Amended in Senate June 9, 2015

Senate Constitutional Amendment No. 5

Introduced by begin delete Senator Hancock end delete begin insert Senators Hancock and Mitchell end insert

March 26, 2015

Senate Constitutional Amendment No. 5—A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by begin delete amending Section 4 of Article XIIIA thereof, by amending Section 2 of Article XIIIC thereof, and by amending Section 3 of Article XIIID thereof, relating to taxation. end delete begin insert amending Section 2 of, and by adding Sections 2.5 and 8.8 to, Article XIII end insert begin insert   end insert begin insert A thereof, by adding Sections 8.8 and 14 to Article XIII end insert begin insert   end insert begin insert B thereof, and by adding Sections 8.6 and 8.7 to end insert begin insert Article XVI thereof, relating to local government finance. end insert

LEGISLATIVE COUNSEL’S DIGEST

SCA 5, as amended, Hancock. begin delete Local government: special taxes: voter approval. end delete begin insert Local government finance. end insert

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The California Constitution provides that all property is taxable, unless exempted by the California Constitution or by federal law. The California Constitution authorizes the Legislature to classify personal property for differential taxation or for exemption by means of a statute approved by a 2⁄3 vote of the membership of each house.

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This measure would exempt from taxation an amount up to $500,000 of tangible personal property used exclusively for business purposes. This measure would prohibit the Legislature from lowering this exemption amount or from changing its application, but would authorize it to be increased consistent with the authority described above. This measure would provide that this provision shall become operative on January 1, 2019.

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This measure, for owners of commercial and industrial property subject to reassessment, who also operate a business or businesses on that property, where the increase in assessed value as a result of this measure exceeds 25% compared to the assessed value of the property prior to the operation of this measure, would exempt that portion of the assessed value that exceeds 25% as so described from taxation for a period of 5 years if specified conditions are met.

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The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred.

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This measure, commencing on the lien date for the 2018-19 fiscal year, would require the full cash value of commercial and industrial property, as defined, to be the fair market value of that property as of the lien date. This measure, for the 2018-19 fiscal year, would require only 50% of those properties that have not been reassessed at fair market value, as specified, to be assessed at fair market value, and by the 2019-20 fiscal year would require all other properties that have not been brought to fair market value to be assessed at fair market value. This bill would require owners of property subject to reassessment as so described to pay only a portion, as provided, of any increase in property tax due in the first year and second years after initial reassessment to fair market value.

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This measure would establish the Local School and Community College Property Tax Fund in the State Treasury, which would be continuously appropriated for the support of school districts, charter schools, schools operated by county offices of education, and community college districts. The measure would require the Controller to allocate 11% of the moneys in the fund to community college districts based on an equal amount per unit of full-time equivalent student receiving educational services, and 89% of the moneys in the fund to school districts, charter schools, and county offices of education. For school districts, charter schools, and county offices of education, the measure would require the Superintendent of Public Instruction to allocate the moneys based on a formula that would include a base grant, a supplemental grant, and a concentration grant, as specified. The measure would require moneys from the fund to support the K-14 educational program for instructional improvement and accountability, and would prohibit them from being used to pay administrative costs. The measure would require school districts, charter schools, and county offices of education to demonstrate through their local control and accountability plans that they are increasing or improving services for unduplicated pupils in proportion to the increase in funds they receive pursuant to those supplemental and concentration grant allocations. The measure would prohibit moneys in the fund from being subject to appropriation, reversion, or a transfer by the Legislature, Governor, Director of Finance, or Controller for any purpose other than those specified in the measure, or from being loaned to the General Fund or any other fund of the state or any local government fund. The measure would, among other things, provide that moneys appropriated by the fund shall not be applied toward the minimum funding requirements for school districts and community college districts imposed by Section 8 of Article XVI of the California Constitution, and that they shall not be considered for purposes of calculations relating to the Budget Stabilization Account or the Public School System Stabilization Account.

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This measure, for each fiscal year beginning with the 2018-19 fiscal year to the 2020-21 fiscal year, inclusive, would require the county assessor to make specified calculations to determine the total “baseline assessed value” and the “incremental assessed percentage” of commercial and industrial property, and to identify the “total revised assessed value” of all commercial and industrial property in the county as determined following the reassessment of commercial and industrial property. This measure would require the county assessor to make additional calculations using the total revised assessed value and the incremental assessed value to determine the incremental revenues available for distribution. This measure, beginning with the 2018-19 fiscal year and for each fiscal year thereafter, would require an amount equal to the reduction in revenues derived from the taxes imposes pursuant to the Personal Income Tax Law and the Corporation Tax Law for each county resulting from the higher property taxes due to the reassessment of commercial and industrial properties and the lower property taxes due to the exemptions described above as estimated by the Franchise Tax Board, to be transferred by each county auditor to the state General Fund and the Mental Health Services Fund, as provided. This measure, beginning with the 2018-19 fiscal year to the 2020-21 fiscal year, inclusive, would require the county auditor, after transferring the amounts as so described to the state General Fund and the Mental Health Services Fund, to make specified determinations and calculations with respect to the remaining incremental revenues, and to transfer specified amounts to the State Controller for deposit in the Local School and Community College Property Tax Trust Fund, for allocation and distribution, as described above. This measure would require the balance of the incremental revenues remaining after transferring the amounts as so described to the Controller to be allocated among local agencies. This measure would require the county auditor to report the incremental revenues available for distribution and calculation made, along with supporting documentation, to the Controller, and would require the Controller to certify that the calculation was properly made and to post the percentage figure for each county on the Controller’s Internet Web site. This measure, for the 2021-22 fiscal year, would require the county assessor to perform the calculations described above, and would require the county auditor to report the resulting percentage to the Controller. This measure, for the 2021-22 fiscal year and each fiscal year thereafter, would require the county auditor to make the determinations and calculation described above, and to transfer the resulting property tax revenues to the State Controller for deposit in the Local School and Community College Property Tax Fund, and would require the balance of the incremental revenues to be allocated among local agencies.

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This measure would require all local education agencies, community colleges, counties, cities and counties, cities, and special districts that receive funds from the revenues generated by the reassessment of commercial and industrial properties to publicly disclose the amount of property tax revenues received, as specified, and how those revenues were spent, and to publish online all public disclosures, with a copy of each disclosure to the Controller. This measure would require all annual public audits required of local education agencies, community colleges, counties, cities and counties, cities, and special districts that receive funds from the revenues generated by the reassessment of commercial and industrial properties to disclose the amount of property tax revenues received, as specified, and to confirm whether the use of those revenues is consistent with the requirements of this measure.

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This measure would authorize expenses incurred by local education agencies to comply with these audit and disclosure requirements to be paid with funding from the Local School and Community College Property Tax Fund.

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The California Constitution prohibits the annual appropriations subject to limitation of any entity of state or local government from exceeding its adjusted annual appropriations limit. The California Constitution defines “appropriations subject to limitation” as any authorization to expend during a fiscal year the proceeds of taxes levied by or for that entity, and defines “proceeds of taxes” to include all tax revenues and the proceeds to an entity of government from specified sources.

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This measure would prohibit proceeds of taxes, and appropriations subject to limitation of each entity of government, from including tax revenues generated by the reassessment of commercial and industrial property under this measure.

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The California Constitution requires the state, whenever the Legislature or a state agency mandates a new program or higher level of service on any local government, to provide a subvention of funds to reimburse the local government, with specified exceptions.

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This measure would exclude the duty to collect the tax revenues generated by the reassessment of commercial and industrial property under this measure from being considered a new program or higher level of service mandated by the state. This measure would, however, authorize the board of supervisors of a county or city and county to direct the county auditor to allocate to the county or city and county an amount equal to the actual direct administrative costs associated with the implementation of the reassessment of commercial and industrial property.

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The California Constitution conditions the imposition of a special tax by a local government upon the approval of 2⁄3 of the voters of the local government voting on that tax, but authorizes the imposition of a local ad valorem tax for school facilities upon the approval of 55% of the voters voting on that tax.

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This measure would condition the imposition, extension, or increase of a special tax by a local government upon the approval of 55% of the voters voting on the proposition, if the proposition proposing the tax contains specified requirements. The measure would also make conforming and technical, nonsubstantive changes.

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Vote: ²⁄₃. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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WHEREAS, The majority of commercial and industrial
properties are assessed at or close to their actual market value,
and their owners are paying their share of property taxes to help
support schools and other local services. But many other
commercial and industrial properties currently are assessed far
below their actual value.

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WHEREAS, According to a recent study by USC Dornsife
researchers, owners of these under-assessed commercial and
industrial properties are avoiding over $9 billion in local property
taxes that should be going to support schools, community colleges,
and other community services such as public safety, fire protection,
libraries, and parks.

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WHEREAS, Proposition 13 was approved by voters in 1978 to
protect homeowners from skyrocketing property taxes. But since
then, under-assessment of commercial and industrial properties
has contributed to a tax shift that has substantially increased the
share of property taxes being paid by owners of residential
properties, including both homeowners and residential rental
property.

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WHEREAS, Since 1978 the residential share of assessed value
statewide has increased from 55% to 72% of the total while the
commercial, industrial, and agricultural share of assessed value
has decreased from 45% to just 28%.

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WHEREAS, The combination of Proposition 13 and the
Williamson Act have been effective tools in the preservation of
agricultural land and should be protected.

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WHEREAS, When homeowners sell their homes, the property
is reassessed to the full market value of the property based on the
sales price. But many large corporations and wealthy individuals
are able to take advantage of loopholes and complex stock
manipulations to avoid reassessment when a property changes
hands. For example, in one widely publicized transaction, a
wealthy CEO was able to structure the purchase of a $200 million
hotel property in a way that prevented reassessment, avoiding
more than $1.1 million a year in local property taxes.

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WHEREAS, California’s current system of taxing commercial
and industrial properties is an impediment to fair competition. It
favors under-assessed businesses over other businesses competing
for the same customers that are assessed at their actual value. It
allows owners of under-assessed properties to avoid paying their
share of taxes to support the local public services they benefit from
just as much as the fully assessed businesses that are paying their
share.

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WHEREAS, The current system of taxing commercial and
industrial properties also creates perverse incentives that
discourage owners from investing in improvements in order to
avoid reassessment, while these same under-assessed owners are
being unfairly advantaged over commercial and industrial property
owners, starting up or expanding an existing business, who are
assessed at the full market value of their property.

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WHEREAS, The current system of assessing commercial and
industrial properties has had the unintended consequence of
encouraging sprawl and discouraging “smart growth,” working
against more efficient use of scarce resources such as energy,
water, and land.

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WHEREAS, While the property tax on business equipment and
fixtures is an irritating burden for small businesses, particularly
for those attempting to start up or expand, it also provides revenues
that support local services. Because this measure eliminates the
under-assessment of commercial and industrial properties and
thereby other revenue to support local services, it also can provide
businesses with an exemption of up to $500,000 for equipment and
fixtures. A $500,000 exemption helps all businesses, and will
eliminate the tax on equipment and fixtures entirely for 90% of
businesses whether they own and operate their own small business
or rent their place of business.

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WHEREAS, If commercial and industrial properties pay their
fair share of taxes, more money will be available for our public
schools, which remain funded well below the national average.
Because of the unique interactions between property tax revenues
and the Proposition 98 minimum funding guarantee, however, the
best way to ensure that all school districts benefit equally from
these new property tax revenues is to place them in a special fund
outside Proposition 98 and distribute them based on enrollment,
with more revenues going to those districts that have higher
proportions of low-income or English learner students and foster
youth.

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WHEREAS, If California were a country, it would have the
eighth largest economy in the world. California corporations are
enjoying record profits and many businesses are starting up,
expanding, and relocating here, even though some businesses do
leave California. The complaints of some businesses and their
spokespersons about high taxes are not an excuse for corporations
and wealthy investors to avoid paying their fair share of local
property taxes as do other businesses. Local communities are
strengthened when everyone is contributing to the common good
by paying their share to support schools, job training, public safety,
fire protection, and other local services.

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WHEREAS, Reforming commercial and industrial property
assessments to bring under-assessed properties up to their full
value will remove tax-induced disincentives to investment in
commercial and industrial property, provide a level playing field
for businesses to compete, and require owners of under-assessed
properties to join with the majority of businesses already paying
their fair share to support local schools and other community
services.

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WHEREAS, Proposition 13 limits property tax rates to 1% of
assessed value. Requiring assessors to bring assessments of
under-assessed commercial and industrial properties up to their
actual market value will not affect the 1% limitation on rates in
any way. Property tax rates on California businesses will continue
to be among the lowest in the country.

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Resolved by the Senate, the Assembly
concurring, That the Legislature of the State of California
at its 2015-16 Regular Session commencing on the first day of
December 2014, two-thirds of the membership of each house
concurring, hereby proposes to the people of the State of California
that the Constitution of the State be amended as follows:

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begin insert First-- end insert   

That it is the intent of the people of the State of
California to do all of the following in this measure:

(a) Eliminate the inequities and impediments to economic growth
caused by current laws governing the assessment of commercial
and industrial properties, by requiring all commercial and
industrial properties to be assessed at their full market value and
reducing the property tax on business equipment and fixtures.

(b) Preserve in every way Proposition 13’s protections for
homeowners and for rental residential properties. This measure
only affects the assessment of taxable commercial and industrial
property.

(c) Make no change to existing laws affecting the taxation or
preservation of agricultural land.

(d) Make sure schools, community colleges, counties, cities and
counties, cities, and special districts are appropriately spending
any new revenues they receive from this measure by requiring that
new revenues and their expenditure be publicly disclosed and
annually audited and that all required disclosures and audits are
easily accessible online.

(e) Authorize the distribution of any new revenues resulting
from the implementation of this law in the same manner as other
property tax revenues.

(f) Ensure that the portion of any new revenues going to local
schools and community colleges is treated as new revenues that
are in addition to all other funding for schools and community
colleges, and are allocated in a manner that benefits all schools
and community colleges consistent with constitutional
requirements. Accordingly, these additional funds for schools and
community colleges shall not be considered funds of the State,
shall not be subject to Proposition 98 or the Proposition 2 rainy
day fund, and shall not be subject to appropriation by the
Legislature. The funds will be allocated to school districts and
community college districts based on enrollment. School districts
with higher proportions of low-income and English learner students
and foster youth will receive additional funds to provide more or
better services to those students.

(g) To assist small businesses, whether they own or rent their
place of business, reduce the business tangible personal property
tax on equipment and fixtures for each business by exempting
$500,000 of that property from taxation. This would eliminate the
tax on equipment and fixtures for about 90 percent of all California
businesses. The Legislature would be prohibited from lowering
this exemption but would be authorized to increase it.

(h) Provide for the phase in of the assessment of under-assessed
commercial and industrial properties to give county assessors time
to effectively implement the new law.

(i) Provide owners of under-assessed commercial and industrial
properties time to meet their obligations under the law by phasing
in assessment increases resulting from the initial implementation
of this law. Small business owners will be eligible for additional
assistance in complying with the law through an additional
five-year phase-in for small business owner-operators.

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begin insert That Section 3.1 is added to Article XIII thereof, to
read: end insert

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begin insert SEC. 3.1. end insert   

(a) For each taxpayer paying the tax on tangible
personal property used exclusively for business purposes, an
amount of up to five hundred thousand dollars ($500,000) is exempt
from taxation. Fixtures shall be included as tangible personal
property subject to this exemption, but aircraft and vessels shall
not be included. The Legislature shall not lower this exemption
amount or change its application but otherwise may increase it
consistent with the authority enumerated in Section 2.

(b) (1) For owners of property subject to reassessment under
Section 2.5 of Article XIII A who operate a business or businesses
on that property, where the increase in assessed value as a result
of this measure exceeds 25 percent compared to the assessed value
of the property prior to the operation of this measure, that portion
of the assessed value that exceeds 25 percent compared to the
assessed value of the property prior to the operation of this
measure shall be exempt from taxation for a period of five years
following the reassessment of the property as a result of this
measure, provided that all of the following conditions are met:

(A) The owner uses a majority of the property or properties for
their own business purpose.

(B) The total fair market value is less than three million dollars
($3,000,000) for the entire property, including land and buildings.
Property owners owning properties in a single county shall certify
under penalty of perjury that the aggregate fair market value of
all their properties in that county does not exceed three million
dollars ($3,000,000) in order to qualify for this exemption.
Property owners owning properties in more than one county must
certify under penalty of perjury that the aggregate fair market
value of all of their properties statewide does not exceed three
million dollars ($3,000,000) in order to qualify for this exemption.

(2) This exemption shall expire five years from its initial
application to a business property, at which time the property
owner shall be liable for the full amount of property taxes levied
on the property pursuant to the operation of this measure.
However, property owners who have realized a reduction in
property taxes as a result of the operation of this subdivision are
not liable for the property taxes exempted for the duration of the
operation of this exemption.

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begin insert That Section 2 of Article XIII A thereof is amended to
read: end insert

SEC. 2.  

(a) The “full cash value” means the county assessor’s
valuation of real property as shown on the 1975-76 tax bill under
“full cash value” or, thereafter, begin insert except as otherwise provided in
Section 2.5, the full cash value base of real property. For purposes
of this section, the full cash value base of real property is end insert the
appraised value of real property when purchased, newly
constructed, or a change in ownership has occurred after the 1975
assessment. All real property not already assessed up to the
1975-76 full cash value may be reassessed to reflect that valuation.
For purposes of this section, “newly constructed” does not include
real property that is reconstructed after a disaster, as declared by
the Governor, where the fair market value of the real property, as
reconstructed, is comparable to its fair market value prior to the
disaster. For purposes of this section, the term “newly constructed”
does not include that portion of an existing structure that consists
of the construction or reconstruction of seismic retrofitting
components, as defined by the Legislature.

However, the Legislature may provide that, under appropriate
circumstances and pursuant to definitions and procedures
established by the Legislature, any person over the age of 55 years
who resides in property that is eligible for the homeowner’s
exemption under subdivision (k) of Section 3 of Article XIII and
any implementing legislation may transfer the base year value of
the property entitled to exemption, with the adjustments authorized
by subdivision (b), to any replacement dwelling of equal or lesser
value located within the same county and purchased or newly
constructed by that person as his or her principal residence within
two years of the sale of the original property. For purposes of this
section, “any person over the age of 55 years” includes a married
couple one member of which is over the age of 55 years. For
purposes of this section, “replacement dwelling” means a building,
structure, or other shelter constituting a place of abode, whether
real property or personal property, and any land on which it may
be situated. For purposes of this section, a two-dwelling unit shall
be considered as two separate single-family dwellings. This
paragraph shall apply to any replacement dwelling that was
purchased or newly constructed on or after November 5, 1986.

In addition, the Legislature may authorize each county board of
supervisors, after consultation with the local affected agencies
within the county’s boundaries, to adopt an ordinance making the
provisions of this subdivision relating to transfer of base year value
also applicable to situations in which the replacement dwellings
are located in that county and the original properties are located
in another county within this State. For purposes of this paragraph,
“local affected agency” means any city, special district, school
district, or community college district that receives an annual
property tax revenue allocation. This paragraph applies to any
replacement dwelling that was purchased or newly constructed on
or after the date the county adopted the provisions of this
subdivision relating to transfer of base year value, but does not
apply to any replacement dwelling that was purchased or newly
constructed before November 9, 1988.

The Legislature may extend the provisions of this subdivision
relating to the transfer of base year values from original properties
to replacement dwellings of homeowners over the age of 55 years
to severely disabled homeowners, but only with respect to those
replacement dwellings purchased or newly constructed on or after
the effective date of this paragraph.

(b) The full cash value base may reflect from year to year the
inflationary rate not to exceed 2 percent for any given year or
reduction as shown in the consumer price index or comparable
data for the area under taxing jurisdiction, or may be reduced to
reflect substantial damage, destruction, or other factors causing a
decline in value.

(c) For purposes of subdivision (a), the Legislature may provide
that the term “newly constructed” does not include any of the
following:

(1) The construction or addition of any active solar energy
system.

(2) The construction or installation of any fire sprinkler system,
other fire extinguishing system, fire detection system, or fire-related
egress improvement, as defined by the Legislature, that is
constructed or installed after the effective date of this paragraph.

(3) The construction, installation, or modification on or after
the effective date of this paragraph of any portion or structural
component of a single- or multiple-family dwelling that is eligible
for the homeowner’s exemption if the construction, installation,
or modification is for the purpose of making the dwelling more
accessible to a severely disabled person.

(4) The construction, installation, removal, or modification on
or after the effective date of this paragraph of any portion or
structural component of an existing building or structure if the
construction, installation, removal, or modification is for the
purpose of making the building more accessible to, or more usable
by, a disabled person.

(d) For purposes of this section, the term “change in ownership”
does not include the acquisition of real property as a replacement
for comparable property if the person acquiring the real property
has been displaced from the property replaced by eminent domain
proceedings, by acquisition by a public entity, or governmental
action that has resulted in a judgment of inverse condemnation.
The real property acquired shall be deemed comparable to the
property replaced if it is similar in size, utility, and function, or if
it conforms to state regulations defined by the Legislature
governing the relocation of persons displaced by governmental
actions. This subdivision applies to any property acquired after
March 1, 1975, but affects only those assessments of that property
that occur after the provisions of this subdivision take effect.

(e) (1) Notwithstanding any other provision of this section, the
Legislature shall provide that the base year value of property that
is substantially damaged or destroyed by a disaster, as declared
by the Governor, may be transferred to comparable property within
the same county that is acquired or newly constructed as a
replacement for the substantially damaged or destroyed property.

(2) Except as provided in paragraph (3), this subdivision applies
to any comparable replacement property acquired or newly
constructed on or after July 1, 1985, and to the determination of
base year values for the 1985-86 fiscal year and fiscal years
thereafter.

(3) In addition to the transfer of base year value of property
within the same county that is permitted by paragraph (1), the
Legislature may authorize each county board of supervisors to
adopt, after consultation with affected local agencies within the
county, an ordinance allowing the transfer of the base year value
of property that is located within another county in the State and
is substantially damaged or destroyed by a disaster, as declared
by the Governor, to comparable replacement property of equal or
lesser value that is located within the adopting county and is
acquired or newly constructed within three years of the substantial
damage or destruction of the original property as a replacement
for that property. The scope and amount of the benefit provided
to a property owner by the transfer of base year value of property
pursuant to this paragraph shall not exceed the scope and amount
of the benefit provided to a property owner by the transfer of base
year value of property pursuant to subdivision (a). For purposes
of this paragraph, “affected local agency” means any city, special
district, school district, or community college district that receives
an annual allocation of ad valorem property tax revenues. This
paragraph applies to any comparable replacement property that is
acquired or newly constructed as a replacement for property
substantially damaged or destroyed by a disaster, as declared by
the Governor, occurring on or after October 20, 1991, and to the
determination of base year values for the 1991-92 fiscal year and
fiscal years thereafter.

(f) For the purposes of subdivision (e):

(1) Property is substantially damaged or destroyed if it sustains
physical damage amounting to more than 50 percent of its value
immediately before the disaster. Damage includes a diminution in
the value of property as a result of restricted access caused by the
disaster.

(2) Replacement property is comparable to the property
substantially damaged or destroyed if it is similar in size, utility,
and function to the property that it replaces, and if the fair market
value of the acquired property is comparable to the fair market
value of the replaced property prior to the disaster.

(g) For purposes of subdivision (a), the terms “purchased” and
“change in ownership” do not include the purchase or transfer of
real property between spouses since March 1, 1975, including, but
not limited to, all of the following:

(1) Transfers to a trustee for the beneficial use of a spouse, or
the surviving spouse of a deceased transferor, or by a trustee of
such a trust to the spouse of the trustor.

(2) Transfers to a spouse that take effect upon the death of a
spouse.

(3) Transfers to a spouse or former spouse in connection with
a property settlement agreement or decree of dissolution of a
marriage or legal separation.

(4) The creation, transfer, or termination, solely between
spouses, of any coowner’s interest.

(5) The distribution of a legal entity’s property to a spouse or
former spouse in exchange for the interest of the spouse in the
legal entity in connection with a property settlement agreement or
a decree of dissolution of a marriage or legal separation.

(h) (1) For purposes of subdivision (a), the terms “purchased”
and “change in ownership” do not include the purchase or transfer
of the principal residence of the transferor in the case of a purchase
or transfer between parents and their children, as defined by the
Legislature, and the purchase or transfer of the first one million
dollars ($1,000,000) of the full cash value of all other real property
between parents and their children, as defined by the Legislature.
This subdivision applies to both voluntary transfers and transfers
resulting from a court order or judicial decree.

(2) (A) Subject to subparagraph (B), commencing with
purchases or transfers that occur on or after the date upon which
the measure adding this paragraph becomes effective, the exclusion
established by paragraph (1) also applies to a purchase or transfer
of real property between grandparents and their grandchild or
grandchildren, as defined by the Legislature, that otherwise
qualifies under paragraph (1), if all of the parents of that grandchild
or those grandchildren, who qualify as the children of the
grandparents, are deceased as of the date of the purchase or transfer.

(B) A purchase or transfer of a principal residence shall not be
excluded pursuant to subparagraph (A) if the transferee grandchild
or grandchildren also received a principal residence, or interest
therein, through another purchase or transfer that was excludable
pursuant to paragraph (1). The full cash value of any real property,
other than a principal residence, that was transferred to the
grandchild or grandchildren pursuant to a purchase or transfer that
was excludable pursuant to paragraph (1), and the full cash value
of a principal residence that fails to qualify for exclusion as a result
of the preceding sentence, shall be included in applying, for
purposes of subparagraph (A), the one-million-dollar ($1,000,000)
full cash value limit specified in paragraph (1).

(i) (1) Notwithstanding any other provision of this section, the
Legislature shall provide with respect to a qualified contaminated
property, as defined in paragraph (2), that either, but not both, of
the following apply:

(A) (i) Subject to the limitation of clause (ii), the base year
value of the qualified contaminated property, as adjusted as
authorized by subdivision (b), may be transferred to a replacement
property that is acquired or newly constructed as a replacement
for the qualified contaminated property, if the replacement real
property has a fair market value that is equal to or less than the
fair market value of the qualified contaminated property if that
property were not contaminated and, except as otherwise provided
by this clause, is located within the same county. The base year
value of the qualified contaminated property may be transferred
to a replacement real property located within another county if the
board of supervisors of that other county has, after consultation
with the affected local agencies within that county, adopted a
resolution authorizing an intercounty transfer of base year value
as so described.

(ii) This subparagraph applies only to replacement property that
is acquired or newly constructed within five years after ownership
in the qualified contaminated property is sold or otherwise
transferred.

(B) In the case in which the remediation of the environmental
problems on the qualified contaminated property requires the
destruction of, or results in substantial damage to, a structure
located on that property, the term “new construction” does not
include the repair of a substantially damaged structure, or the
construction of a structure replacing a destroyed structure on the
qualified contaminated property, performed after the remediation
of the environmental problems on that property, provided that the
repaired or replacement structure is similar in size, utility, and
function to the original structure.

(2) For purposes of this subdivision, “qualified contaminated
property” means residential or nonresidential real property that is
all of the following:

(A) In the case of residential real property, rendered
uninhabitable, and in the case of nonresidential real property,
rendered unusable, as the result of either environmental problems,
in the nature of and including, but not limited to, the presence of
toxic or hazardous materials, or the remediation of those
environmental problems, except where the existence of the
environmental problems was known to the owner, or to a related
individual or entity as described in paragraph (3), at the time the
real property was acquired or constructed. For purposes of this
subparagraph, residential real property is “uninhabitable” if that
property, as a result of health hazards caused by or associated with
the environmental problems, is unfit for human habitation, and
nonresidential real property is “unusable” if that property, as a
result of health hazards caused by or associated with the
environmental problems, is unhealthy and unsuitable for
occupancy.

(B) Located on a site that has been designated as a toxic or
environmental hazard or as an environmental cleanup site by an
agency of the State of California or the federal government.

(C) Real property that contains a structure or structures thereon
prior to the completion of environmental cleanup activities, and
that structure or structures are substantially damaged or destroyed
as a result of those environmental cleanup activities.

(D) Stipulated by the lead governmental agency, with respect
to the environmental problems or environmental cleanup of the
real property, not to have been rendered uninhabitable or unusable,
as applicable, as described in subparagraph (A), by any act or
omission in which an owner of that real property participated or
acquiesced.

(3) It shall be rebuttably presumed that an owner of the real
property participated or acquiesced in any act or omission that
rendered the real property uninhabitable or unusable, as applicable,
if that owner is related to any individual or entity that committed
that act or omission in any of the following ways:

(A) Is a spouse, parent, child, grandparent, grandchild, or sibling
of that individual.

(B) Is a corporate parent, subsidiary, or affiliate of that entity.

(C) Is an owner of, or has control of, that entity.

(D) Is owned or controlled by that entity.

If this presumption is not overcome, the owner shall not receive
the relief provided for in subparagraph (A) or (B) of paragraph
(1). The presumption may be overcome by presentation of
satisfactory evidence to the assessor, who shall not be bound by
the findings of the lead governmental agency in determining
whether the presumption has been overcome.

(4) This subdivision applies only to replacement property that
is acquired or constructed on or after January 1, 1995, and to
property repairs performed on or after that date.

(j) Unless specifically provided otherwise, amendments to this
section adopted prior to November 1, 1988, are effective for
changes in ownership that occur, and new construction that is
completed, after the effective date of the amendment. Unless
specifically provided otherwise, amendments to this section
adopted after November 1, 1988, are effective for changes in
ownership that occur, and new construction that is completed, on
or after the effective date of the amendment.

begin insert

begin insert Fourth-- end insert   

That Section 2.5 is added to Article XIII A thereof,
to read:

begin insert SEC. 2.5. end insert   

(a) (1) This section shall not apply to residential
property as defined in this section, whether it is occupied by a
homeowner or a renter. This section shall also not apply to real
property used for commercial agricultural production as defined
in this section.

(2) For the lien date for the 2018-19 fiscal year and each lien
date thereafter, the “full cash value” of commercial and industrial
real property that is not used for commercial agricultural
production or is otherwise exempt under the Constitution or statute
is the fair market value of that property as of that date, except as
provided in subdivision (b) and (c).

(b) (1) For the 2018-19 fiscal year only, the requirement that
those commercial and industrial properties subject to reassessment
under this section be assessed at fair market value shall apply only
to the 50 percent of such properties that have not been brought to
fair market value for any part of their property for the greatest
number of years prior to the 2018-19 lien date.

(2) For the 2019-20 and 2020-21 fiscal years only, the assessed
value of properties assessed at full market value pursuant to
paragraph (1) shall be increased by the rate of inflation, but not
more than 2 percent.

(3) Owners of property subject to this subdivision shall be
required to pay one-third of the amount of any increase in property
tax due and payable resulting from initial assessment to fair market
value in the first year upon receiving the new valuation required
by subdivision (b), two-thirds of the amount of any increase in
property tax due and payable in the second year, and the full
amount of any property tax due and payable in the third year after
initial reassessment to fair market value and in subsequent years
thereafter. The balance of the amounts due for the first and second
years following initial assessment to full market value shall be
forgiven.

(c) (1) All other commercial and industrial properties subject
to reassessment under this section shall be assessed at fair market
value by the lien date for 2019-20.

(2) For the 2020-21 fiscal year only, the assessed value of
properties assessed at full market value pursuant to paragraph
(1) shall be increased by the rate of inflation, but not more than
2 percent.

(3) Owners of property subject to this subdivision shall be
required to pay one-half of the amount of any increase in property
tax due and payable resulting from initial assessment to fair market
value in the first year upon receiving the new valuation required
by subdivision (b) and the full amount of any property tax due and
payable in the year following initial reassessment and in
subsequent years thereafter. The balance of the amount due for
the first year following initial assessment to full market value shall
be forgiven.

(d) For purposes of this section:

(1) “Commercial and industrial real property” means any real
property that is not residential property or not used for commercial
agricultural production.

(2) “Residential property” shall include both single-family and
multiunit structures, and the land on which such structures are
constructed, that are intended to be used and are used for
long-term residential occupancy, but shall exclude hotels, motels
and similar structures that are used primarily for transient and
non-permanent residence.

(3) “Real property used for commercial agricultural
production” is real property that is used and zoned for producing
commercial agricultural commodities and is real property for
which either of the following applies:

(A) The real property is an unimproved parcel to which both of
the following apply:

(i) The parcel is used and zoned for producing commercial
agricultural commodities.

(ii) The parcel does not contain a single-family residence or a
multifamily residence that was subdivided in accordance with the
Subdivision Map Act (Division 2 (commencing with Section 66410)
of Title 7 of the Government Code), or any successor to that law,
or that was described and conveyed in one or more deeds
separating the parcel from all adjoining property.

(B) The parcel of real property contains only living
improvements. Improvements other than those intended and used
for habitation shall be considered commercial and industrial
property for purposes of this section.

(e) Notwithstanding subdivision (a), it is the intent of the voters
in this section to provide a transition to fair market value as
provided in subdivision (b) and (c), for the purposes of assuring
a reasonable workload and implementation period for county
assessors and taxpayers.

end insert

begin insert

begin insert Fifth-- end insert   

That Section 8.8 is added to Article XIII A thereof, to
read:

begin insert SEC. 8.8. end insert   

(a) All local education agencies, community colleges,
counties, cities and counties, cities, and special districts that
receive funds from the revenues generated by Section 2.5 of Article
XIII A shall publicly disclose each year, including in their annual
budgets, the amount of property tax revenues they received for
that fiscal year as the result of Section 2.5 of Article XIII A and
how those revenues were spent.

(b) All annual public audits required of local education
agencies, community colleges, counties, cities and counties, cities,
and special districts that receive funds from the revenues generated
by Section 2.5 of Article XIII A shall disclose the amount of
property tax revenues received for that fiscal year as the result of
Section 2.5 of Article XIII A and confirm whether the use of those
revenues is consistent with the requirements of this act.

(c) All local education agencies, community colleges, counties,
cities and counties, cities, and special districts receiving new
revenues generated by Section 2.5 of Article XIII A shall publish
online all public disclosures required by this measure, with a copy
of each disclosure to the Controller.

(d) Expenses incurred by local education agencies receiving
new revenues generated by Section 2.5 of Article XIII A to comply
with the audit and disclosure requirement of this section may be
paid with funding from the Local School and Community College
Property Tax Fund, and shall not be considered administrative
costs for purposes of subsection (b) of Section 8.7 of Article XVI.

end insert

begin insert

begin insert Sixth-- end insert   

That Section 14 is added to Article XIII B thereof, to
read:

begin insert SEC. 14. end insert   

(a) For purposes of this article, “proceeds of taxes”
shall not include the revenues generated by Section 2.5 of Article
XIII A.

(b) For purposes of this article, “appropriations subject to
limitation” of each entity of government shall not include
appropriations of revenues generated by Section 2.5 of Article
XIII A.

(c) The duty to collect the revenues generated by Section 2.5 of
Article XIII A shall not be considered a new program or higher
level of service mandated by the State for purposes of this article.
The board of supervisors of a county or city and county, upon the
adoption of a method identifying the actual direct administrative
costs identified in Section 75.60 of the Revenue and Taxation Code,
as that section read on July 1, 2015, that are associated with the
implementation of Section 2.5 of Article XIII A, may direct the
county auditor to allocate to the county or city and county, prior
to any allocation of property tax revenues, an amount equal to the
actual direct administrative costs, but not to exceed 3 percent of
the revenues that have been collected as a result of the
implementation of Section 2.5 of Article XIII A. The amount
determined to provide reimbursement for the actual direct
administrative costs of implementing Section 2.5 of Article XIII A
shall be deducted proportionately from the allocations to be
provided to cities, the county, and special districts, but not
deducted from the school share of any increased allocation. The
board of supervisors shall identify the ongoing costs of
implementation of Section 2.5 annually.

end insert

begin insert

begin insert Seventh-- end insert   

That Section 8.6 is added to Article XVI thereof, to
read:

begin insert SEC. 8.6. end insert   

(a) For each fiscal year beginning with the 2018-19
fiscal year to the 2020-21 fiscal year, inclusive, county assessors
shall calculate the following:

(1) The total “baseline assessed value” of all commercial and
industrial property in the county subject to Section 2.5 of Article
XIII A. The total “baseline assessed value” shall be calculated as
follows:

(A) The county assessor shall identify the total assessed value
of commercial and industrial property as determined pursuant to
Chapter 1 (commencing with Section 50) of Part 0.5 of Division
1 of the Revenue and Taxation Code, as that chapter read on July
1, 2015, for the 2017-18 fiscal year.

(B) The amount in subparagraph (A) shall be increased by the
amount for that fiscal year determined pursuant to Section 51 of
the Revenue and Taxation Code, as that section read on July 1,
2015.

(C) The county assessor shall add to the amount determined
pursuant to subparagraph (B) the incremental increase in assessed
value of commercial and industrial property resulting from the
sale or transfer of properties for purposes of the respective January
1 lien dates beginning with the 2018-19 fiscal year to the 2020-21
fiscal year, inclusive, provided the sale or transfer would have
triggered reassessment pursuant to Chapter 2 (commencing with
Section 60) of Part 0.5 of Division 1 of the Revenue and Taxation
Code, as that chapter read on July 1, 2015.

(D) The county assessor shall add to the amount determined
pursuant to subparagraph (C) the incremental increase in assessed
value of commercial and industrial property resulting in new
construction for purposes of the respective January 1 lien dates
beginning with the 2018-19 fiscal year to the 2020-21 fiscal year,
inclusive, as determined pursuant to Chapter 3 (commencing with
Section 70) of Part 0.5 of Division 1 of the Revenue and Taxation
Code, as that chapter read on July 1, 2015.

(2) The county assessor shall identify the total “revised assessed
value” of all commercial and industrial property in the county as
determined following the reassessment required by Section 2.5 of
Article XIII A for each fiscal year beginning with the 2018-19
fiscal year to the 2020-21 fiscal year, inclusive, except that for
the 2018-19 and 2019-20 fiscal years, the amount of assessed
value shall be reduced to reflect the amounts actually due and
payable pursuant to subdivisions (b) and (c) of Section 2.5 of
Article XIII A.

(3) For each fiscal year beginning with the 2018-19 fiscal year
to the 2020-21 fiscal year, inclusive, the county assessor shall
subtract the amount determined pursuant to subparagraph (D) of
paragraph (1) from the amount determined pursuant to paragraph
(2).

(4) For each fiscal year beginning with the 2018-19 fiscal year
to the 2020-21 fiscal year, inclusive, the county assessor shall
divide the amount determined pursuant to paragraph (3) by the
amount determined pursuant to paragraph (2). The resulting
percentage shall be known as the “incremental assessed
percentage” of commercial and industrial property in the county
subject to Section 2.5 of Article XIII A.

(b) For each fiscal year beginning with the 2018-19 fiscal year
to the 2020-21 fiscal year, inclusive, county assessors shall
multiply the total revised assessed value by the incremental
assessed percentage and a tax rate of one percent to determine
the incremental revenues available for distribution as the result
of Section 2.5 of Article XIII A.

(c) For each fiscal year beginning with the 2018-19 fiscal year
and for each fiscal year thereafter, all of the following shall apply:

(1) An amount equal to the reduction in revenues derived from
the taxes imposed pursuant to the Personal Income Tax Law (Part
10 (commencing with Section 17001) of Division 2 of the Revenue
and Taxation Code) and the Corporation Tax Law (Part 11
(commencing with Section 23001) of Division 2 of the Revenue
and Taxation Code), as those laws read on July 1, 2015, for each
county resulting from the higher property taxes due to the
implementation of Section 2.5 of Article XIII A and the lower
property taxes due to the implementation of Section 3.1 of Article
XIII, as estimated by the Franchise Tax Board each year for that
fiscal year, shall be transferred by May 15 of each year beginning
with the 2018-19 fiscal year and each fiscal year thereafter by
each county auditor to the Controller for deposit in the General
Fund and the Mental Health Services Fund, respectively.

(2) An amount equal to the reduction in property taxes resulting
from the exemption provided pursuant to subdivision (a) of Section
3.1 of Article XIII shall be calculated by the county auditor
beginning with the 2018-19 fiscal year and each fiscal year
thereafter. For purposes of calculating the aggregate amount of
personal property taxes exempted under that subdivision for each
fiscal year, the auditor shall apply the average annual rate of
growth of tangible personal property used exclusively for business
purposes for the period from the 2012-13 fiscal year to the
2017-18 fiscal year, inclusive, to the total tangible personal
property used exclusively for business purposes for the prior fiscal
year and subtract the amount of tangible personal property used
exclusively for business purposes not exempted for that fiscal year.

(3) An amount equal to the value of foregone property tax
revenues pursuant to subdivision (b) of Section 3.1 of Article XIII
shall be calculated by the county auditor.

(d) For each fiscal year beginning with the 2018-19 fiscal year
to the 2020-21 fiscal year, inclusive, the county auditor shall do
the following with the incremental revenues remaining after
deducting from those revenues the amounts determined pursuant
to subdivision (c):

(1) Determine the combined weighted average tax rate in each
county for K-12 school districts, county offices of education and
community college districts. The weighted average tax rate in each
county for K-12 school districts, county offices of education and
community college districts shall be calculated by the county
auditor by averaging the effective combined tax rate for all of the
K-12 school districts, the county office of education and all
community college districts in each tax rate area using weights
for each tax rate area determined by calculating the share of the
total assessed value of commercial and industrial property for
each tax rate area of the total assessed value of commercial and
industrial property as determined pursuant to Chapter 1
(commencing with Section 50) of Part 0.5 of Division 1 of the
Revenue and Taxation Code, as that chapter read on July 1, 2015,
for the 2017-18 fiscal year for all tax rate areas in the county.

(2) Multiply the incremental revenues remaining after deducting
the amounts determined pursuant to subdivision (c) by the
combined weighted average tax rate determined pursuant to
paragraph (1). Half of the resulting amount of property tax revenue
shall be transferred by the county auditor to the Controller on
February 1 of each fiscal year and half of the resulting amount of
property tax revenue shall be transferred to the Controller on June
1 of each fiscal year, and shall be deposited into the Local School
and Community College Property Tax Trust Fund for allocation
and distribution as set forth in Section 8.7 of Article XIII A.

(3) The balance of the incremental revenues remaining after
deducting the amounts determined pursuant to subdivision (c) and
the amount transferred pursuant to paragraph (2) shall be
allocated to local agencies pursuant to Chapter 6 (commencing
with Section 95) of Part 0.5 of Division 1 of the Revenue and
Taxation Code, as that chapter read on July 1, 2015.

(4) Report the incremental revenues available for distribution
determined pursuant to subdivision (b), the deductions attributable
to subdivision (c), and the combined weighted average tax rate in
each county for K-12 school districts, county offices of education,
and community college districts determined pursuant to paragraph
(1), along with supporting documentation, to the Controller who
shall certify that the calculation was properly calculated and post
the percentage figure for each county on the Controller’s Internet
Web site.

(e) (1) For the 2021-22 fiscal year, the county assessor shall
perform the calculations specified in paragraphs (1) to (4),
inclusive, of subdivision (a) for that fiscal year. The county auditor
shall report the resulting percentage figure to the Controller who
shall certify that the calculation was properly calculated and post
the percentage figure for each county on the Controller’s Internet
Web site.

(2) (A) For the 2021-22 fiscal year and each fiscal year
thereafter, the county auditor shall perform the calculation
specified in paragraph (2) of subdivision (d) using the result of
the calculation in paragraph (1) and the percentage determined
in paragraph (1) of subdivision (d) and shall transfer half the
resulting amount of property tax revenue to the Controller on
February 1 of each fiscal year and transfer half of the resulting
amount of property tax revenue to the Controller on June 1 of each
fiscal year, for deposit in the Local School and Community College
Property Tax Fund for allocation and distribution as set forth in
Section 8.7 of Article XIII A.

(B) The balance of the incremental revenues remaining after
deducting the amounts determined pursuant to subdivision (c) and
the amount transferred pursuant to paragraph (A) shall be
allocated to local agencies pursuant to Chapter 6 (commencing
with Section 95) of Part 0.5 of Division 1 of the Revenue and
Taxation Code as that chapter read on July 1, 2015.

(C) In making the calculation in subparagraph (A), the county
auditor shall calculate the amount of total revised assessed value
as if no exemption of property taxes were being provided pursuant
to subdivision (b) of Section 3.1 of Article XIII.

end insert

begin insert

begin insert Eighth-- end insert   

That Section 8.7 is added to Article XVI thereof, to
read:

begin insert SEC. 8.7. end insert   

(a) The Local School and Community College
Property Tax Fund is hereby created in the State Treasury to be
held in trust for the purposes set forth below and is continuously
appropriated for the support of school districts, charter schools,
schools operated by county offices of education, and community
college districts, as follows:

(1) Eleven percent (11%) to community colleges. Each year the
Controller shall allocate the funds to each community college
district based on an equal amount per unit of full-time equivalent
student receiving educational services.

(2) Eighty-nine percent (89%) to school districts, charter
schools, and county offices of education for schools operated by
the county superintendent of schools.

(3) Each year the Controller shall allocate the funds to school
districts, charter schools, and county offices of education based
on the following formula, to be calculated annually by the
Superintendent of Public Instruction:

(A) A base grant based on an equal amount per enrolled student
in each school district or charter school, provided, however, that
the base grant shall be adjusted by grade span, as follows: no
grade span adjustment per enrolled student in grades kindergarten
to grade 3, inclusive; 1.5 percent more per enrolled student in
grades 4 to 6, inclusive; 4.5 percent more per enrolled student in
grades 7 and 8; and 21 percent more per enrolled student in grades
9 to 12, inclusive. County offices of education shall receive a base
grant per student enrolled in schools operated by the county
superintendent of schools that is 33 percent more per enrolled
student than the base grant for school districts, but shall receive
no grade span adjustments to the base grant.

(B) A supplemental grant add-on for school districts and charter
schools equal to 20 percent of the base grant calculated pursuant
to subparagraph (A), multiplied by the percentage of unduplicated
pupils in that school district or charter school, and a supplemental
grant add-on for county offices of education equal to 35 percent
of the base grant calculated pursuant to subparagraph (A),
multiplied by the percentage of unduplicated pupils enrolled in
schools operated by the county superintendent of schools.

(C) A concentration grant add-on for school districts and
charter schools equal to 50 percent of the base grant calculated
pursuant to subparagraph (A), multiplied by the percentage of
unduplicated pupils in that school district or charter school in
excess of 55 percent of the total enrollment in that school district
or charter school, and a concentration grant add-on for county
offices of education equal to 35 percent of the base grant calculated
pursuant to subparagraph (A), multiplied by the percentage of
unduplicated pupils enrolled in schools operated by the county
superintendent of schools in excess of 50 percent of the total
enrollment in those schools.

(D) An amount equal to 10.4 percent of the base grant per
enrolled student in kindergarten and grades 1 to 3, inclusive, for
school districts and charter schools that maintain an average class
enrollment of not more than 24 students for each schoolsite in
kindergarten and grades 1 to 3, inclusive, unless a collectively
bargained alternative annual average class enrollment for each
schoolsite in those grades is agreed to by the school district or
charter school.

(E) The Superintendent of Public Instruction shall subtract from
the total of the amounts computed pursuant to subparagraphs (A)
to (D), inclusive, the amount of property tax revenue received by
a basic aid school district or basic aid charter school that exceeds
the total amount of funding it would have been entitled to that
fiscal year pursuant to the local control funding formula
established pursuant to Article 2 (commencing with Section 42238)
of Chapter 7 of Part 24 of Division 3 of Title 2 of the Education
Code, as that section read on July 1, 2015. For purposes of this
section, a school district or charter school that does not receive
an apportionment of state funds pursuant to the local control
funding formula shall be considered a basic aid school district or
a basic aid charter school.

(F) For purposes of this section, enrollment shall be measured
in units of average daily attendance or its equivalent, and
“unduplicated pupil” shall mean a student who is classified as
either an English learner, eligible for a free or reduced-price meal,
or a foster youth, as defined in Section 42238.01 of the Education
Code, provided that a student may only be counted once for
purposes of making supplemental and concentration grant
adjustments, regardless of whether she or he falls within more
than one of these student subgroups. Students shall not be counted
as enrolled in a school operated by a county superintendent of
schools if they are otherwise counted as enrolled in a school
district for purposes of calculating that school district’s local
control funding formula allocation.

(b) Moneys in the Local School and Community College
Property Tax Fund are dedicated to the support of the K-14
educational program for instructional improvement and
accountability, and shall not be used to pay administrative costs.
School districts, charter schools, and county offices of education
shall demonstrate through their local control and accountability
plans that they are increasing or improving services for
unduplicated pupils in proportion to the increase in funds allocated
pursuant to subparagraphs (B) and (C) of paragraph (3) of
subdivision (a).

(c) Notwithstanding any other law, the moneys deposited in the
Local School and Community College Property Tax Fund shall
not be subject to appropriation, reversion, or transfer by the
Legislature, the Governor, the Director of Finance, or the
Controller for any purpose other than those specified in this
section, nor shall such revenues be loaned to the General Fund
or any other fund of the state or any local government fund.

(d) Moneys allocated to community college districts, county
offices of education, school districts, or charter schools from the
Local School and Community College Property Tax Fund shall
supplement, and shall not replace, other funding for education.
Funds deposited into the Local School and Community College
Property Tax Fund and allocated from the Local School and
Community College Property Tax Fund shall not be deemed to be
part of “total allocations to school districts and community college
districts from General Fund proceeds of taxes appropriated
pursuant to Article XIII B and allocated local proceeds of taxes”
for purposes of paragraphs (2) and (3) of subdivision (b) of Section
8 or for purposes of Section 21. Revenues derived from the taxes
imposed pursuant to Section 2.5 of Article XIII A shall not be
deemed to be “General Fund revenues which may be appropriated
pursuant to Article XIII B” for purposes of paragraph (1) of
subdivision (b) of Section 8, Section 20, or Section 21, nor shall
they be considered in the determination of “per capita General
Fund revenues” for purposes of subdivisions (b) and (e) of Section
8.

end insert

begin insert

begin insert Ninth-- end insert   

This measure shall become operative on January 1,
2018, except that subdivision (a) of Section 3.1 of Article XIII shall
become operative on January 1, 2019.

end insert

begin delete

Resolved by the Senate, the Assembly concurring, That the
Legislature of the State of California at its 2015-16 Regular
Session commencing on the first day of December 2014, two-thirds
of the membership of each house concurring, hereby proposes to
the people of the State of California, that the Constitution of the
State be amended as follows:

First--  

That Section 4 of Article XIII A thereof is amended to
read:

Section 4.  

A city, county, or special district, upon the approval
of 55 percent of its voters voting on the proposition, may impose
a special tax within that city, county, or special district, except ad
valorem taxes on real property or a transactions tax or sales tax on
the sale of real property within that city, county, or special district.

Second--  

That Section 2 of Article XIII C thereof is amended
to read:

SEC. 2.  

Notwithstanding any other provision of this
Constitution:

(a) Any tax imposed by any local government is either a general
tax or a special tax. A special district or agency, including a school
district, has no authority to levy a general tax.

(b) A local government shall not impose, extend, or increase
any general tax unless and until that tax is submitted to the
electorate and approved by a majority vote. A general tax is not
deemed to have been increased if it is imposed at a rate not higher
than the maximum rate so approved. The election required by this
subdivision shall be consolidated with a regularly scheduled general
election for members of the governing body of the local
government, except in cases of emergency declared by a unanimous
vote of the governing body.

(c) Any general tax imposed, extended, or increased, without
voter approval, by any local government on or after January 1,
1995, and prior to November 6, 1996, may continue to be imposed
only if that general tax is approved by a majority vote of the voters
voting in an election on the issue of the imposition, which election
shall be held no later than November 6, 1998, and in compliance
with subdivision (b).

(d) (1) A local government shall not impose, extend, or increase
any special tax unless and until that tax is submitted to the
electorate and approved by 55 percent of the voters voting on the
proposition, and all of the following requirements are met:

(A) The ballot proposition contains a specific list of programs
and purposes to be funded, and a requirement that tax proceeds be
spent solely for those programs and purposes.

(B) The ballot proposition includes a requirement for the annual
independent audit of the amount of tax proceeds collected and the
specified purposes and programs funded.

(C) The ballot proposition requires the governing board to create
a citizens’ oversight committee to review all expenditures of
proceeds and financial audits, and report its findings to the
governing board and public.

(2) A special tax shall not be deemed to have been increased if
it is imposed at a rate not higher than the maximum rate so
approved.

Third--  

That Section 3 of Article XIII D thereof is amended
to read:

SEC. 3.  

(a) An agency shall not assess a tax, assessment, fee,
or charge upon any parcel of property or upon any person as an
incident of property ownership except:

(1) The ad valorem property tax imposed pursuant to Article
XIII and Article XIII A.

(2) Any special tax receiving The approval of that percentage
of voters on the proposition as required by this Constitution.

(3) Assessments as provided by this article.

(4) Fees or charges for property-related services as provided by
this article.

(b) For purposes of this article, fees for the provision of electrical
or gas service are not charges or fees imposed as an incident of
property ownership.

end delete