BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |SB 801 |Hearing |4/29/15 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Committee on Governance and |Tax Levy: |No | | |Finance | | | |----------+---------------------------------+-----------+---------| |Version: |3/24/15 |Fiscal: |No | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Grinnell | |: | | ----------------------------------------------------------------- PROPERTY TAX POSTPONEMENT Makes minor, technical changes to the Property Tax Postponement Program. Background, Existing Law, and Proposed Law The Senior Citizens and Disabled Citizens Property Tax Postponement Law (PTP), allows the State Controller to pay property taxes to county tax collectors, on behalf of individuals over the age of 62 or disabled persons making less than $39,000 in income per year. The Controller secures repayment by recording a lien against the claimant's property, which is satisfied when the home is sold or refinanced. As liens are repaid out of sales proceeds, revenue flows back to the Controller, who in turn uses these funds to pay property taxes for new applicants. Loans do not become due and payable if the claimant or the claimant's spouse continues to occupy the home. However, the Controller's lien is only paid off when proceeds remain after previously filed liens have been satisfied; liens filed by county tax collectors have "super priority" status, and therefore must be satisfied before all others regardless of when they're filed. SB 801 (Committee on Governance and Finance) 3/24/15 Page 2 of ? In 2009, due to budgetary constraints, and fewer funds flowing back to the Controller as a result of diminishing sales prices, the Legislature prohibited persons from filing new claims for property tax postponement, and the Controller from accepting applications (SBx3 8, Ducheny, 2009). However, the Legislature resuscitated the program last year by removing SBx3 8's prohibition, albeit with tightened eligibility criteria, and a requirement for the Controller to transfer to the General Fund repayments received above a $20 million total (AB 2231, Gordon, 2014). The Controller wants to clean up some parts of existing law that need to be changed after AB 2231's enactment. I. Certificates of Eligibility. The PTP program formerly used a process where the Controller provided "certificates of eligibility" to applicants to pay their property taxes. The Controller submitted these "checks" to the county. The renewed program uses electronic funds transfers instead, and while AB 2231 removed almost all references to certificates of eligibility, it didn't make the change in Government §16183, which also contains two paragraphs labelled as (1). Senate Bill 801 removes the reference to certificates, and strikes the first paragraph (1) label. Additionally, the bill clarifies in the same section that interest rates for past loans are calculated at the Pooled Money Investment Account rate as was the case under the former program, while future loans pay the 7% percent rate provided for in AB 2231. II. Contents of Lien. The former PTP program required county treasurers to add the property description to the lien for properties owned by individuals enrolled in the program, and then forward the lien to the county recorder for filing. However, for the new program, AB 2231 instead directs the Controller to prepare the lien and file it with the recorder. SB 801 replaces references in the relevant section from county tax collectors to the Controller, deletes the information required as part of the lien because the Controller isn't likely to be able to describe properties across the state, and changes the appropriate verbs from "recorded" to "executed," because the Controller doesn't actually record the document. III. Replicated Payments. If the Controller denies a taxpayer for the program, but the taxpayer successfully appeals, the taxpayer may already have paid the county the taxes while the appeal is pending. In this case, the Controller sends a payment SB 801 (Committee on Governance and Finance) 3/24/15 Page 3 of ? to the county, but if the individual has already paid the taxes, there may be an overpayment. The county should refund the overpayment payment directly to the taxpayer, but the law doesn't explicitly require it. SB 801 explicitly states that in the event an appeal reverses the initial denial, and the Controller sends a payment for taxes due in the same fiscal year for which the taxpayer has paid the taxes, the county must refund that amount. State Revenue Impact No estimate. Comments 1. Purpose of the bill . When AB 2231 resurrected the PTP program, it didn't change all the statutes necessary for the Controller to ensure that the law would be administered effectively. SB 801 consolidates several minor, technical changes to PTP program statutes to assist the Controller implement the program as she prepares to again begin accepting applications in September. Senate Rule 23 requires all members of the Committee to sign Committee Bills prior to introduction, so SB 801 can only contain items with universal agreement; should anyone object to a provision in the measure, it will be removed. 2. Related Legislation . On April 22nd, the Committee approved SB 477 (Leyva), which expands the renewed PTP program to mobile homes. The Senate Committee on Appropriations will hear the measure soon. Support and Opposition 4/23/15 Support : State Controller Betty Yee. SB 801 (Committee on Governance and Finance) 3/24/15 Page 4 of ? Opposition : -- END --