BILL ANALYSIS
SB 114
Page 1
SENATE THIRD READING
SB 114 (Florez)
As Amended August 31, 2007
2/3 vote. Urgency
SENATE VOTE :36-0
REVENUE & TAXATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Charles Calderon, DeVore, |Ayes:|Leno, Walters, Caballero, |
| |Arambula, Eng, Feuer, | |Davis, DeSaulnier, |
| |Hayashi, Ma, Plescia, | |Emmerson, Huffman, |
| |Garrick | |Karnette, Krekorian, La |
| | | |Malfa, Lieu, Ma, |
| | | |Nakanishi, Nava, Sharon |
| | | |Runner, Solorio, De Leon |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Adds the severe freezing conditions that commenced
January 11, 2007, in the Counties of El Dorado, Fresno,
Imperial, Kern, Kings, Madera, Merced, Monterey, Riverside, San
Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa
Clara, Stanislaus, Tulare, Ventura, and Yuba (2007 Freeze) to
the list of disasters eligible for state reimbursement of local
property tax losses, beneficial homeowners' property tax
exemption treatment, and favorable treatment of excess disaster
losses. Specifically, this bill :
1)Provides a mechanism for reimbursing the specified counties
for property tax losses resulting from the reassessment of
properties damaged by the 2007 Freeze.
2)Provides that any dwelling that qualified for a homeowners'
property tax exemption before January 11, 2007, that was
damaged or destroyed by the 2007 Freeze, and that has not
changed ownership since January 11, 2007, shall not be denied
a homeowners' exemption solely because that dwelling was
temporarily damaged or destroyed, or was being reconstructed
by the owner, or was temporarily uninhabited as a result of
restricted access.
3)Provides that any taxpayer's excess disaster loss resulting
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from the 2007 Freeze shall be carried forward to each of the
five taxable years following the taxable year for which the
loss is claimed. However, if there is any excess disaster
loss remaining after this five-year period, then the
applicable percentage of that excess disaster loss shall be
carried forward to each of the next 10 taxable years.
4)Specifies that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state, local
agencies and school districts will be reimbursed for those
costs.
5)Contains double-jointing language with disaster relief bills
AB 62 (Nava), pending on the Senate Floor, and SB 38 (Battin),
pending in Senate unfinished business.
EXISTING LAW :
1)Allows each county, by ordinance, to provide for the
reassessment of properties damaged by a calamity, disaster, or
misfortune. Taxpayers owning damaged property must apply for
a reassessment within the time period specified in the
applicable county's ordinance or within 12 months of the
misfortune or calamity, whichever is later. Once the property
is reassessed, the taxpayer is entitled to a refund of any
excess property tax paid on the property. If the affected
property is subsequently repaired, its value is subject to an
upward reassessment by the county. [Property Tax
Reassessment]
2)Exempts the first $7,000 of the full value of a dwelling from
property tax, when the dwelling is occupied by an owner as
his/her principal residence. However, if a property is no
longer owner-occupied or is vacant on the lien date (January
1), the property is not eligible for the exemption for the
succeeding tax year. [Homeowners' Exemption]
3)Allows non-business taxpayers with casualty losses that are
not reimbursed by insurance and that exceed $100 plus 10% of
the taxpayer's adjusted gross income (AGI) to claim these
losses as itemized deductions on their tax return. Taxpayers
may carry forward 100% of any remaining losses for up to 10
years. Corporate taxpayers with casualty losses that are not
reimbursed by insurance are not subject to the $100 plus 10%
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of AGI threshold, but are subject to the same carry forward
rules that apply to individual taxpayers. [Income Tax Losses]
Allows both individual and corporate taxpayers who experience
losses as a result of certain named disasters to claim these
losses either in the year in which the loss occurred or in the
preceding year. [Income Tax Losses]
FISCAL EFFECT : The Board of Equalization (BOE) estimates
minimal administrative costs, and likely no cost to extend the
homeowners' exemption to homes that are uninhabitable on the
lien date. Additionally, BOE estimates minimal costs to the
state due to the state backfill of property tax revenue losses.
The Franchise Tax Board estimates insignificant income tax
losses in FY 2006-07, and insignificant gains in FYs 2007-08 and
2008-09, due to accelerated claims on amended returns.
COMMENTS : The author states that, "On January 12, 2007 Governor
Schwarzenegger proclaimed a state of emergency for ten counties
that [experienced] severe freezing temperatures and damaged
crops. Since then, the list of counties has expanded to 18.
Policy was passed in 1991 and 1999 to provide relief for farmers
and based on the severe conditions under this year's freeze;
steps should be taken to help out once again."
Committee staff note that the list of counties named by the
Governor in his emergency proclamations is not identical to the
list of counties identified by the federal government. For
example, the federal government has named Los Angeles County as
having been adversely affected by the 2007 Freeze, but Los
Angeles County is not listed as one of the affected counties in
this bill. Conversely, the Governor has identified the Counties
of El Dorado, Santa Clara, and Yuba as impacted, while the
federal government apparently has not. This may lead to
disparate treatment of residents impacted by the 2007 Freeze,
depending on their county of residency.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
SB 114
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FN: 0002865