BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
------------------------------------------------------------------
|Bill No: |AB 2691 |Hearing | 6/8/16 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |Holden |Tax Levy: |No |
|----------+---------------------------------+-----------+---------|
|Version: |4/19/16 |Fiscal: |No |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Grinnell |
|: | |
-----------------------------------------------------------------
Property taxation: Monthly Property Tax Payment Program
Allows counties boards of supervisors to implement monthly
property tax payment programs.
Background
State law sets January 1st 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. For property on the secured roll, which generally
includes real property such as land and buildings, tax
collectors must send bills to taxpayers by November 1st.
Taxpayers must pay their bills in two installments: the first on
November 1st, which becomes delinquent December 10th, and the
second on February 1st, with delinquency occurring on April
10th. Taxpayers can pay in full at the first installment.
Taxpayers with mortgages who pay property taxes through impound
accounts collected as part of monthly mortgage payments don't
pay according to this schedule; they receive informational
copies of tax bills instead. Many other locally-imposed
charges, fees, taxes, and assessments, such as Mello-Roos taxes,
benefit assessments, and parcel taxes, are also collected as
part of the property tax bill, and subject to the same
restrictions and penalties.
When taxes become delinquent, state law imposes a 10% penalty on
AB 2691 (Holden) 4/19/16 Page 2
of ?
each amount, and counties can also apply administrative charges.
The property becomes tax defaulted if taxes remain unpaid as of
June 30th, triggering redemption penalties of 1.5% a month until
the full amount is paid. After five years, the tax collector
with approval by the Board of Supervisors can 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. Counties 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. Additionally, tax collectors can also accept
partial payments from delinquent taxpayers if authorized to do
so by the board of supervisors. Seeking to allow taxpayers to
pay in installments before delinquency, taxpayer groups want to
authorize counties to adopt a resolution or ordinance to
implement a program for taxpayers to pay property taxes in
monthly installments.
Proposed Law
Assembly Bill 2691 authorizes a county board of supervisors to
adopt a resolution or ordinance to implement a Month Property
Tax Payment Program, where qualified taxpayers can instead pay
ad valorem property taxes on a monthly basis. The measure
defines as "qualified taxpayers" those individuals who are 62
years of age or older, or who receive supplemental security
income.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "Assembly Bill
2691 would authorize a county board of supervisors to implement
AB 2691 (Holden) 4/19/16 Page 3
of ?
a Monthly Property Tax Payment Program. The Program would allow
qualified individuals living on a fixed-income to pay their
property tax in monthly installments. The individual would have
to be 62 years of age or older or be receiving supplemental
security income for a disability, regardless of age. By
providing an option to pay property taxes in lower monthly
installments, AB 2691 makes it easier for individuals on fixed
incomes to pay the principal of the tax steadily, rather than
face the uncertainty of paying a month's worth of Social
Security Income. This bill provides the power to the county
board of supervisors to implement such a program."
2. Implementation . County tax collectors administer the
property tax collection, billing, and tax sale process. County
tax collectors currently send only two bills per year, one for
each installment, so administering a monthly payment system
would increase printing, mailing, and banking costs.
Information technology may also need to be reprogrammed, because
most of the state's tax collectors use the same collections
software built around the two-installment system, which does not
currently allow for monthly payments. Because AB 2691 allows,
but does not require, counties to allow monthly payments, the
measure would not obligate the state to pay these costs;
instead, tax collectors would have to ask their boards of
supervisors for funding to implement the program. Instead, the
measure could be amended to require the consent of the tax
collector prior to implementation, or allow the tax collector to
apportion these costs to taxpayers enrolling in the monthly
payment program, and charge a fee necessary to compensate for
them. The Committee may wish to consider whether AB 2691 is
worth the potential tradeoff of increased administrative costs
for tax collectors.
3. PTP . AB 2691 allows counties to enact ordinances or
resolutions implementing a program for eligible taxpayers to pay
property taxes in monthly installments. However, shifting the
payment schedule from twice per year to monthly doesn't affect
the amount due, or positively impact the taxpayer's ability to
pay. For low-income home-owning taxpayers, the State Controller
administers the Property Tax Postponement (PTP) Program, which
allows the state to loan funds to individuals over the age of 62
or disabled persons with less than $39,000 in income per year to
pay their property taxes to the county tax collector. The
Controller secures repayment by recording a lien against the
AB 2691 (Holden) 4/19/16 Page 4
of ?
claimant's property, which is satisfied when the home is sold or
refinanced. As liens are repaid, revenue flows back to the
Controller, who in turn uses these funds to pay property taxes
for new applicants, up to $20 million annually; the Controller
must shift any amounts received above that amount to the General
Fund. While PTP was defunct from 2009 until recently, the
Controller may not have sufficient current resources to grant
every claim, but the Legislature could appropriate more, or
remove the requirement to shift funds back to the General Fund.
The Committee may wish to consider, given the measure's
potential administrative difficulty, whether adding resources to
PTP may be a better way of helping low-income senior taxpayers
than altering the payment schedule.
4. Technicals . Committee staff recommends the following
amendments to assist implementation:
Instead of applying only to ad valorem property taxes,
apply the measure to all charges that appear on the
property tax bill, and require the county auditor to
prorate payments between each component on the bill.
Require the ordinance or resolution authorizing the
program to set forth specific procedures for the tax
collector to deem as timely filed monthly installments paid
late but within a specified grace period due to reasonable
cause for purposes of determining delinquency and default
for failing to pay by specified deadlines currently in
state law.
Assembly Actions
Assembly Revenue and Taxation 9-0
Assembly Floor 75-0
Support and
Opposition (6/2/16)
AB 2691 (Holden) 4/19/16 Page 5
of ?
Support : Howard Jarvis Taxpayers Association, California State
Retirees.
Opposition : California Association of County Treasurer-Tax
Collectors, State Association of County Auditors.
-- END --