BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1952


                                                                    Page  1





          GOVERNOR'S VETO


          AB  
          1952 (Gordon)


          As Amended  September 2, 2016


          2/3 vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |78-0  |(June 2, 2016) |SENATE: |39-0  |(August 22,      |
          |           |      |               |        |      |2016)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 



           -------------------------------------------------------------------- 
          |ASSEMBLY:  |79-0  |(August 25,    |        |      |                 |
          |           |      |2016)          |        |      |                 |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  L. GOV.




          SUMMARY:  Makes a number of changes to the Senior Citizens and  
          Disabled Citizens Property Tax Postponement Program (PTP  
          Program). 









                                                                    AB 1952


                                                                    Page  2






          The Senate amendments:  


          1)Add, for purposes of the definitions used in the statutes for  
            the PTP Program, that a "residential dwelling" does not  
            include any residential dwelling that is subject to a Property  
            Assessed Clean Energy bond, or PACE bond, as defined.


          2)Remove the caps on the PTP revolving fund, as specified.


          3)Add specific dates and timelines for when the Controller,  
            Department of Finance (DOF) and the Joint Legislative Budget  
            Committee need notification and funding, as specified.


          4)Add chaptering out language to avoid conflicts with SB 909  
            (Beall), Chapter 425, Statutes of 2016.


          5)Add a co-author and make other minor, technical changes.


          EXISTING LAW:  


          1)Creates the PTP Program in the State Treasury, which is  
            continuously appropriated to the Controller for purposes of  
            administering the PTP Program, including, but not limited to,  
            necessary administrative costs and disbursements relating to  
            the postponement of property taxes pursuant to the PTP Law.


          2)Requires the Controller, pursuant to the PTP Program, to do  
            both of the following:










                                                                    AB 1952


                                                                    Page  3





             a)   On June 30, 2017, transfer any moneys in the fund in  
               excess of $20 million to the General Fund (GF); and,


             b)   On June 30, 2018, and on June 30 each year thereafter,  
               transfer any moneys in the fund in excess of $15 million to  
               the GF.


          3)Requires, on or after January 1, 2015, any loan repayments  
            relating to the PTP Program to be deposited into the PTP Fund.


          4)Requires all sums paid by the Controller to be secured by a  
            lien in favor of the State of California when funds are  
            transferred to the county by the Controller upon the real  
            property for which property taxes have been postponed.


          5)Allows the Controller to start accepting new applications for  
            the PTP Program on July 1, 2016.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, there is 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.


          COMMENTS:  


          1)Bill Summary.  This bill makes a number of changes to the PTP  
            Program.  The bill specifies that if the Controller determines  
            that there are insufficient moneys in the PTP Fund to cover  








                                                                    AB 1952


                                                                    Page  4





            the cost of all claims that will be approved for the  
            postponement of property taxes in that fiscal year (FY), the  
            Controller shall notify DOF, and DOF can then authorize a  
            transfer from the GF to the PTP Fund in an amount necessary to  
            cover the costs of paying those claims, after notification of  
            the authorization of that expenditure to the chairperson of  
            the fiscal committees of each house of the Legislature and the  
            Chairperson of the Joint Legislative Budget Committee.  This  
            bill also makes a number of other technical and clarifying  
            changes to the PTP Program, including the removal of erroneous  
            code section references, and modifying application dates.


            This bill is sponsored by State Controller Betty Yee.


          2)Author's Statement.  According to the author, "The PTP  
            program, as reestablished by AB 2231 (Gordon), Chapter 703,  
            Statutes of 2014, allows California's seniors over 62 or  
            disabled persons with an income of less than $35,000 per year  
            to receive a loan from the state to pay their property taxes.   
            Any repayments to these loans are deposited into the PTP Fund,  
            but the State Controller must transfer to the GF any amounts  
            in the PTP Fund that exceed $20 million as of June 30, 2017,  
            and $15 million each June 30 thereafter.


            "Since the current program limits the amount of money that can  
            be in the PTP Fund, the PTP program will eventually run out of  
            money.  Estimates from the State Controller's Office project  
            that this will likely occur in the 2017-18 fiscal year.  At  
            that point, the PTP program will not be able to fund new loans  
            to qualified California homeowners in need of assistance.


            "AB 1952 will help make the existing PTP Program more  
            sustainable and accessible for eligible applicants.  By  
            permitting DOF to augment the budget or authorize additional  
            funding for the PTP program, this bill will ensure that the  








                                                                    AB 1952


                                                                    Page  5





            PTP program is able to fulfill the purpose for which it was  
            developed, and assist as many qualified Californians as  
            possible."


          3)Background.  California has several property tax programs  
            benefiting elderly and disabled individuals, including  
            property tax reappraisal relief, property tax assistance, and  
            the PTP program.  Unlike the property tax assistance program  
            that refunds a percentage of property taxes paid, the PTP  
            program allows eligible homeowners to defer payment of all or  
            a portion of the property taxes on their residences.  The  
            program was enacted in 1977, after the passage of a  
            constitutional amendment authorizing the postponement of  
            property taxes (California Constitution Article XIII, Section  
            8) and is administered by the Controller's Office.  The  
            constitutional amendment was in response to concerns that  
            senior homeowners on fixed incomes could lose their homes  
            because of the inability to pay rising property tax bills.   
            Originally designed for persons over 62 years of age, the  
            program is now also available to eligible blind and disabled  
            persons, regardless of age.  


            Suspension of the PTP Program.  On February 20, 2009, the PTP  
            Program was indefinitely suspended as part of the budget  
            reductions to the state's GF programs (SB 8 X3 (Ducheny),  
            Chapter 4, Statutes of 2009-10 Third Extraordinary Session).   
            The funding for the program was eliminated and the Controller  
            was prohibited from accepting any new applications after  
            February 20, 2009.  In response to the negative impacts of the  
            suspension of the PTP Program, AB 1718 (Blumenfield) of 2010  
            was introduced.  AB 1718 would have established the County  
            Deferred Property Tax Program for Senior Citizens and Disabled  
            Citizen, but was vetoed by Governor Schwarzenegger.   
            Subsequently, the Legislature enacted AB 1090 (Blumenfield),  
            Chapter 369, Statutes of 2011, creating the County Deferred  
            Property Tax Program.  AB 1090 was substantially similar to AB  
            1718, except that it did not allow the county treasurer-tax  








                                                                    AB 1952


                                                                    Page  6





            collector to secure the deferral with a superior priority  
            status lien.  


            In contrast to the PTP program that was funded exclusively by  
            GF moneys, the County Deferred PTP program was self-financing.  
             It was funded by a participating county through a fund to be  
            established within its treasury.  Upon adoption of a  
            resolution by the county's governing body, and with the  
            consent of the county treasurer, excess county funds are  
            deposited in the fund for the purpose of providing property  
            tax postponement loans to qualified claimants.  AB 1090  
            established uniform statewide eligibility criteria for the  
            claimants and certain rules and guidelines for a County  
            Deferred Property Tax program.  Since the passage of AB 1090,  
            the Legislature was only aware of one county (Santa Cruz  
            County) that implemented the optional program.  


            AB 2231 (Gordon), Chapter 703, Statutes of 2014, reinstated a  
            modified PTP Program to provide property tax deferment to  
            seniors and disabled persons and allows income-eligible senior  
            citizens and disabled persons to apply to the Controller to  
            defer payment of property taxes, beginning on July 1, 2016.   
            Though the funding for the previous program was eliminated in  
            2009, the statute remained.  This bill was sponsored by the  
            California Association of County Treasurers and Tax  
            Collectors.  


          1)Arguments in Support.  Supporters argue that this bill will  
            ensure the sustainability of the PTP Program while protecting  
            the General Fund during times of economic uncertainty.


          2)Arguments in Opposition.  None on file.


          GOVERNOR'S VETO MESSAGE:








                                                                    AB 1952


                                                                    Page  7







          "This bill allows the Director of Finance to authorize  
          expenditures from the General Fund to pay all approved claims  
          from the Senior and Disabled Citizens Property Tax Postponement  
          Program if the State Controller determines there are  
          insufficient funds.  


          "The premise of the 2014 legislation reinstating this program  
          was that it be entirely self-financing. This bill will reverse  
          that, putting the General Fund back on the hook."




          Analysis Prepared by:                                             
                          Debbie Michel / L. GOV. / (916) 319-3958  FN:  
          0005059