BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2291| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2291 Author: Achadjian (R) Amended: 6/8/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 6/15/16 AYES: Hertzberg, Beall, Hernandez, Lara, Moorlach, Pavley NOES: Nguyen ASSEMBLY FLOOR: 74-0, 4/14/16 - See last page for vote SUBJECT: Property taxes: delinquent taxes: partial payment: fee SOURCE: Author DIGEST: This bill authorizes a county board of supervisors to allow the tax collector to charge a fee for the reasonable costs of partial property tax payments. ANALYSIS: 1)Sets January 1 of each year as the "lien date," or the date upon which the assessor values property, and property taxes are imposed on its owner in the form of a lien against the property. 2)Requires tax collectors to send bills to taxpayers on the secured roll by November 1. AB 2291 Page 2 3)Requires taxpayers must pay their bills in two installments: the first on November 1, which becomes delinquent December 10, and the second on February 1, with delinquency occurring on April 10, but allows taxpayers to pay in full in the first installment. 4)Imposes a 10% penalty on each delinquent amount, and allows counties to also apply administrative charges. 5)Provides that a property becomes tax defaulted if taxes remain unpaid as of June 30, triggering redemption penalties of 1.5% a month until the full amount is paid. 6)Allows the tax collector with approval by the board of supervisors to sell a tax defaulted residential property to satisfy back taxes, penalties, costs, and other liens; for commercial property, the tax collector can do so after three years. 7)Requires counties to allow taxpayers to pay in installments by making an initial payment of 20% of the amount outstanding, but only after a property becomes tax defaulted. Under an installment plan, taxpayers must make one payment a year for five years, in addition to paying current taxes. Failure to make timely payments on an installment plan again places the property in default; however, taxpayers can enter into another installment plan at the beginning of the next fiscal year. 8)Allows tax collectors to also accept partial payments from delinquent taxpayers if authorized to do so by the board of supervisors. 9)Authorizes tax collectors to charge fees for certain activities, such as an application fee for valuing property for the purpose of redemption, or a processing fee for entering into an installment payment plan; however, existing AB 2291 Page 3 law does not clearly authorize the tax collector to charge a fee for accepting partial payments. This bill: 1)Allows a county board of supervisors to authorize the tax collector to recover the reasonable costs for instituting and maintaining a partial payment arrangement for property taxes. 2)Requires the initial ordinance authorizing the fee to establish the maximum fees that the tax collector can charge, which the measure limits only to cost recovery. 3)Requires the county board of supervisors to adopt the fee and any subsequent changes during a regularly scheduled meeting after at least one public meeting where oral and written presentations can be made. 4)States that the fee is imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to provide the service for purposes of the California Constitution. 5)Says that the fee is subject to statutory requirements that cap the fee at the amount reasonably necessary to provide the service. Background Tax collectors generally rely on county general fund allocations from the board of supervisors to operate their offices and fulfill their legal duties. As such, funding and service levels will vary from county to county, and tax collectors must compete for funding against many other worthy causes such as public safety, health care, and other county offices and services when AB 2291 Page 4 the Board enacts the budget. State law explicitly allows tax collectors to charge fees to recover the reasonable costs for some specified services, but not do so for accepting partial payments. Many counties already accept partial payments without charging a fee, paying for any costs out of general funding. Any county that currently does not accept partial payments can commence doing so without charging a fee. Taxpayers with sufficient means are not likely to make partial payments given significant penalties, interest, and risk of tax sale, so adding a fee on to taxpayers who can only pay partially may serve as a financial barrier to taxpayers who can't pay in full. Additionally, counties who have been accepting partial payments without a fee would have legal authorization to do so under AB 2291, which allows tax collectors to shift costs currently funded as part of general operations onto taxpayers who can only make partial payments. However, some counties that won't currently accept partial payments without charging a fee may choose to do so under AB 2291. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified6/17/16) California Association of County Treasurer-Tax Collectors California State Association of Counties Santa Clara County Board of Supervisors OPPOSITION: (Verified6/17/16) None received AB 2291 Page 5 ARGUMENTS IN SUPPORT: According to the author, "AB 2291 would simply allow counties to recover the cost of providing an alternative for taxpayers with tax-defaulted property. Accepting payments on a monthly basis would offer a substantially lower barrier to entry than the existing, more restrictive Permanent Installment Plan. As a result, AB 2291 would allow more taxpayers to begin paying off their delinquent taxes with lower monthly payments in the same manner they typically pay other debt. This will have direct benefits to taxpayers who are making earnest efforts to pay taxes owed. AB 2291 is both taxpayer friendly and maintains local control for countries that choose to provide this service." ASSEMBLY FLOOR: 74-0, 4/14/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Jones, Jones-Sawyer, Kim, Lackey, Linder, Lopez, Low, Maienschein, Mathis, Mayes, Medina, Mullin, 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: Harper, Irwin, Levine, McCarty, Melendez, Nazarian Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119 6/17/16 15:03:51 **** END ****