BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2476 |Hearing |6/29/16 |
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|Author: |Daly |Tax Levy: |No |
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|Version: |5/27/16 |Fiscal: |Yes |
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|Consultant|Grinnell |
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Local governments: parcel taxes: notice
Requires public agencies seeking voter approval of parcel taxes
to send specified information to nonresident landowners within
30 days of enacting the ordinance.
Background
The California Constitution requires 2/3 voter approval when a
local agency wants to impose or increase a special tax
(Proposition 13, 1978). The Legislature allowed school and
community college districts to impose qualified special taxes
that applied uniformly to all taxpayers or real property within
the district, and allowed districts to exempt persons over the
age of 65 from the tax (AB 1440, Hannigan, 1988). Soon after,
the Legislature also allowed 15 types of local agencies to
impose similar taxes, but without a similar exemption (SB 158,
Committee on Local Government, 1991). Subsequently, the
Legislature allowed school districts to also exempt persons
receiving Supplemental Security Income (SSI) regardless of age
(AB 385, Lieber, 2006), and then income-eligible persons
receiving Social Security Disability Insurance (SSDI) (SB 874,
Hancock, 2012).
Thus far, all qualified special taxes imposed by local agencies
have been parcel taxes, which are not assessed based on the
value of a property like ad valorem property taxes. Instead,
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parcel taxes are generally measured a flat rate assessed per
parcel or per square foot of the parcel or its improvements,
regardless of its size. Some include inflation adjustments. As
such, they are basically a flat tax on property ownership.
Districts can use revenues in almost any way that serves local
needs, such as ongoing expenses, programs, or buildings.
Property tax law generally guides parcel tax collection, where
counties collect parcel taxes with property taxes, and then
remit funds to the agency imposing the tax.
A local agency seeking to impose a parcel tax must first adopt a
resolution in a public meeting with 72 hours advance notice,
which includes the type of tax and rate to be levied, the method
of collection, and the date of the election. Special taxes,
such as parcel taxes, are subject to additional accountability,
which requires local agencies to (SB 165, Alarcón, 2000):
Issue a statement indicating the specific purpose of the
tax, and a requirement that the proceeds be used only for
that purpose;
Create an account in which to deposit proceeds; and,
Publish an annual report that includes the amount of
funds collected and expended, along with the status of any
project required or authorized by the tax measure.
After the local agency has voted to place a parcel tax measure
on the ballot, the election must be held on "established
election dates," which means March, April, or November of an
even-numbered year, or March, June, or November in an
odd-numbered year. A parcel tax measure levied by a local
agency requires approval by two-thirds of the qualified
electors, which Courts have interpreted to mean the registered
voters voting in the election concerning the proposed tax in
Neilson v. City of California City (2005), 133 Cal. App.4th
1296, 1312. As such, non-resident property owners who are not
registered voters are not included among the voters voting on a
proposed parcel tax. However, renters and tenants who do not
own real property, and therefore do not directly pay the tax,
can vote on the ballot measure imposing the tax. Seeking to
increase notification to nonresident landowners of upcoming
parcel tax elections, the California Association of Realtors
wants agencies seeking to impose parcel taxes to send specified
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information to nonresident landowners.
Proposed Law
Assembly Bill 2476 requires a public agency to provide a notice
of the vote to enact a parcel tax to the owner of the parcel if
that owner does not reside in the jurisdiction of the public
agency seeking to impose the tax. The bill requires that the
agency provide the notice within 30 days following the local
agency's vote to place the parcel tax measure on the ballot.
The notice must include, but is not limited to, the following
information:
The amount or rate of the proposed parcel tax in
sufficient detail to allow each property owner to calculate
the amount of the tax to be levied against the owner's
property;
The method and frequency for collecting the proposed
parcel tax, and the duration of time the parcel tax will be
imposed;
The date that the proposed parcel tax will be voted on;
and,
The telephone number and address of an individual,
office, or organization that interested persons may contact
to receive additional information about the proposed parcel
tax.
The bill provides that the notice must be accomplished through
prepaid postage mailing in United States Mail, which is deemed
given when deposited. The measure requires the public agency to
send the notice to the name and address which appears on the
last equalized county or Board of Equalization assessment roll.
AB 2476 additionally requires the notice to be in at least
ten-point type, either with an envelope or postcard which
includes the name and return address of the sender and to
include the specified information listed above.
The measure allows the agency levying the tax to recover its
costs, not to exceed the reasonable cost of preparing and
mailing the notice, from the proceeds of the parcel tax. The
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bill states that because of this authority, the state need not
reimburse the agency for these mandated costs; however, should
the parcel tax measure be rejected by voters, AB 2472 states
that agencies can seek reimbursement through existing statutory
provisions if the Commission on State Mandates finds that the
bill contains state-mandated costs.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "Currently,
property owners are required to pay parcel taxes approved by
voters on a local ballot. If a property owner is a resident of
the local jurisdiction that is seeking to enact a parcel tax,
they learn of that proposed parcel tax when they receive their
ballot pamphlets before an election. In contrast, non-resident
property owners - who own parcels in the given community but
reside elsewhere - receive absolutely no notice of a pending
parcel tax vote. AB 2476 seeks to provide a measure of fairness
and transparency by establishing a process for notifying
non-resident property owners. Specifically, this bill would
require a local agency to inform property owners about the
amount of the proposed parcel tax, the period of time for which
the proposed tax would be collected, and the date on which the
proposed tax would be voted on by local residents. AB 2476 also
provides that the local agency may recover the reasonable costs
of the notice from the proceeds of the parcel tax, including the
costs of preparation and postage."
2. Process . Local agencies, including school districts, enact
parcel taxes by first enacting an ordinance in a public meeting
where the agenda must be published 72 hours before the meeting,
and then submitting the ordinance to voters for approval.
However, nonresident landowners may not be paying attention to
local agency governing board hearings or elections, and can be
surprised when a new parcel tax appears on their property tax
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bill. AB 2476 enacts a specific process for local agencies to
notify these potentially affected taxpayers, which while
providing potentially useful information, would subject parcel
taxes to a higher standard than other local agency actions. The
bill only applies to parcel taxes, but not to other local agency
actions with potentially significant consequences, such as a
fire district changing fire response procedures or defensible
space requirements, or a school district seeking to issue a
facilities construction bond. Determining who must receive
notice, and then printing and mailing them to taxpayers who may
be out of the state or the country, will be costly to these
agencies, so why should state law subject parcel taxes to
special requirements? While some agencies are more transparent
than others, any citizen can keep track of a local agency's
agenda by checking its website or getting on its mailing list.
The Committee may wish to consider whether parcel taxes should
be subject to different notice and disclosure requirements than
other local agency actions, and if so, whether it justifies the
cost.
3. Timing is everything . Local agencies must comply with AB
2476's requirements by sending a notice with specified
information to nonresident landowners within 30 days of enacting
the ordinance placing the measure on the ballot. As such, the
bill compels agencies asking voters to approve a tax to send
specified information to affected non-voters, who while unable
to vote, may potentially be encouraged to politically engage in
the election where voters must approve the parcel tax. However,
a notice specifying some details of a pending parcel tax is not
political in and of itself. Postponing the notice requirement
until after the election would eliminate the measure's potential
political impact while accomplishing its goal of providing ample
taxpayer notification. Additionally, an after-the-election
notice would allay concerns regarding additional costs to local
agencies resulting from having to prepare and mail notices
within the relatively short time period of 30 days, and ensure
that parcel tax proceeds exist to pay for the notice.
4. Who ? AB 2476 requires agencies to send notices to "a
property owner, if that owner does not reside within the
jurisdictional boundaries of the taxing entity proposed to be
subject to the new tax, whose name and address appears on the
last equalized county assessment roll or the State Board of
Equalization assessment roll, as applicable." Agencies won't
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likely know where a property owner resides based on the
information they have available. While voter rolls may provide
an indication, a resident property owner isn't necessarily
registered to vote. Determining residency is notoriously
difficult in income tax cases, having led to extensive and
costly disputes and litigation between taxpayers and the
Franchise Tax Board (FTB), and agencies tasked with delivering
these notices will likely have less information to do so than
FTB. The Committee may wish to consider whether AB 2476's
notification requirement is feasible.
5. Parcel taxes in California . Between 1983 and November 2012,
voters approved 322 parcel taxes in 584 elections. In response,
the Legislature required entities imposing parcel taxes to
report specified information to the State Controller, who must
add this information in her local government financial
transaction reports (AB 2109, Daly, 2014). For many years,
little aggregate information existed regarding parcel taxes, but
a recent report from the Public Policy Institute of California
collected a great deal of revealing data regarding the way in
which local agencies use parcel taxes. Cities placed 124 parcel
tax measures before voters between 2003 and 2012, with 54
receiving the required 2/3 vote, with almost all taxes imposed
by cities in the San Francisco Bay Area and Los Angeles County.
School districts placed 329 parcel tax measures before voters
during the same period, with 60% passing, mostly concentrated in
the Bay Area. The report argues that the higher frequency of
parcel taxes in the Bay Area is partly explained by higher
income levels. Special districts asked voters to enact parcel
taxes 238 times from 2003 to 2012, with 3 out of 4 winning.
PPIC argues that the use of the parcel tax is growing, and that
it has many advantages over other taxes: it has no deadweight
loss, and assigns taxes in line with benefits. However, PPIC
cautions that the tax has a major shortcoming in that many large
parcels have little value, and are limited in their capacity to
support a parcel tax.
Assembly Actions
Assembly Local Government 5-0
Assembly Appropriations 18-0
Assembly Floor 71-4
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Support and
Opposition (6/23/16)
Support : California Apartment Association, California
Association of Realtors, California Chamber of Commerce,
California Manufacturers and Technology Association, California
Taxpayers Association, Howard Jarvis Taxpayers Association,
KernTax, Western Manufactured Housing Communities Association,
Opposition : Association of California Water Agencies,
California Professional Firefighters, California Special
Districts Association, San Bernardino County District Advocates
for Better Schools, San Francisco Unified School District.
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