BILL ANALYSIS
AB 308
Page 1
Date of Hearing: August 26, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 308 (Cook and Carter) - As Amended: August 19, 2010
Policy Committee: Local
GovernmentVote:9-0
Urgency: Yes State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill retains the historical allocation method for property
taxes levied on a recently sold power plant in San Bernardino
County.
(Under existing law, the sale would trigger a change in the
method for allocating about $8 million in annual property taxes
on the plant. The effect of this change will be a reduction in
property taxes going to the Inland Valley Development Agency and
other local agencies in the immediate vicinity of the plant, and
corresponding increases to the County of San Bernardino and
school districts throughout the county.)
FISCAL IMPACT
1)Relative to the historical allocation of property taxes on
this facility, there is no revenue impact, since the bill
maintains historical allocation formulas for property taxes
from the power plant affected by this bill.
2)Relative to current law, there would be a state revenue impact
of about $1.5 million. This is because about $1.5 million of
the property taxes that would be reallocated under current law
would go to school districts throughout the county and, under
Proposition 98, the increased property taxes result in a
corresponding reduction in GF spending on schools.
COMMENTS
1)Rationale. According to the authors, the bill is intended to
preserve the current longstanding property tax allocation
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method for the Mountain View power plant in the City of
Redlands. They assert that the change in ownership of the
plant, from a Southern California Edison subsidiary to the
utility itself, has not changed the nature of the plant itself
or the needs of the communities in the immediate area. They
also note that the Inland Valley Development Agency, which has
had success in redeveloping the former Norton Air Force Base,
will lose a major source of funding without the bill.
2)Background - allocation of property taxes of utility
properties . To deal with the complexity and administrative
costs of tracking utility property holdings and allocating
property tax revenues among thousands of small geographic
locations, the Legislature created a unitary method for
allocating property taxes of regulated utilities in 1987.
Under this method, the Board of Equalization first allocates
the combined assessed value of a utility's property among
California's counties based on the amount of the combined
holdings that are located within each county. County auditors
then allocate the property tax revenues within each county
using a formula that takes into account, among other things,
each local agency's share of locally-assessed property tax
collections. In recent years, the Legislature has created two
exceptions to this countywide apportionment method for
power-generating and transmission facilities to recognize the
impacts that large scale projects have on services provided by
surrounding communities.
First, following the deregulation of the California's electric
utility industry in 1996, regulated public utilities sold many
of their electric generating facilities to unregulated private
companies. Unregulated private companies also began building
new electric generation facilities. Regulations adopted by
the BOE in 1999 made county assessors responsible for
assessing electric facilities owned by unregulated private
companies. County auditors allocated property tax revenues
from those locally-assessed facilities on a "situs basis"
(that is, to the local agencies encompassing the site where
the facilities are located). In 2002, the Legislature
transferred the responsibility for assessing electric
facilities owned by unregulated private companies back to the
BOE and retained the situs-based allocation of property tax
revenues from those facilities.
Second, in 2006 the Legislature created an exception to the
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countywide unitary tax allocation method for utility-owned
power plants. That exception allocates property taxes to the
county, school districts, and enterprise special districts in
proportion to their share of locally assessed taxes in the
previous year, and the remaining taxes on a situs basis,
mainly to the city or county in which a qualified electrical
facility is located.
As a result of these developments, property taxes from power
plants are allocated in one of two ways, depending on whether
the plant is owned by an unregulated entity or a regulated
public utility. Those owned by unregulated entities have their
property taxes allocated strictly on a situs basis, whereas
those owned by regulated utilities have their property taxes
allocated partly on a situs basis and partly on a county-wide
basis.
3)Background - the Mountainview power plant . This plant is
located in the City of Redlands (San Bernardino County) within
a redevelopment project area encompassing the former Norton
Air Force Base. Until this year, the plant was owned by an
unregulated subsidiary of Southern California Edison (SCE),
and thus its property taxes were allocated strictly on a situs
basis. However, in March 2010, SCE took ownership of the
plant, triggering a change in the allocation method to one
which as partly situs-based and partly countywide-based.
This bill retains the historical, situs-based, allocation of
property taxes assessed on the Mountainview power plant,
treating the plant as if it continued to be owned by an
unregulated entity.
Prepared by : Brad Williams / APPR. / (916) 319-2081