BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1339 (V.M. Perez)
Hearing Date: 08/17/2009 Amended: As Introduced
Consultant: Mark McKenzie Policy Vote: L Gov 3-2
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BILL SUMMARY: AB 1339 would forgive the Imperial County Free
Library from the obligation to repay property tax revenues that
were allocated to the library rather than the Educational
Revenue Augmentation Fund (ERAF) in Imperial County from fiscal
years 2001-02 through 2006-07.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
ERAF repayment forgiveness $959* General
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* Absent this bill, repayment of this amount would be subject to
a negotiated agreement
with the SCO. Typically repayment would occur over 3-7 years.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
In 1992-93 and 1993-94, in response to serious budgetary
shortfalls, the Legislature and administration permanently
redirected over $3 billion of property taxes from cities,
counties, and special districts to schools and community college
districts. Under Proposition 98, these redirected funds reduce
the state's funding obligation for K-14 school districts by a
commensurate amount. The property tax shift is accomplished
through contributions that cities, counties, and special
districts (such as library districts) deposit into the ERAF in
each county, the proceeds of which then are transferred to
school districts within the county. These contributions grow
over time in line with the property tax growth rate in each
local jurisdiction. Property tax allocations and annual
contributions to ERAF are made by the county auditor.
AB 1339 is sponsored by the County of Imperial to rectify a
local taxation problem. An audit by the State Controller's
Office (SCO) determined that the county auditor inadvertently
left the county library out of the ERAF contributions made by
local entities within the county. This mistake resulted in
overpayment to the library system of over $1.6 million over the
period of the audit that should have been allocated to the ERAF.
The county indicates that the mistake has been corrected and
the ERAF contribution is now being made, resulting in a
substantially smaller revenue stream for the library. Current
law requires repayment of underallocations, but limits the
amount of repayment to 1% of the county's current year secured
property tax revenues, which would be $959,203.
This bill would relieve the library district from the obligation
to repay property tax revenues that were allocated to the
library instead of to the ERAF. Specifically, AB 1339 would
deem correct the property tax apportionments made by Imperial
County
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AB 1339 (V.M. Perez)
officials to the Imperial County Free Library for fiscal years
2001-02 through 2006-07, and would require that apportionments
made in 2007-08 and thereafter be based on corrected factors.
Staff notes that deeming the past mistakes to be correct would
result in a General Fund impact of $959,202, since any repayment
required under current law would relieve the state from
corresponding payments to schools. The repayment schedule would
be subject to a negotiated agreement between the county and the
SCO.
Imperial County notes that, based on corrected factor, the
library system receives approximately $375,000 annually.
Repayment would place a hardship on the library system, likely
resulting in temporary closures of facilities.