BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2691|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  AB 2691
          Author:   Holden (D) 
          Amended:  8/1/16 in Senate
          Vote:     21 

           SENATE GOVERNANCE & FIN. COMMITTEE:  6-1, 6/8/16
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Pavley
           NOES:  Moorlach

           ASSEMBLY FLOOR:  75-0, 5/2/16 - See last page for vote

           SUBJECT:   Property taxation:  Monthly Property Tax Payment  
                     Program


          SOURCE:    Author

          DIGEST:   This bill allows counties boards of supervisors to  
          implement monthly property tax payment programs.  


          Senate Floor Amendments of 8/1/16 add a provision that states  
          that the bill does not apply to escrow accounts, as defined.


          Senate Floor Amendments of 6/21/16 add references to school  
          entities for purposes of the auditor's allocation of property  
          tax revenue.


          ANALYSIS:  










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          Existing law:


          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.  


          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 amount, and allows counties to  
            also apply administrative charges.


          5)Provides that a 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.


          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.







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          8)Allows tax collectors to also accept partial payments from  
            delinquent taxpayers if authorized to do so by the board of  
            supervisors.


          This bill:


          1)Authorizes a county board of supervisors to adopt a resolution  
            or ordinance to implement a Monthly Property Tax Payment  
            Program, where qualified taxpayers can instead pay taxes on a  
            monthly basis.


          2)Allows 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.


          3)Directs the auditor to apportion property tax payments to  
            cities, counties, special districts and school entities on a  
            proportional basis based on existing law.


          4)Defines as "qualified taxpayers" those individuals who are 62  
            years of age or older, or who receive supplemental security  
            income.


          5)Defines "school entities" by reference to the Revenue and  
            Taxation Code.


          6)States that the bill not apply to escrow accounts, as defined  
            in Section 1024.17 of Title 12 of the Code of Federal  
            Regulations.


          Background








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          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, this bill does 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.  


          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 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  
          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.  




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified8/2/16)









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          California State Retirees
          Howard Jarvis Taxpayers Association


          OPPOSITION:   (Verified8/2/16)


          California Association of County Treasurer-Tax Collectors
          State Association of County Auditors


          ARGUMENTS IN SUPPORT:     According to the author, "Assembly  
          Bill 2691 would authorize a county board of supervisors to  
          implement 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."


          ARGUMENTS IN OPPOSITION:     According to the California  
          Association of County Treasurer-Tax Collectors, "The use of the  
          word installment suggests that the tax collector has the  
          capacity to send out monthly bills requiring that month's  
          payment and outstanding balances; tax collectors do not have  
          this capacity - this would require a significant investment at  
          the Board of Supervisors to upgrade tax collection systems to  
          produce those mailings and handle postage.  Many counties'  
          systems are decades old and predicated on the December 10 and  
          April 10 collection dates.  Changes to these systems take  
          enormous time and resources that the Tax Collector must request  
          from the County's General Fund, and compete with public safety,  
          health, and public works projects for local resources.  There  
          are existing options to assist seniors who wish to remain  
          current on their taxes without creating new local, publicly  
          funded programs."









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          ASSEMBLY FLOOR:  75-0, 5/2/16
          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,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gray, Grove, Hadley, Harper, Holden, Irwin,  
            Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  
            Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon
          NO VOTE RECORDED:  Beth Gaines, Gordon, Roger Hernández,  
            Ridley-Thomas, Williams

          Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
          8/3/16 19:38:12


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