Amended in Senate May 4, 2016

Senate Bill No. 1126

Introduced by Senator Stone

February 17, 2016

An act to amend begin delete Section 51 end delete begin insert Sections 51 and 5813 end insert of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1126, as amended, Stone. Property taxation: inflation factor: senior citizens.

The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value, as defined, of that property, and provides that the full cash value base may be adjusted each year by an inflationary rate not to exceed 2% for any given year. Existing property tax law implementing this constitutional authority provides that the taxable value of real property is the lesser of its base year value compounded annually by the inflation factor not to exceed 2%, as provided, or its full cash value. begin insert Existing property tax law also provides that the taxable value of a manufactured home is the lesser of its base year value end insert begin insert compounded annually by an inflation factor not to exceed 2% end insert begin insert or its full cash value. end insert

This bill would provide that the inflation factor shall not apply to the principal place of residence of a “qualified taxpayer,” defined by the bill to mean a begin delete taxpayer end delete begin insert person that owns a dwelling as his or her principal place of residence, or a person that owns a manufactured home as his or her principal place of residence, end insert who is 65 years of age or older begin insert on the lien date end insert who meets specified requirements.

By changing the manner in which local tax officials calculate the taxable value of real property owned by senior citizens, this bill would impose a state-mandated local program.

Section 2229 of the Revenue and Taxation Code requires the Legislature to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

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

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

This bill would take effect immediately as a tax levy.

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

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

SECTION 1.  

Section 51 of the Revenue and Taxation Code is
amended to read:

51.  

(a) For purposes of subdivision (b) of Section 2 of Article
XIII A of the California Constitution, for each lien date after the
lien date in which the base year value is determined pursuant to
Section 110.1, the taxable value of real property shall, except as
otherwise provided in subdivision (b) or (c), be the lesser of:

(1) Its base year value, compounded annually since the base
year by an inflation factor, which shall be determined as follows:

(A) For any assessment year commencing prior to January 1,
1985, the inflation factor shall be the percentage change in the cost
of living, as defined in Section 2212.

(B) For any assessment year commencing after January 1, 1985,
and prior to January 1, 1998, the inflation factor shall be the
percentage change, rounded to the nearest one-thousandth of 1
percent, from December of the prior fiscal year to December of
the current fiscal year in the California Consumer Price Index for
all items, as determined by the California Department of Industrial
Relations.

(C) For any assessment year commencing on or after January
1, 1998, the inflation factor shall be the percentage change, rounded
to the nearest one-thousandth of 1 percent, from October of the
prior fiscal year to October of the current fiscal year in the
California Consumer Price Index for all items, as determined by
the California Department of Industrial Relations.

(D) The percentage increase for any assessment year determined
pursuant to subparagraph (A), (B), or (C) shall not exceed 2 percent
of the prior year’s value.

(E) (i) Notwithstanding any other law, for any assessment year
commencing on or after January 1, 2017, the percentage increase
for an assessment year determined pursuant to subparagraph (A),
(B), or (C) shall not apply to the principal place of residence of a
qualified taxpayer.

(ii) For purposes of this subparagraph, begin delete both end delete begin insert all end insert of the following
shall apply:

(I) “Qualified taxpayer” means a begin delete taxpayer end delete begin insert person that owns a
dwelling as his or her principal place of residence end insert who is 65 years
of age or older begin insert on the lien date end insert and satisfies either of the following:

(ia) If the qualified taxpayer is single, his or her annual
household begin delete income end delete begin insert income, as defined in Section 20504, end insert is
twenty-five thousand dollars ($25,000) or less.

(ib) If the qualified taxpayer is married, his or her combined
annual household begin delete income end delete begin insert income, as defined in Section 20504, end insert is
fifty thousand dollars ($50,000) or less.

(II) A qualified taxpayer who is 65 years of age or older includes
a married couple, one member of which is 65 years of age or begin delete older. end delete

begin insert older on the lien date. end insert

begin insert

(III) When claiming the benefit provided by this subparagraph,
the claimant shall provide all information required by, and answer
all questions contained in, an affidavit furnished by the assessor
to determine that the claimant is a qualified taxpayer. The assessor
may require additional proof of the information or answers
provided in the affidavit before allowing the benefit provided by
this subparagraph.

end insert

(2) Its full cash value, as defined in Section 110, as of the lien
date, taking into account reductions in value due to damage,
destruction, depreciation, obsolescence, removal of property, or
other factors causing a decline in value.

(b) If the real property was damaged or destroyed by disaster,
misfortune, or calamity and the board of supervisors of the county
in which the real property is located has not adopted an ordinance
pursuant to Section 170, or any portion of the real property has
been removed by voluntary action by the taxpayer, the taxable
value of the property shall be the sum of the following:

(1) The lesser of its base year value of land determined under
paragraph (1) of subdivision (a) or full cash value of land
determined pursuant to paragraph (2) of subdivision (a).

(2) The lesser of its base year value of improvements determined
pursuant to paragraph (1) of subdivision (a) or the full cash value
of improvements determined pursuant to paragraph (2) of
subdivision (a).

In applying this subdivision, the base year value of the subject
real property does not include that portion of the previous base
year value of that property that was attributable to any portion of
the property that has been destroyed or removed. The sum
determined under this subdivision shall then become the base year
value of the real property until that property is restored, repaired,
or reconstructed or other provisions of law require establishment
of a new base year value.

(c) If the real property was damaged or destroyed by disaster,
misfortune or calamity and the board of supervisors in the county
in which the real property is located has adopted an ordinance
pursuant to Section 170, the taxable value of the real property shall
be its assessed value as computed pursuant to Section 170.

(d) For purposes of this section, “real property” means that
appraisal unit that persons in the marketplace commonly buy and
sell as a unit, or that is normally valued separately.

(e) Nothing in this section shall be construed to require the
assessor to make an annual reappraisal of all assessable property.
However, for each lien date after the first lien date for which the
taxable value of property is reduced pursuant to paragraph (2) of
subdivision (a), the value of that property shall be annually
reappraised at its full cash value as defined in Section 110 until
that value exceeds the value determined pursuant to paragraph (1)
of subdivision (a). In no event shall the assessor condition the
implementation of the preceding sentence in any year upon the
filing of an assessment appeal.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 5813 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

5813.  

begin delete For end delete begin insert (a) end insert begin insert   end insert begin insert For end insert each lien date after the lien date for which
the base year value is determined, the taxable value of a
manufactured home shall be the lesser of:

begin delete

(a)

end delete

begin insert (1) end insert  Its base year value, compounded annually since the base
year by an inflation factor, which shall be the percentage change
in the cost of living, as defined in Section 51, provided, that any
percentage increase shall not exceed 2 percent of the prior year’s
value; or

begin delete

(b)

end delete

begin insert (2) end insert  Its full cash value, as defined in Section 5803, as of the lien
date, taking into account reductions in value due to damage,
destruction, depreciation, obsolescence, or other factors causing
a decline in value; or

begin delete

(c)

end delete

begin insert (3) end insert  If the manufactured home is damaged or destroyed by
disaster, misfortune, or calamity, its value determined pursuant to
begin delete (b) end delete begin insert paragraph (2) end insert shall be its base year value until the
manufactured home is restored, repaired or reconstructed or other
provisions of law require establishment of a new base year value.

begin insert

(b) (1) Notwithstanding any other law, for any assessment year
commencing on or after January 1, 2017, the percentage increase
for an assessment year determined pursuant to paragraph (1) of
subdivision (a) shall not apply to the principal place of residence
of a qualified taxpayer.

end insert begin insert

(2) For purposes of this subdivision, all of the following shall
apply:

end insert begin insert

(A) “Qualified taxpayer” means a person that owns a
manufactured home as his or her principal place of residence who
is 65 years of age or older on the lien date and satisfies either of
the following:

end insert begin insert

(i) If the qualified taxpayer is single, his or her annual household
income, as defined in Section 20504, is twenty-five thousand dollars
($25,000) or less.

end insert begin insert

(ii) If the qualified taxpayer is married, his or her combined
annual household income, as defined in Section 20504, is fifty
thousand dollars ($50,000) or less.

end insert begin insert

(B) A qualified taxpayer who is 65 years of age or older includes
a married couple, one member of which is 65 years of age or older
on the lien date.

end insert begin insert

(C) When claiming the benefit provided by this subdivision, the
claimant shall provide all information required by, and answer
all questions contained in, an affidavit furnished by the assessor
to determine that the claimant is a qualified taxpayer. The assessor
may require additional proof of the information or answers
provided in the affidavit before allowing the benefit provided by
this subdivision.

end insert

begin delete SEC. 2. end delete

begin insert SEC. 3. end insert   

Notwithstanding Section 2229 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any property tax revenues
lost by it pursuant to this act.

begin delete SEC. 3. end delete

begin insert SEC. 4. end insert   

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

begin delete SEC. 4. end delete

begin insert SEC. 5. end insert   

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.