BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1952|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 1952
Author: Gordon (D), et al.
Amended: 8/17/16 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.
Senate Floor Amendments of 8/17/16: (1) Delete provisions in
current law requiring the Controller to transfer property tax
postponement loan repayments above specified thresholds to the
General Fund, (2) Modify the bill's authorization for the
Director of Finance to pay certain costs if the Controller
notifies the Director that there are insufficient moneys in the
Fund, (3) Correct a reference, (4) Resolve conflicts with SB 909
(Beall), and (5) Make other technical and conforming changes.
AB 1952
Page 2
ANALYSIS:
Existing law:
1)Establishes the Senior Citizens and Disabled Citizens Property
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 deposited in the
Senior Citizens and Disabled Citizens Property Tax
Postponement Fund, generally derived from PTP loan repayments,
to the General Fund when fund amounts exceed specified levels:
$20 million as of June 30, 2017, and $15 million for each June
30 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)Deletes the current requirement for the Controller to shift
revenues deposited in the Senior Citizens and Disabled
Citizens Property Tax Postponement Fund to the General Fund
AB 1952
Page 3
when fund amounts exceed specified levels: $20 million as of
June 30, 2017, and $15 million for each June 30 thereafter.
2)Permits, instead, the Director of Finance to authorize
expenditures from the General Fund in an amount necessary to
pay additionally approved claims to postpone property taxes,
if:
a) The Controller determines that there are insufficient
moneys in the fund to pay all approved PTP claims for that
fiscal year, and
b) The Controller notifies the Director by April 1 of each
year of the deficiency.
1)Limits the permission for the Director of Finance to authorize
expenditures to pay claims to a period of within 60 days of
receiving the notice of the deficiency from the Controller,
and not sooner than 30 days after providing 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.
2)Deletes the requirement for the county recorder to send a copy
of the lien to the tax collector, instead directing the
Controller to do so, and additionally requiring her to also
send a copy of the lien to the assessor.
3)Substitutes a reference to "an electronic funds transfer" with
"payment," in several sections to accommodate other forms of
payment.
4)Clarifies the accounting treatment of repayments to apply any
repayment first to interest due, next to principal, and lastly
AB 1952
Page 4
to administrative fees, to the extent a balance remains.
5)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.
6)Contains contingent enactment provisions that resolve
conflicts with SB 909 (Beall).
7)Corrects references, and makes other technical and conforming
changes to PTP law.
Background
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.
AB 1952
Page 5
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.
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)
AB 1952
Page 6
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
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,
AB 1952
Page 7
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
8/18/16 16:50:28
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