BILL ANALYSIS
Bill No: AB
50
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 50 Author: Nava
As Proposed to be Amended: June 23, 2009
Hearing Date: June 23, 2009
Consultant: Chris Lindstrom
SUBJECT
Disaster relief.
DESCRIPTION
AB 50, an urgency measure, adds the wildfires that occurred
in Southern California in 2007 to the list of disasters
that are eligible for full reimbursement of local agency
costs under the California Disaster Assistance Act (CDAA).
AB 50 also adds the wildfires that occurred in Santa
Barbara County in 2008 and 2009 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.
AB 50, which has been dually referred to the Senate
Committees on Governmental Organization (GO) and Revenue
and Taxation (Rev & Tax), makes changes to the Government
Code which falls within the jurisdiction of GO, as well as,
changes to the Revenue and Taxation Code which falls within
the jurisdiction of Rev & Tax.
Specifically, this bill:
1)Makes the following changes to the Government Code:
a) Adds the wildfires that occurred in Southern
California starting on or about October 20, 2007, to
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the list of disasters eligible for full state
reimbursement of local agency costs.
b) Deletes provisions in current law that require the
inclusion of certain elements in a local hazard
mitigation plan, including an initial earthquake
performance evaluation of public facilities that are
potentially hazardous, and a plan to reduce the
potential risk from private and government facilities
in the event of a disaster.
2)Makes the following changes to the Revenue and Taxation
Code:
a) Provides a mechanism for reimbursing Santa Barbara
County for property tax losses resulting from the
reassessment of properties damaged by the Santa
Barbara Wildfires.
b) Provides that any dwelling that qualified for a
homeowners' property tax exemption before the Santa
Barbara Wildfires, that was damaged or destroyed by
the Santa Barbara Wildfires, and that has not changed
ownership since the Santa Barbara Wildfires, 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.
c) Provides that any taxpayer's excess disaster loss
resulting from the Santa Barbara 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.
3)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.
4)Takes effect immediately as an urgency measure.
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EXISTING LAW
Existing law, the CDAA, provides that the state must pay
75% of the non-federal share of eligible costs for any
state-declared emergency. For some statutorily specified
disasters the state is required to pay 100 percent of the
non-federal cost.
Existing law allows the Legislature to provide for a state
share of local costs that exceeds 75% of total state
eligible costs if the city, county, or city and county has
adopted a local hazard mitigation plan (HMP) in accordance
with the federal Disaster Mitigation Act (DMA) of 2000.
Existing law prohibits the state share of reimbursement for
local costs due to a disaster from exceeding 75% of total
state eligible costs, unless the local agency is located
within a city or county that has adopted a local HMP in
accordance with the federal DMA as part of the safety
element.
Existing law requires the HMP to include all of the
following elements called for in the federal act
requirements:
a) An initial earthquake performance evaluation of
public facilities that provide essential services,
shelter, and critical government functions.
b) An inventory of private facilities that are
potentially hazardous, including, but not limited to,
multiunit, soft story, concrete tilt-up, and concrete
frame buildings.
c) A plan to reduce the potential risk from private
and governmental facilities in the event of a
disaster.
Existing federal law requires, as specified in the federal
Disaster Mitigation Act of 2000 (Public Law 106-390; 42
U.S.C. Sec.5121 et seq.) that:
a) As a condition of receipt of an increased federal
share for hazard mitigation measures, a state, local,
or tribal government shall develop and submit for
approval to the President a mitigation plan that
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outlines processes for identifying the natural
hazards, risks, and vulnerabilities of the area under
the jurisdiction of the government.
b) Each mitigation plan developed by a local or tribal
government shall: (1) describe actions to mitigate
hazards, risks, and vulnerabilities identified under
the plan; and (2) establish a strategy to implement
those actions.
Existing law specifies that local jurisdictions that have
not adopted a local hazard mitigation plan shall be given
preference by the Office of Emergency Services (now the
California Emergency Management Agency) in recommending
actions to be funded from the Pre-Disaster Mitigation
Program, the Hazard Mitigation Grant Program, and the Flood
Mitigation Assistance Program to assist the local
jurisdiction in developing and adopting a local hazard
mitigation plan, subject to available funding from the
Federal Emergency Management Agency.
The California Constitution, Article XIII, Section 3(k)
exempts from property tax the first $7,000 of the assessed
value of an owner-occupied principal place of residence.
This is commonly referred to as the "homeowners'
exemption."
Existing law provides that the $7,000 homeowners' exemption
is available to a dwelling that is occupied as the owner's
principal place of residence. Eligibility is generally
continuous once granted. However, if a property becomes
vacant or is under construction on the lien date, which is
January 1, it is not eligible for the exemption for the
upcoming tax year.
Existing law authorizes a county board of supervisors to
provide by ordinance for the reassessment of property that
is damaged or destroyed by a major disaster without the
fault of the assessed.
Existing law 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
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casualty losses that are not reimbursed by insurance are
not subject to the $100 plus 10% of AGI threshold, but are
subject to the same carry forward rules that apply to
individual taxpayers.
Existing law 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.
BACKGROUND
Purpose of the bill. The author has introduced AB 50 to
provide financial relief to those affected by the Southern
California Wildfires of 2007 and the Santa Barbara
Wildfires of 2008 and 2009.
Government Code provisions of the bill. The CDAA requires
the state share for non-federal eligible costs to be
apportioned on a 75% state/25% local government share
basis. For certain disasters (e.g., 1989 Loma Prieta
earthquake, 1991 East Bay Fire, 1994 Northridge earthquake,
the 2001 Southern California wildfires), the law provides
that the state cover up to 100% of the non-federal eligible
costs.
This measure would provide for the state to cover up to
100% of the non-federal share of costs associated with the
wildfires that occurred in Southern California commencing
on October 20, 2007, as specified in agreements for federal
assistance between this state and the United States.
Last year, SB 1537 (Kehoe) added the 2007 Southern
California wildfires to the list of disasters eligible for
coverage of 100% of the non-federal costs, but the bill
would only become effective if SB 1764 (Kehoe) was also
signed into law. The Governor vetoed SB 1764 thereby
nullifying the changes proposed by SB 1537, as well. AB 50
would correct that problem by re-authorizing the state to
cover up to 100% of the non-federal share of costs
associated with the wildfires that occurred in Southern
California commencing on October 20, 2007.
In addition, AB 50 modifies section 65302.6 of the
Government Code related to HMPs. These changes are
necessary to ensure that state statute is consistent with
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the federal requirements for HMPs. A majority of the
counties and cities in California, including all of the
counties covered by this proposal, have completed HMPs as
per the federal guidelines. In 2006, however, AB 2140
added requirements to the HMPs that followed the intent,
but were not consistent with, the federal guidelines. AB
50 would make the necessary changes to the Government Code
in order for the state requirements to be consistent with
the federal requirements.
Revenue and Taxation Code provisions of the bill.
Provisions of the Revenue and Taxation Code provide
financial assistance to individuals and local governments
affected by natural disasters, such as:
1)Property Tax Reassessment - Current law 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 - Current law:
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; and,
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,
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and are vacant solely because of damage incurred
during the disaster, continue to be eligible for the
homeowners' exemption.
1)Income Tax Losses - Current law:
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 the same carry
forward rules that apply to individual taxpayers; and,
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.
AB 50 makes the necessary changes to the Revenue and
Taxation Code to provide financial relief to those affected
by the Santa Barbara Wildfires and a property tax revenue
backfill to Santa Barbara County. Proponents of AB 50
note, "The bill would reimburse Santa Barbara County for
property tax losses related to the wildfires of November
2008. The bill further provides that dwellings that
qualified for the homeowner's property tax exemption may
not be denied the exemptions solely due to it being
damaged, destroyed, on uninhabitable by those wildfires."
PRIOR/RELATED LEGISLATION
SB 1308 (Cox), Chapter 400, Statutes of 2008 . Provides for
up to 100% state reimbursement to local governments for the
costs associated with the Angora Fire in South Lake Tahoe
which occurred in June and July 2007.
SB 1537 (Kehoe) Chapter 355, Statutes of 2008 . Provides
for up to 100% state reimbursement to local governments for
the costs associated with the Wildfires that devastated
Southern California in October, 2007. Becomes operative
only if SB 1764 of the 2007-2008 Regular Session is
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enacted.
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SB 1764 (Kehoe), 2007-2008 Legislative Session . Would have
required a local agency, on or after on January 1, 2010, to
obtain an annual certification by the State Fire Marshal to
be eligible to receive a percentage for a state share for
an eligible project in excess of 75 percent. (Vetoed by
the Governor)
Veto Message:
I am returning Senate Bill 1764 without my signature.
This bill prohibits a city or county, in the event of
a wildfire, from receiving full reimbursement from the
state for disaster-related costs, unless that city or
county has obtained certification from the Department
of Forestry and Fire Protection (CALFIRE) for
specified fire protection requirements.
When a fire disaster occurs, it is vital that all
levels of government commit resources to protect
public health and safety. Local governments should
have incentives to increase prevention, but they
should also have incentives to respond to a disaster
whenever one might occur.
Current law correctly requires local governments to
have adopted an overarching Local Hazard Mitigation
Plan and submitted it to the state to receive 100% of
their California Disaster Assistance Act funding.
This type of broad based planning is appropriate and
serves a dual purpose because federal grant
distribution is also based on those plans. By
preventing a local government from receiving
reimbursement from the state unless they meet the
specifications of this bill, it provides a perverse
incentive for areas that might not have met the bill's
requirements, even for technical reasons.
A more appropriate fiscal incentive program would not
focus on holding hostage funds already expended in an
emergency, but would provide both local and state
funding to reward disaster preparation and prevention.
The Emergency Response Initiative I proposed in this
year's budget would have done so. As I proposed, this
initiative would have provided $139 million each year
to initially increase our disaster response
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capabilities. This could have been expanded to
provide financial incentives, through grants to local
governments, for increasing disaster prevention
activities as well. Unfortunately, the Legislature
rejected this proposal.
Nonetheless, I look forward to working with the
Legislature in the next session to continue to look
for new ways to fund both disaster prevention and
response activities.
For these reasons, I am returning this bill without my
signature.
AB 1798 (Berg), Chapter 896, Statutes of 2006 . Adds the
severe rainstorms that occurred in selected counties in
Northern California from December 17, 2005, to January 3,
2006, to the list of disasters eligible for full state
reimbursement of local agency costs under the Disaster
Assistance Act.
AB 2140 (Hancock), Chapter 739, Statutes of 2006 .
Authorized a city or county to adopt a local hazard
mitigation plan (HMP) with the safety element of its
general plan, and created incentives for local governments
to adopt HMPs.
AB 2735 (Nava), Chapter 897, Statutes of 2006 . Adds the
severe rainstorms that occurred in selected counties in
Northern California from December 17, 2005, to January 3,
2006, to the list of disasters eligible for full state
reimbursement of local agency costs under the Disaster
Assistance Act.
AB 164 (Nava and Bass), Chapter 623, Statutes of 2005 .
Adds the severe storms, flooding, debris flows, and
mudslides that occurred in the Counties of Kern, Los
Angeles, Santa Barbara and Ventura in December 2004,
January 2005, February 2005, and March 2005, to the list of
disasters eligible for full state reimbursement of local
agency costs under the Disaster Assistance Act.
SB 457 (Kehoe), Chapter 622, Statutes of 2005 . Adds the
severe rainstorms, floods, mudslides, and other events that
occurred the Counties of Orange, Riverside, San Bernardino,
and San Diego during December 2004, January 2005, February
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2005, March 2005, and June 2005 to the list of disasters
eligible for full state reimbursement of local agency costs
under the Disaster Assistance Act.
AB 1510 (Kehoe), Chapter 772, Statutes of 2004 . Adds the
Southern California wildfires that occurred during October
and November 2003 and the San Simeon earthquake that
occurred during December 2003 to the list of disasters
eligible for full state reimbursement of local agency costs
under the Disaster Assistance Act.
SUPPORT: As of June 19, 2009:
American Federation of State, County and Municipal
Employees
California Special Districts Association
California State Association of Counties
County of Santa Barbara
County of San Diego (sponsor)
OPPOSE: None on file as of June 19, 2009.
DUAL REFERRAL: Senate Revenue and Taxation Committee
FISCAL COMMITTEE: Senate Appropriations Committee
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