BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: AB 1339 HEARING: 7/1/09
AUTHOR: V. Manuel P?rez FISCAL: Yes
VERSION: 2/27/09 CONSULTANT:
Weinberger
IMPERIAL COUNTY FREE LIBRARY'S PROPERTY TAX ALLOCATION
Background and Existing Law
County auditors allocate property tax revenues to cities,
county governments, special districts, and schools. To
check the accuracy of the county auditors' work with these
complex formulas, the State Controller regularly audits the
counties' property tax allocations. Sometimes the State
Controller discovers that a county auditor has allocated
too much property tax revenue to some local governments
while others haven't received enough. When these errors
come to light, the Legislature used to forgive past
mistakes in return for prospective compliance.
In 2001, the Legislature created a standard approach to
fixing these errors, declaring the State Controller's
audits to be correct. If adjustments are needed, the new
law requires repayments but caps them at 1% of the current
year's secured tax revenues, paid in equal increments over
the next three fiscal years. This approach applies only to
errors uncovered on or after July 1, 2001 (AB 169, Wiggins,
2001).
The Imperial County Free Library system serves over 54,000
residents living in unincorporated areas of Imperial County
and in the cities of Calipatria, Holtville, and
Westmorland. The Board of Supervisors funds the library
largely with property tax revenues. A recent audit by the
State Controller's Office determined that the County had
improperly allocated some property tax revenues to the
library rather than to the Educational Revenue Augmentation
Fund (ERAF), which provides additional funding to school
districts. In response, beginning in the 2007-08 fiscal
year, the County corrected the allocation of the library's
property tax revenues, cutting library funding by more than
50%. County officials want the Legislature to forgive the
property tax revenues that were misallocated before 2007,
instead of requiring repayment under the terms of the 2001
AB 1339 -- 2/27/09 -- Page 2
Wiggins bill.
Proposed Law
Assembly Bill 1339 declares that the property tax
apportionment factors applied in allocating property tax
revenues in the County of Imperial for the Imperial County
Free Library for each fiscal year from the 2001-02 fiscal
year to the 2006-07 fiscal year, inclusive, are deemed
correct.
AB 1339 requires that for the 2007-08 fiscal year and each
fiscal year thereafter, property tax apportionment factors
applied in allocating property tax revenue for the Imperial
County Free Library must be determined on the basis of
property tax apportionment factors for prior fiscal years
that have been fully
corrected or adjusted.
Comment
1. It's only fair . Allocating property tax revenues is an
excruciatingly complex process involving technical
computations and statutory interpretations. Imperial
County officials made mistakes and allocated too much to
the County Free Library. After the State's audits
uncovered this mistake, the County corrected the error,
reducing the library's share of property tax revenues by
more than half. In the past year, the library has closed
five of its eight branch locations. Because the library is
already confronting severe fiscal challenges, requiring
full repayment of its misallocated property taxes would
likely result in the closure of the entire library system.
Rather than forcing the County to eliminate literacy
programs, English-as-a-second-language instruction, access
to online educational services, and other vital library
programs, AB 1339 does what's fair and forgives the
repayment of the library's property tax debts to ERAF.
2. Forgiveness has a price tag . When county auditors
don't shift enough property tax revenue to ERAF, the State
General Fund must increase its apportionment payments to
schools. Over the years, Imperial County's errors have
AB 1339 -- 2/27/09 -- Page 3
cost the State General Fund nearly $1 million. Contrary to
the policy established by the 2001 Wiggins bill, AB 1339
forgives the County's obligations to the State General
Fund. The Committee may wish to consider whether the
Legislature wants to set a precedent by letting the State
General Fund subsidize Imperial County's errors.
Assembly Actions
Assembly Local Government Committee: 7-0
Assembly Appropriations Committee:17-0
Assembly Floor: 78-0
Support and Opposition (6/25/09)
Support : Imperial County, Cities of Calexico and
Holtville, California Library Foundation, Friends of the
Imperial County Library, Friends of the Niland Branch,
Imperial County Office of Education, Imperial County
Library, Imperial Public Library.
Opposition : Unknown.