BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2032 |Hearing |6/15/16 |
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|Author: |Linder |Tax Levy: |No |
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|Version: |6/6/16 |Fiscal: |Yes |
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|Consultant|Favorini-Csorba |
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Change of organization: cities: disincorporation
Requires additional financial information to be identified
during disincorporation.
Background and Existing Law
Local Agency Formation Commissions (LAFCOs) are responsible for
coordinating logical and timely changes in local governmental
boundaries, conducting special studies that review ways to
reorganize, simplify, and streamline governmental structures,
and preparing a sphere of influence for each city and special
district within each county. The courts refer to LAFCOs as the
Legislature's "watchdog" over local boundary changes. The
Cortese-Knox Hertzberg Local Government Reorganization Act of
2000 (the Act) establishes procedures for local government
changes of organization, including city incorporations,
disincorporations, annexations to a city or special district,
and city and special district consolidations. LAFCOs regulate
boundary changes through the approval or denial of proposals by
other public agencies or individuals for these procedures.
Last year, the Legislature significantly amended the process for
city disincorporations for the first time since 1963, with the
goal of ensuring that the full effects of disincorporation are
identified and understood before voters decide to approve or
reject it (AB 851, Mayes, 2015). Among other things, AB 851
AB 2032 (Linder) 6/6/16 Page 2
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requires a plan for providing services following
disincorporation that identifies the services currently provided
in the city and which "successor agencies" will provide those
services in the future. The LAFCO executive officer must also
develop a comprehensive fiscal analysis that reviews and
documents information about the financial condition, costs, and
revenues of a city proposed for disincorporation, including:
The cost of providing services and the revenues to the
city in the past 3 fiscal years,
The cost of current and proposed capital improvements,
facilities, assets, and infrastructure,
The sources of funding available to the entities that
take over providing services, and
The anticipated costs to the agency designated to take
over service provision of providing those services.
AB 851 also requires the city proposed for disincorporation to
provide a written statement that identifies the indebtedness of
the city, the amount of money in the city's treasury, the amount
of uncollected tax levies or other obligations due to the city,
and the amount of current and future liabilities of the city.
Once disincorporated, the county tax collector must collect any
unpaid taxes owed to the city and provide the revenues to the
agency taking over service provision, and the board of
supervisors must collect debts due to the city and perform any
other acts necessary for winding up the affairs of the city.
The State Association of County Auditors wants to ensure that
all relevant financial information is disclosed during the
disincorporation process and that all debts are successfully
collected.
Proposed Law
Assembly Bill 2032 requires the comprehensive fiscal analysis
prepared by the LAFCO's executive officer to include (1) all
current and long-term liabilities, including debt obligations,
of the city proposed for disincorporation and the funds
available to discharge those liabilities; and (2) the potential
AB 2032 (Linder) 6/6/16 Page 3
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financing mechanisms available to meet those obligations. It
also requires the city's written statement of liabilities to
include the amount of any assessment due to the city, and
requires the tax collector to also collect any assessments due
to the disincorporated city. AB 2032 directs the successor
agency's governing body and officers, instead of the board of
supervisors and the county officers, to wind up the
disincorporated city's affairs.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Although AB 851 (Mayes, 2015)
comprehensively updated LAFCO statutes relating to city
disincorporations, some small errors remain. AB 2032 makes
minor changes to ensure that important financial information,
such as current and future liabilities and potential financing
mechanisms, are not left out of the LAFCO executive officer's
comprehensive fiscal analysis of disincorporation. It also
ensures that county tax collectors can collect unpaid
assessments that are owed to the disincorporated city. Finally,
it addresses a technical error that results in inconsistency in
the disincorporation process by ensuring that the most
appropriate agency, which may or may not be the county, winds up
the affairs of the disincorporated city. These changes will
make the disincorporation process run as smoothly as possible if
it is needed in the future.
2. Mandate. The California Constitution generally requires the
state to reimburse local agencies for their costs when the state
imposes new programs or additional duties on them. According to
the Legislative Counsel's Office, AB 2032 creates a new
state-mandated local program because county tax collectors will
have to collect unpaid assessments, thereby increasing their
duties. AB 2032 says that if the Commission on State Mandates
determines that it creates a state-mandated local program, the
state must reimburse local agencies by following the existing
statutory process for mandate claims.
AB 2032 (Linder) 6/6/16 Page 4
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Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee: 20-0
Assembly Floor: 76-0
Support and
Opposition (6/9/16)
Support : State Association of County Auditors (sponsor);
California Association of LAFCOs; Orange County LAFCO.
Opposition : Unknown.
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