limits to the General Fund.
Fiscal
Impact: An estimated transfer in the low millions of dollars
from the General Fund to the Property Tax Postponement (PTP)
Fund in 2018-19. Current projections of the Fund balance, based
on the last five years of data, show that in 2017-18, up to
3,000 applicants will be rejected because of insufficient funds.
This bill would permit DOF to transfer an amount from General
Fund necessary to support these claims.
AB 1952 (Gordon) Page 1 of
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Background: The Senior Citizens and Disabled Citizens Property Tax
Postponement Law (PTP), allows the State 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 in income per year. The Controller secures
repayment by recording a lien against the claimant's property,
which is satisfied when the home is sold or refinanced. As
liens are repaid out of sales proceeds, revenue flows back to
the Controller, who in turn uses these funds to pay property
taxes for new applicants.
Loans do not become due and payable if the claimant or the
claimant's spouse continues to occupy the home. However, the
Controller's lien is only paid off when proceeds remain after
previously filed liens have been satisfied; liens filed by
county tax collectors have "super priority" status, and
therefore must be satisfied before all others regardless of when
they're filed.
In 2009, due to budgetary constraints, and fewer funds flowing
back to the Controller as a result of diminishing sales prices,
the Legislature prohibited persons from filing new claims for
property tax postponement, and the Controller from accepting
applications (SBx3 8, Ducheny, 2009). However, the Legislature
revived the program last year with both tightened eligibility
criteria, and a requirement for the Controller to transfer to
the General Fund repayments received above specified amounts (AB
2231, Gordon, 2014).
Proposed Law:
This bill would, among other things, do the following:
Require the Controller to shift revenues derived from
PTP loan repayments when they exceed specified levels.
If the Controller determines that there are insufficient
moneys in the fund to cover the costs of administering the
program, and to pay all approved claims for the
postponement of property taxes, the Director of Finance,
may authorize expenditures from the General Fund in an
amount necessary to cover the costs of administering this
AB 1952 (Gordon) Page 2 of
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chapter and to pay those claims not sooner than 30 days
after providing written notification. The Director of
Finance must notify the chairpersons of the fiscal
committees of each house of the Legislature, and the
Chairperson of the Joint Legislative Budget Committee, of
any expenditures.
The Controller secures the PTP loan amount in a lien
recorded against the claimant's property, and increases it
to reflect interest accumulation. When the Controller
receives repayments, she lowers the amount of the
obligation secured by the lien. To clarify the accounting
treatment of repayments, the bill applies any payment first
to interest due, next to principal, and lastly to
administrative fees, to the extent a balance remains.
Deletes from eligibility any residential dwelling
subject to a Property Assessed Clean Energy Bond, which are
financing programs that allow local governments to offer
loans to private property owners to cover the initial costs
of renewable energy, energy efficiency, water efficiency,
and other improvements to private property that offer
public benefits. Property owners repay the loans through
voluntary assessments or parcel taxes, which are secured by
priority liens and appear annually on property tax bills
until the loans are repaid
Staff
Comments: AB 2231 required the Controller to shift repayment
amounts above a specified level back to the General Fund,
leaving fewer funds to grant future PTP claims, but providing
more general resources for other state priorities. AB 1952
makes two changes to reduce the number of claimants that may be
turned away in the future: first, authorizing the Director of
Finance to supplement funds to cover administrative costs and
AB 1952 (Gordon) Page 3 of
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pay previously approved claims, and second, allowing the
Controller to deduct administrative costs before shifting funds
back to the General Fund.
The property tax postponement Program was entirely General
Fund-supported prior to its suspension. When the Program was
resuscitated in 2014, it was redesigned to be self-financing. As
noted previously, the annual repayments received from the
estates of persons no longer participating in Program are now
placed in the PTP Fund. The repayment revenues finance the
in-lieu payments to counties that replace, on a dollar-for
dollar basis, the property tax revenue lost due to
Program-authorized property tax postponements.
Prior to its suspension in 2009, Program claims averaged around
$12 million annually, and repayments historically ranged between
$6 million and $10 million. Assuming participation rates in the
resuscitated Program match those of the prior Program, there
would be an annual General Fund cost exposure of between $2
million and $6 million.
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