BILL ANALYSIS                                                                                                                                                                                                    

                         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  

           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. 


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          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  
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          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.


           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  

          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.


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           Opposition  :  

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