BILL ANALYSIS
AB 15
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Date of Hearing: May 18, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
AB 15 (Fuentes) - As Amended: April 13, 2009
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Disaster relief
SUMMARY : Adds the wildfires that occurred in Los Angeles and
Ventura Counties in 2008 (2008 Wildfires) to the list of
disasters eligible for full state reimbursement of local
property tax losses, beneficial homeowners' property tax
exemption treatment, and special "carry forward" treatment of
excess disaster losses. Specifically, this bill :
1)Provides a mechanism for reimbursing the counties for property
tax losses resulting from the reassessment of properties
damaged by the 2008 Wildfires.
2)Provides that any dwelling that qualified for a homeowners'
property tax exemption before the commencement dates of the
2008 Wildfires, that was damaged or destroyed by the 2008
Wildfires, and that has not changed ownership since the
commencement dates of these disasters, 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
from the 2008 Wildfires 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.
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5)Takes effect immediately as an urgency measure.
EXISTING LAW :
1)Property Tax Reassessment: 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. The
application for reassessment must show the condition and value
of the property after the damage and the dollar value of the
damage. 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.
2)Homeowners' Exemption :
a) 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.
b) Provides certain disaster-related exceptions to the
general rule that a property must be owner-occupied on the
lien date to receive the homeowners' exemption. Under
these exceptions, properties that were eligible for the
homeowners' exemption immediately before the disaster, do
not change ownership after the disaster, and are vacant
solely because of damage incurred during the disaster,
continue to be eligible for the homeowners' exemption.
3)Income Tax Losses:
a) 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% of AGI threshold, but are subject to
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the same carry forward rules that apply to individual
taxpayers.
b) 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.
FISCAL EFFECT :
1)Property Tax Reassessment : The Board of Equalization (BOE)
estimates that the cost of reimbursing the counties' property
tax losses would be $263,552.
2)Homeowners' Exemption : BOE estimates that extending the
homeowners' exemption to homes that are uninhabitable on the
lien date will result in revenue losses of less than $36,000.
3)Income Tax Losses : The Franchise Tax Board estimates minimal
revenue losses resulting from the carry forward provisions of
this bill.
COMMENTS :
1)The author states, "AB 15 would allow special tax treatment,
called disaster loss treatment, for losses sustained as a
result of the October and November 2008 Los Angeles County
wildfires. The purpose of this bill is to provide immediate
tax relief to individuals and businesses affected by the
wildfires. As an urgency measure, this bill would be
effective and operative immediately upon enactment."
2)Proponents state, "AB 15 would provide disaster-related tax
relief for losses sustained as a result of wildfires that
occurred in Los Angeles and Ventura Counties. The legislation
would include state reimbursement to backfill property tax
revenue losses resulting from assessment reductions because of
these wildfires. These tax benefits are necessary tools for
these areas to recover from these disasters as quickly as
possible."
3)Committee staff notes:
a) That this bill was double-referred with the Committee on
Local Government, and passed out of that committee by a
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vote of 7 to 0 on April 1, 2009.
b) This bill is similar to both AB 50 (Nava) and AB 79
(Duvall), also introduced in the current Legislative
Session. Should all three bills continue to progress
through the Legislature, double-jointing amendments may
become necessary.
c) Technical amendment: This bill makes reference to the
Governor's disaster proclamation of October 12, 2008.
While the 2008 Wildfires began on that day, the actual
proclamation was not issued until October 13, 2008. The
author may wish to take amendments reflecting this.
REGISTERED SUPPORT / OPPOSITION :
Support
California State Association of Counties
Regional Council of Rural Counties
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098