BILL ANALYSIS Ó
AB 2691
Page A
GOVERNOR'S VETO
AB
2691 (Holden)
As Enrolled August 29, 2016
2/3
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|ASSEMBLY: |75-0 |(May 2, 2016) |SENATE: |37-0 |(August 15, |
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|ASSEMBLY: |78-0 |(August 22, | | | |
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Original Committee Reference: REV. & TAX.
SUMMARY: Authorizes a county board of supervisors to adopt a
resolution or ordinance allowing certain taxpayers to pay their
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property tax in monthly installments.
The Senate amendments:
1)Allow the ordinance or resolution to set forth specific
procedures for the tax collector to deem as timely monthly
installments paid late but within a specified grace period for
purposes of determining delinquency and default.
2)Require the monthly property tax payment to be allocated among
the county, cities, special districts, and school entities in
proportion to the amounts of property tax revenue otherwise
allocated.
3)Define "school entities" as having the same meaning as Revenue
& Taxation Code Section 95(f).
4)Provide that this bill does not apply to property for which an
escrow account is established.
EXISTING LAW:
1)Provides that all property is taxable, unless otherwise
provided by the California Constitution or federal laws
(California Constitution Article XIII, Section 1(a)). Limits
ad valorem taxes on real property to 1% of the full cash value
of that property (California Constitution Article XIII A,
Section 1(a) (Proposition 13 of 1978)).
2)Requires an annual payment of property tax and provides that
unpaid taxes become delinquent and subject to penalties and
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costs.
3)Specifies that half of the property tax on real property is
due and payable November 1, and the second half is due and
payable on February 1.
4)Provides that the entire tax on real property may be paid when
the first installment is due and payable or at any time
thereafter until the properties on the current roll become tax
defaulted. The second installment may be paid separately only
if the first installment has been paid.
AS PASSED BY THE ASSEMBLY, this bill:
1)Authorized a county board of supervisors to adopt a resolution
or ordinance to implement a Monthly Property Tax Payment
Program to allow a qualified taxpayer to pay the ad valorem
property tax owed on the qualified taxpayer's principal
residence in monthly installments.
2)Defined a "qualified taxpayer" as a taxpayer who is any or
both of the following:
a) A person who is 62 years of age or older.
b) A person receiving supplemental security income for a
disability, regardless of age.
FISCAL EFFECT: None
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COMMENTS:
1)Proposition 13. Much of the law pertaining to property
taxation is prescribed by Articles XIII and XIII A (commonly
known as "Proposition 13") of the California Constitution.
Proposition 13 was added to the California Constitution in
June 1978 and was most recently amended by Proposition 26 in
2010. Proposition 13 was designed to provide real property
tax relief by imposing a set of interlocking limitations upon
the assessment and taxing powers of state and local
governments.<1> California Constitution Article XIII A,
Section 1, states that, as a general rule, the maximum amount
of any ad valorem tax on real property may not exceed 1% of
the property's full cash value, as adjusted for the lesser of
inflation or 2% per year. The term "full cash value" is
defined as the "county assessor's valuation of real property
as shown on the 1975-1976 tax bill" or thereafter "the
appraised value of real property when purchased, newly
constructed, or a change in ownership has occurred after the
1975 assessment" (California Constitution Article XIII A,
Sections 1 and 2).
2)Property Tax Payments: Due Dates. Generally, property taxes
on the secured roll are due in two installments: on November
1 and February 1. Property taxes that are due but unpaid
after December 10 or April 10 become delinquent and incur a
10% penalty per installment. After April 10, the taxpayer is
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<1>
Since any tax savings resulting from the real property tax
limitations provided in California Constitution Article XIII A,
Sections 1 and 2 could be effectively eliminated through the
imposition of additional state and local taxes, Sections 3 and 4
place additional restrictions upon the imposition of any such
taxes. See Amador Valley Joint Union High Sch. Dist. v. State
Bd. of Equalization, (1978) 22 Cal.3d 208.
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also charged a $10 fee for preparation of his/her delinquent
tax records. If there are any unpaid taxes after June 30,
then the property taxes are declared to be in default and
incur additional penalties at the rate of 1.5% per month of
the unpaid taxes (18% per year), as well as a $15 redemption
fee.
3)Is There a Problem? According to this bill's author, many
seniors, particularly those on fixed incomes, have trouble
saving up for a large expenditure such as an annual property
tax bill. While California is among the states with the
lowest property tax rates, a large number of seniors who are
homeowners still struggle to make ends meet during retirement.
The Economic Policy Institute has described the status of
these seniors as "economically vulnerable". Nearly one-half
of the elderly population in the United States, or 48%, falls
within this category.
4)Proposed Solution: Monthly Property Tax Program. This bill
proposes to authorize a county board of supervisors to create
a Monthly Property Tax Payment program for seniors and
disabled individuals, regardless of age. In essence, the
program would allow those property owners to pay their
property tax bill in monthly installments instead of bi-annual
payments. Property for which an escrow account is established
would not qualify for the program.
5)Implementation Issues. 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 as 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 this bill allows, but does not
require, counties to allow monthly payments, this bill does
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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.
GOVERNOR'S VETO MESSAGE:
I am returning Assembly Bill 2691 without my signature.
This bill authorizes a county board of supervisors to let
qualified taxpayers pay their property taxes in monthly,
rather than biannual, payments.
County supervisors, tax collectors, and auditors across the
state oppose this measure due to the significant costs to
upgrade tax collection systems. I am not convinced that
changing these current systems, many of which have been in
place for decades, is worth the cost.
Analysis Prepared by:
Irene Ho / REV. & TAX. / (916) 319-2098 FN: 0005069