BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 371 |Hearing |5/6/15 |
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|Author: |Hancock |Tax Levy: |No |
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|Version: |4/6/15 |Fiscal: |No |
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|Consultant|Grinnell |
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SCHOOL DISTRICTS: SPECIAL TAXES
Clarifies that school districts can exempt any, not all, of
three sets of persons from its parcel tax.
Background and Existing Law
The California Constitution requires 2/3 voter approval when a
local agency wants to impose or increase a special tax
(Proposition 13, 1978). However, the Legislature must authorize
school or special districts to impose taxes because these
agencies have no plenary taxing powers. Responding to
Proposition 13's reduction in local revenue, the Legislature
generally authorized all local agencies to impose special taxes
with 2/3 voter approval (SB 785, Foran, 1979), but voters
subsequently approved an initiative requiring the Legislature to
grant specific taxing power to local agencies to impose taxes
(Proposition 62, 1986).
One common form of local tax is the parcel tax, which can be
imposed by cities, counties, or special districts. Parcel taxes
are not ad valorem or assessed based on the value of a property
like property taxes; instead they are generally a flat rate
assessed per parcel regardless of its size, or per square foot
of a parcel or its improvements. Agencies can use revenues in
almost any way that serves local needs, such as ongoing
expenses, programs, or buildings. Counties collect parcel taxes
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with property taxes, and then remit funds to the agency imposing
the tax. Property tax law generally guides parcel tax
collection.
Prior to Proposition 62, school districts imposed parcel taxes
to fund education; however, the initiative prompted school
districts to seek specific legislative authorization to ratify
the existing taxes, and clarify the authority to impose new
ones. The Legislature allowed school and community college
districts to impose qualified special taxes that applied
uniformly, to all taxpayers or real property within the
district, and allowed districts to exempt persons over the age
of 65 from the tax (AB 1440, Hannigan, 1988). In 1991, the
Legislature additionally allowed 15 types of local agencies to
impose similar taxes; however, the measure allowed local
agencies to tax unimproved property at a lower rate than
improved property, and contained no other exemptions (SB 158,
Committee on Local Government, 1991).
In 2006, the Legislature allowed school districts to also exempt
persons receiving Supplemental Security Income (SSI) regardless
of age (AB 385, Lieber, 2006), and then persons receiving Social
Security Disability Insurance (SSDI), whose yearly income was
less than 250% of 2012 federal poverty guidelines (SB 874,
Hancock, 2012). When the Legislature enacted AB 385, it clearly
allowed school districts to exempt persons over the age of 65 or
persons receiving SSI for a disability. However, during the
consideration of SB 874, a drafting mistake deleted the word
"or" and instead inserted the words "all of the following." The
measure was subsequently enacted. As a result, some school
districts think the statute requires them to either exempt all
three categories (individuals over 65, SSI recipients, and SSDI
recipients), or exempt no one at all. The author wants to
clarify that school districts can exempt any or all of the
groups currently eligible for the exemption from the parcel tax.
Proposed Law
Senate Bill 371 provides that school districts can exempt any or
all, and do not have to exempt all, of the following from the
parcel tax:
Persons over the age of 65,
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Persons receiving SSI for a disability,
Persons receiving SSDI whose yearly income was less than
250% of 2012 federal poverty guidelines.
The measure states that its provisions are declaratory of
existing law.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "Existing law
allows school districts and community college districts to
impose special taxes (parcel taxes) that apply to taxpayers or
real property within the school district. K-12 school districts
may exempt persons 65 years of age and older persons who receive
supplemental security income (SSI) regardless of age from paying
these taxes and/or persons who receive Social Security
Disability Insurance (SSDI). In 2011, SB 874 (Hancock) gave
school districts the option of exempting property owners who
receive SSDI, but in 2015 the Santa Clara County Counsel's
office raised an issue with this new exemption. The County
Counsel's office interpreted Government Code Section 50079 (b)
(1) which states, "all of the following taxpayers," to mean that
a parcel tax must either have no exemptions or must meet all
three exemptions, an interpretation that goes against the
intention of SB 874. SB 371 simply clarifies that school
districts can provide the exemption to any or all of exempted
categories of tax payers."
2. Parcel taxes in California . For many years, little
aggregate information existed regarding parcel taxes, but a
recent report from the Public Policy Institute of California
collected a great deal of revealing data regarding the way in
which local agencies use parcel taxes. Cities placed 124 parcel
tax measures before voters between 2003 and 2012, with 54
receiving the required 2/3 vote, with almost all taxes imposed
by cities in the San Francisco Bay Area and Los Angeles County.
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School districts placed 329 parcel tax measures before voters
during the same period, with 60% passing, mostly concentrated in
the Bay Area. The report argues that the higher frequency of
parcel taxes in the Bay Area is partly explained by higher
income levels. Special districts asked voters to enact parcel
taxes 238 times from 2003 to 2012, with 3 out of 4 winning.
PPIC argues that the use of the parcel tax is growing, and that
it has many advantages over other taxes: it has no deadweight
loss, and assigns taxes in line with benefits. However, PPIC
cautions that the tax has a major shortcoming in that many large
parcels have little value, and are limited in their capacity to
support a parcel tax.
3. What's the difference ? The Social Security Administration
(SSA) administers both the SSI and SSDI programs. SSI is a
federal income supplement program paid out of general federal
revenues for persons aged, blind, disabled, and of limited
income. SSDI is funded from federal payroll taxes and provides
benefits to disabled persons because their disability serves as
a barrier to employment, but unlike SSI, eligibility is not
restricted by an individual's income, instead based on the
nature of the disability. While SSDI recipients may be
economically better off than SSI recipients, their disability
can inhibit their ability to generate income.
4. Uniform . In 2013, George Borikas successfully challenged
Alameda Unified School District's Measure H, which imposed a
variable rate parcel tax. The Fourth District Appellate Court
determined that Alameda's tax didn't meet the statute's
uniformity requirement, because the school district statute
didn't also contain the language in SB 158 allowing for a lower
rate on unimproved property (Borikas v. Alameda Unified School
District, 214 Cal. App. 4th 135). Last year, the Committee
approved a measure that would have partially addressed the case;
however, the measure died in the Assembly Revenue and Taxation
Committee (SB 1021, Wolk, 2014).
Support and
Opposition
Support : Unknown.
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Opposition : Howard Jarvis Taxpayers Association.
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