BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1952|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: AB 1952
Author: Gordon (D), et al.
Amended: 6/15/16 in Senate
Vote: 27
SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 6/22/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Moorlach, Pavley
NO VOTE RECORDED: Lara
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 6/2/16 - See last page for vote
SUBJECT: Property tax postponement
SOURCE: State Controller Betty Yee
DIGEST: This bill allows the Director of Finance to authorize
expenditures to pay Property Tax Postponement (PTP) claims as
well as administrative costs under specified circumstances, and
makes other changes to the PTP program.
ANALYSIS:
Existing law:
1)Establishes the Senior Citizens and Disabled Citizens Property
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Tax Postponement Law (PTP), which allows the State Controller
to pay property taxes to county tax collectors on behalf of
individuals over the age of 62 or disabled persons with 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.
2)Requires the Controller to shift revenues derived from PTP
loan repayments to the General Fund when they exceed specified
levels: $20 million as of June 30, 2017, and $15 million for
each June 30th thereafter.
3)Directs the Controller, when granting a PTP loan, to record a
lien against the applicant's property with the county recorder
in the county in which the PTP applicant lives, and requires
the county recorder to send a copy of the lien to the tax
collector.
4)Provides that the Controller increases the lien amount to
reflect interest accumulation, and decreases it by the amount
of any repayments.
This bill:
1)Allows the Controller to exclude any funds used to pay
additional approved claims to postpone property taxes, as well
as the Controller's administrative costs, for purposes of
determining whether to shift and calculating any repayment
amounts to the General Fund,
2)Permits the Director of Finance to authorize expenditures from
the General Fund in an amount necessary to pay additionally
approved claims to postpone property taxes, as well as the
Controller's administrative costs, if:
a) The Controller determines that there are insufficient
moneys in the fund to cover the costs of administering the
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program and pay all approved PTP claims, and
b) The Director of Finance receives a notification from the
Controller of that determination, and provides 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.
1)Requires the Controller, instead of directing the county
recorder to send the a copy of the lien to the tax collector,
to send the copy of the lien, and additionally requires her to
also send a copy of the lien to the assessor.
2)Substitutes a reference to "an electronic funds transfer" with
"payment," in several sections to accommodate other forms of
payment.
3)Clarifies the accounting treatment of repayments to apply any
repayment first to interest due, next to principal, and lastly
to administrative fees, to the extent a balance remains.
4)Prohibits the Controller from granting a PTP loan to an
applicant owning a property 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.
5)Makes technical and conforming changes to PTP law.
Background
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PTP allows the Controller to make loans on behalf of
income-eligible seniors and disabled persons, secured by a lien
that is satisfied when the property 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. The program should be self-financing, as the state's
interest is safeguarded by a lien recorded against the property,
which is repaid, with interest, upon sale. 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 for uncollected property taxes 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 applicants from filing new claims for
property tax postponement, and the Controller from accepting
applications (SBx3 8, Ducheny, Chapter 4, Statues of the 2009-10
Third Extraordinary Session). However, the Legislature
resuscitated the program in 2014 by removing SBx3 8's
prohibition, albeit with tightened eligibility criteria, and a
requirement for the Controller to transfer to the General Fund
repayments received above specified amounts (AB 2231, Gordon,
Chapter 703, Statutes of 2014). The Controller will soon begin
accepting applications for PTP, enabling low-income property
owners to apply for loans which will pay for their property
taxes, which if granted, eliminate the chance the taxpayer will
fall into default, delinquency, or be subject to a tax sale.
Prior to suspension, the Controller granted about $12 million
annually in claims, but repayments only ranged between $6 and
$10 million, potentially leading to General Fund costs. Because
of these risks, AB 2231 applied higher equity percentage
requirement of 40%, among other measures. Additionally, 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.
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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 pay previously approved claims, and second, allowing
the Controller to deduct administrative costs before shifting
fund back to the General Fund. However, in doing so, this bill
may result in less funds for other state priorities.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/12/16)
State Controller Betty Yee (source)
California Association of County Treasurer-Tax Collectors
California Special Districts Association
California State Association of Counties
League of California Cities
Retired Public Employees Association
Rural County Representatives of California
Santa Clara County Board of Supervisors
OPPOSITION: (Verified8/12/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "AB 1952 will
make the reestablished Property Tax Postponement Program more
sustainable and accessible for eligible applicants. Under the
existing program, the money in the PTP Revolving Fund comes from
collections on existing PTP loans; because the Fund relies on
loan repayments, it will take time in the beginning to develop a
strong base. If PTP Fund does not have enough money to make
payments on behalf of eligible and approved claimants, the
Controller will be forced to reject loans to applicants that
would otherwise be eligible once the fund is depleted. By
permitting the Department of Finance to authorize additional
funding for the PTP program, this bill will ensure that the
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Program is able to fulfill the purpose for which it was
developed, and assist as many qualified low income, disabled,
and senior Californians as possible."
ASSEMBLY FLOOR: 78-0, 6/2/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos,
Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh,
Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Bigelow, Beth Gaines
Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
8/15/16 19:36:11
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