Senate BillNo. 25


Introduced by Senator Roth

(Coauthors: Assembly Members Linder and Melendez)

December 1, 2014


An act to amend Section 97.70 of the Revenue and Taxation Code, relating to local government finance.

LEGISLATIVE COUNSEL’S DIGEST

SB 25, as introduced, Roth. Local government finance: property tax revenue allocation: vehicle license fee adjustments.

Existing property tax law requires the county auditor, in each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, and generally provides that each jurisdiction shall be allocated an amount equal to the total of the amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction’s portion of the annual tax increment, as defined.

Existing property tax law also requires that, for purposes of determining property tax revenue allocations in each county for the 1992-93 and 1993-94 fiscal years, the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities, and special districts be reduced in accordance with certain formulas. It requires that the revenues not allocated to the county, cities, and special districts as a result of these reductions be transferred to the Educational Revenue Augmentation Fund in that county for allocation to school districts, community college districts, and the county office of education.

Beginning with the 2004-05 fiscal year and for each fiscal year thereafter, existing law requires that each city, county, and city and county receive additional property tax revenues in the form of a vehicle license fee adjustment amount, as defined, from a Vehicle License Fee Property Tax Compensation Fund that exists in each county treasury. Existing law requires that these additional allocations be funded from ad valorem property tax revenues otherwise required to be allocated to educational entities.

This bill would modify these reduction and transfer provisions for a city incorporating after January 1, 2004, and on or before January 1, 2012, for the 2014-2015 fiscal year and for each fiscal year thereafter, by providing for a vehicle license fee adjustment amount calculated on the basis of changes in assessed valuation.

By imposing additional duties upon local tax officials with respect to the allocation of ad valorem property tax revenues, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 97.70 of the Revenue and Taxation Code
2 is amended to read:

3

97.70.  

Notwithstanding any other law, for the 2004-05 fiscal
4year and for each fiscal year thereafter, all of the following apply:

5(a) (1) (A) The auditor shall reduce the total amount of ad
6valorem property tax revenue that is otherwise required to be
7allocated to a county’s Educational Revenue Augmentation Fund
8by the countywide vehicle license fee adjustment amount.

9(B) If, for the fiscal year, after complying with Section 97.68
10there is not enough ad valorem property tax revenue that is
11otherwise required to be allocated to a county Educational Revenue
12Augmentation Fund for the auditor to complete the allocation
13reduction required by subparagraph (A), the auditor shall
14additionally reduce the total amount of ad valorem property tax
15revenue that is otherwise required to be allocated to all school
16districts and community college districts in the county for that
P3    1fiscal year by an amount equal to the difference between the
2countywide vehicle license fee adjustment amount and the amount
3of ad valorem property tax revenue that is otherwise required to
4be allocated to the county Educational Revenue Augmentation
5Fund for that fiscal year. This reduction for each school district
6and community college district in the county shall be the percentage
7share of the total reduction that is equal to the proportion that the
8total amount of ad valorem property tax revenue that is otherwise
9required to be allocated to the school district or community college
10district bears to the total amount of ad valorem property tax revenue
11that is otherwise required to be allocated to all school districts and
12community college districts in a county. For purposes of this
13 subparagraph, “school districts” and “community college districts”
14do not include any districts that are excess tax school entities, as
15defined in Section 95.

16(2) The countywide vehicle license fee adjustment amount shall
17be allocated to the Vehicle License Fee Property Tax Compensation
18Fund that shall be established in the treasury of each county.

19(b) (1) The auditor shall allocate moneys in the Vehicle License
20Fee Property Tax Compensation Fund according to the following:

21(A) Each city in the county shall receive its vehicle license fee
22adjustment amount.

23(B) Each county and city and county shall receive its vehicle
24license fee adjustment amount.

25(2) The auditor shall allocate one-half of the amount specified
26in paragraph (1) on or before January 31 of each fiscal year, and
27the other one-half on or before May 31 of each fiscal year.

28(c) For purposes of this section, all of the following apply:

29(1) “Vehicle license fee adjustment amount” for a particular
30city, county, or a city and county means, subject to an adjustment
31under paragraph (2) and Section 97.71, all of the following:

32(A) For the 2004-05 fiscal year, an amount equal to the
33difference between the following two amounts:

34(i) The estimated total amount of revenue that would have been
35deposited to the credit of the Motor Vehicle License Fee Account
36in the Transportation Tax Fund, including any amounts that would
37have been certified to the Controller by the auditor of the County
38of Ventura under subdivision (j) of Section 98.02, as that section
39read on January 1, 2004, for distribution under the law as it read
40on January 1, 2004, to the county, city and county, or city for the
P4    12004-05 fiscal year if the fee otherwise due under the Vehicle
2License Fee Lawbegin delete (Pt.end deletebegin insert (Partend insert 5 (commencing with Section 10701)
3ofbegin delete Div.end deletebegin insert Divisionend insert 2) was 2 percent of the market value of a vehicle,
4as specified inbegin delete Sectionend deletebegin insert Sectionsend insert 10752 and 10752.1 as those
5sections read on January 1, 2004.

6(ii) The estimated total amount of revenue that is required to be
7distributed from the Motor Vehicle License Fee Account in the
8Transportation Tax Fund to the county, city and county, and each
9city in the county for the 2004-05 fiscal year under Section 11005,
10as that section read on the operative date of the act that amended
11this clause.

12(B) (i) Subject to an adjustment under clause (ii), for the
132005-06 fiscal year, the sum of the following two amounts:

14(I) The difference between the following two amounts:

begin delete

15(Ia)

end delete

16begin insert(ia)end insert The actual total amount of revenue that would have been
17deposited to the credit of the Motor Vehicle License Fee Account
18in the Transportation Tax Fund, including any amounts that would
19have been certified to the Controller by the auditor of the County
20of Ventura under subdivision (j) of Section 98.02, as that section
21read on January 1, 2004, for distribution under the law as it read
22on January 1, 2004, to the county, city and county, or city for the
232004-05 fiscal year if the fee otherwise due under the Vehicle
24License Fee Law (Part 5 (commencing with Section 10701) of
25Division 2) was 2 percent of the market value of a vehicle, as
26specified in Sections 10752 and 10752.1 as those sections read on
27 January 1, 2004.

begin delete

28(Ib)

end delete

29begin insert(ib)end insert The actual total amount of revenue that was distributed
30from the Motor Vehicle License Fee Account in the Transportation
31Tax Fund to the county, city and county, and each city in the county
32for the 2004-05 fiscal year under Section 11005, as that section
33read on the operative date of the act that amended this
34begin delete sub-subclause.end deletebegin insert subsubclause.end insert

35(II) The product of the following two amounts:

begin delete

36(IIa)

end delete

37begin insert(ia)end insert The amount described in subclause (I).

begin delete

38(IIb)

end delete

39begin insert(ib)end insert The percentage change from the prior fiscal year to the
40current fiscal year in gross taxable assessed valuation within the
P5    1jurisdiction of the entity, as reflected in the equalized assessment
2roll for those fiscal years. For the first fiscal year for which a
3change in a city’s jurisdictional boundaries first applies, the
4percentage change in gross taxable assessed valuation from the
5prior fiscal year to the current fiscal year shall be calculated solely
6on the basis of the city’s previous jurisdictional boundaries, without
7regard to the change in that city’s jurisdictional boundaries. For
8each following fiscal year, the percentage change in gross taxable
9assessed valuation from the prior fiscal year to the current fiscal
10year shall be calculated on the basis of the city’s current
11jurisdictional boundaries.

12(ii) The amount described in clause (i) shall be adjusted as
13follows:

14(I) If the amount described in subclause (I) of clause (i) for a
15particular city, county, or city and county is greater than the amount
16described in subparagraph (A) for that city, county, or city and
17county, the amount described in clause (i) shall be increased by
18an amount equal to this difference.

19(II) If the amount described in subclause (I) of clause (i) for a
20particular city, county, or city and county is less than the amount
21described in subparagraph (A) for that city, county, or city and
22county, the amount described in clause (i) shall be decreased by
23an amount equal to this difference.

24(C) For the 2006-07 fiscal year and for each fiscal year
25thereafter, the sum of the following two amounts:

26(i) The vehicle license fee adjustment amount for the prior fiscal
27year, if Section 97.71 and clause (ii) of subparagraph (B) did not
28apply for that fiscal year, for that city, county, and city and county.

29(ii) The product of the following two amounts:

30(I) The amount described in clause (i).

31(II) The percentage change from the prior fiscal year to the
32current fiscal year in gross taxable assessed valuation within the
33jurisdiction of the entity, as reflected in the equalized assessment
34roll for those fiscal years. For the first fiscal year for which a
35change in a city’s jurisdictional boundaries first applies, the
36percentage change in gross taxable assessed valuation from the
37prior fiscal year to the current fiscal year shall be calculated solely
38on the basis of the city’s previous jurisdictional boundaries, without
39regard to the change in that city’s jurisdictional boundaries. For
40each following fiscal year, the percentage change in gross taxable
P6    1assessed valuation from the prior fiscal year to the current fiscal
2year shall be calculated on the basis of the city’s current
3jurisdictional boundaries.

begin insert

4(2) Notwithstanding paragraph (1), “vehicle license fee
5adjustment amount,” for a city incorporating after January 1,
62004, and on or before January 1, 2012, means the following:

end insert
begin insert

7(A) For the 2015-16 fiscal year, the quotient derived from the
8following fraction:

end insert
begin insert

9(i) The numerator is the product of the following two amounts:

end insert
begin insert

10(I) The sum of the most recent vehicle license fee adjustment
11amounts determined for all cities in the county.

end insert
begin insert

12(II) The population of the incorporating city.

end insert
begin insert

13(ii) The denominator is the sum of the populations of all cities
14in the county.

end insert
begin insert

15(B) For the 2016-17 fiscal year, and for each fiscal year
16thereafter, the sum of the following two amounts:

end insert
begin insert

17(i) The vehicle license fee adjustment amount for the prior fiscal
18year.

end insert
begin insert

19(ii) The product of the following two amounts:

end insert
begin insert

20(I) The amount described in clause (i).

end insert
begin insert

21(II) The percentage change from the prior fiscal year to the
22current fiscal year in gross taxable assessed valuation within the
23jurisdiction of the entity, as reflected in the equalized assessment
24roll for those fiscal years.

end insert
begin delete

25(2)

end delete

26begin insert(3)end insert For the 2013-14 fiscal year, the vehicle license fee
27adjustment amount that is determined under subparagraph (C) of
28paragraph (1) for the County of Orange shall be increased by
29fifty-three million dollars ($53,000,000). For the 2014-15 fiscal
30year and each fiscal year thereafter, the calculation of the vehicle
31license fee adjustment amount for the County of Orange under
32subparagraph (C) of paragraph (1) shall be based on a prior fiscal
33year amount that reflects the full amount of this one-time increase
34of fifty-three million dollars ($53,000,000).

begin delete

35(3)

end delete

36begin insert(4)end insert “Countywide vehicle license fee adjustment amount” means,
37for any fiscal year, the total sum of the amounts described in
38paragraphsbegin delete (1)end deletebegin insert (1), (2),end insert andbegin delete (2)end deletebegin insert (3)end insert for a county or city and county,
39and each city in the county.

begin delete

40(4)

end delete

P7    1begin insert(5)end insert On or before June 30 of each fiscal year, the auditor shall
2report to the Controller the vehicle license fee adjustment amount
3for the county and each city in the county for that fiscal year.

4(d) For the 2005-06 fiscal year and each fiscal year thereafter,
5the amounts determined under subdivision (a) of Section 96.1, or
6any successor to that provision, shall not reflect, for a preceding
7fiscal year, any portion of any allocation required by this section.

8(e) For purposes of Section 15 of Article XI of the California
9Constitution, the allocations from a Vehicle License Fee Property
10Tax Compensation Fund constitute successor taxes that are
11otherwise required to be allocated to counties and cities, and as
12successor taxes, the obligation to make those transfers as required
13by this section shall not be extinguished nor disregarded in any
14manner that adversely affects the security of, or the ability of, a
15county or city to pay the principal and interest on any debts or
16obligations that were funded or secured by that city’s or county’s
17allocated share of motor vehicle license fee revenues.

18(f) This section shall not be construed to do any of the following:

19(1) Reduce any allocations of excess, additional, or remaining
20funds that would otherwise have been allocated to county
21superintendents of schools, cities, counties, and cities and counties
22pursuant to clause (i) of subparagraph (B) of paragraph (4) of
23subdivision (d) of Sections 97.2 and 97.3 or Article 4 (commencing
24with Section 98) had this section not been enacted. The allocations
25required by this section shall be adjusted to comply with this
26paragraph.

27(2) Require an increased ad valorem property tax revenue
28allocation or increased tax increment allocation to a community
29redevelopment agency.

30(3) Alter the manner in which ad valorem property tax revenue
31growth from fiscal year to fiscal year is otherwise determined or
32allocated in a county.

33(4) Reduce ad valorem property tax revenue allocations required
34under Article 4 (commencing with Section 98).

35(g) Tax exchange or revenue sharing agreements, entered into
36prior to the operative date of this section, between local agencies
37or between local agencies and nonlocal agencies are deemed to be
38 modified to account for the reduced vehicle license fee revenues
39resulting from the act that added this section. These agreements
40are modified in that these reduced revenues are, in kind and in lieu
P8    1thereof, replaced with ad valorem property tax revenue from a
2Vehicle License Fee Property Tax Compensation Fund or an
3Educational Revenue Augmentation Fund.

4

SEC. 2.  

If the Commission on State Mandates determines that
5this act contains costs mandated by the state, reimbursement to
6local agencies and school districts for those costs shall be made
7pursuant to Part 7 (commencing with Section 17500) of Division
84 of Title 2 of the Government Code.



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