BILL ANALYSIS
SB 542
Date of Hearing: August 27, 1997
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
SB 542 (Alpert) - As Amended: August 25, 1997
Policy Committee: Revenue and Taxation Vote: 11-0
(Consent)
Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY
This bill makes numerous changes to property tax law as follows:
1. Grants, on a prospective basis, a property tax reassessment
exclusion for a parent-child change of ownership where the
customary time period for filing the claim to receive the
exclusion from the initial date of the transfer has expired.
2. Revises the deadline for the filing of certain property tax
exemption affidavits from March 15 to February 15 each year,
similarly revises the filing deadline for the homeowners'
exemption, and makes other related conforming changes in dates
contained in property tax and exemption provisions. (These
changes conform to the new January 1 tax lien date.)
3. Requires the county assessor, on or after January 1, 1998, to
determine the assessed value of pipelines and related rights-of
way that are located wholly within the county on the basis of a
single, countywide parcel per taxpayer, and to combine the
assessed value of each component or segment of those pipelines
or rights-of-way. However, the assessor must maintain a
separate base-year value for each of these components or
segments. (This provision conforms to the determination of
assessed value for inter-county pipeline rights-of way.)
4. Authorizes a county board of supervisors, upon the
recommendation of the county assessor and the clerk of the
county board of equalization, to adopt a resolution providing
that an application for reduction in assessment may also be
filed within 60 days of the mailing of the notice of the
assessor's response to a request for assessment as specified.
(The period for filing an application for reduction in
assessment is July 2 to September 15, inclusive.) The
applicant's signature on each application for reduction in
assessment must be certified or made under penalty of perjury.
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5. Authorizes a property owner, subject to certain limitations and
conditions, to bring a refund action in superior court for the
recovery of the first installment of taxes paid under an
installment plan for which a claim has been denied.
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FISCAL EFFECT
1. According to the Board of Equalization (BOE), this bill is
expected to result in minor revenue losses in the first year,
with losses growing over time. Assuming the number of
taxpayers affected by this bill totals 1,000, property tax
revenue reductions would be about $1 million. In this event,
General Fund costs of $510,000 would be incurred to backfill
the property tax losses to schools.
However, the BOE does not believe it is likely the number of
taxpayers covered by this bill would reach 1,000, and it is
unclear whether the Legislature has the authority to establish
any deadlines on filing a claim. If such authority does not
exist, this bill would have no fiscal effect.
2. Potential, probably minor, state reimbursable costs to county
assessors for processing exclusion claims. Additionally, minor
nonreimbursable costs criminal justice costs attributable to
potential acts of perjury relating to applications for a
reduction in assessment.
BACKGROUND
1. The California Constitution requires real property to be
reassessed to market value when there is a change in ownership.
However, "change of ownership" does not include real property
transfers between parents and children up to $1 million in
assessed value. Current statute specifies that in order for
the assessment to be continued after the parent-child change of
ownership, the party receiving the property must submit a claim
with the county assessor within certain time periods. If the
claim is made within these time periods, then the property
transfer is excluded from change of ownership as of the initial
date the property was transferred, thereby resulting in
property tax refunds being issued for prior years if the
property was previously reassessed.
To preclude taxpayers who are unaware of these filing time
limits from permanently losing this exclusion, this bill
applies the pre-reassessment value to the property commencing
in the year that the claim is filed, whereby property tax
refunds would not be issued for prior years. However, future
property tax bills would reflect the lower assessed value.
2. The intent of extending the filing deadline for applications
for reduction in assessment is to provide flexibility to
taxpayers in counties hardest hit by the decline in the real
estate market in many parts of California.
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3. This bill also allows a property owner to bring a refund action
in superior court for the recovery of the first installment of
taxes paid under an installment plan in the event a claim has
been denied. This action must be brought forth in accordance
with provisions under current law authorizing refund actions by
taxpayers for whom a local entity has refused to refund on a
claim.
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