BILL ANALYSIS
AB 1662
Page 1
CORRECTED - 06/02/2010 Technical change (Member name)
ASSEMBLY THIRD READING
AB 1662 (Portantino and Jeffries)
As Amended April 7, 2010
2/3 vote. Urgency
REVENUE & TAXATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Portantino, Conway, |Ayes:|Fuentes, Conway, Ammiano, |
| |Beall, | | |
| |Charles Calderon, Coto, | |Bradford, Charles |
| |Fuentes, Harkey, | |Calderon, Coto, |
| |Nestande, Saldana | |Davis, Monning, Ruskin, |
| | | |Harkey, |
| | | |Miller, Nielsen, Norby, |
| | | |Skinner, |
| | | |Solorio, Torlakson, |
| | | |Torrico |
| | | | |
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SUMMARY : Adds the wildfires that occurred in the Counties of Los
Angeles and Monterey in 2009 (2009 Wildfires) and the severe
winter storms that occurred in the Counties of Calaveras,
Imperial, Los Angeles, Orange, Riverside, San Bernardino, San
Francisco, and Siskiyou in 2010 (2010 Storms) 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 that, notwithstanding existing law, the state share
shall be up to 100% of total state eligible costs connected with
the severe winter storms, flooding, and debris and mud flows
that occurred in Northern, Central, and Southern California from
January 17, 2010, to February 6, 2010, as specified in
agreements between this state and the United States for federal
financial assistance.
2)Provides a mechanism for reimbursing eligible counties for
property tax losses resulting from the reassessment of
properties damaged by the 2009 Wildfires and the 2010 Storms.
3)Provides that any dwelling that qualified for a homeowners'
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property tax exemption before the commencement dates of the 2009
Wildfires, that was damaged or destroyed by the 2009 Wildfires,
and that has not changed ownership since the commencement dates
of the 2009 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.
4)Provides identical homeowners' property tax exemption treatment
for victims of the 2010 Storms.
5)Provides that any taxpayer's excess disaster loss resulting from
the 2009 Wildfires and/or 2010 Storms 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.
6)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.
7)Takes immediate effect 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
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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, 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 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Property tax reassessment and homeowners' exemption: The Board
of Equalization (BOE) estimates that the cost of reimbursing the
counties' property tax losses and of extending the homeowners'
exemption would be less than $500,000.
2)Income tax losses: The Franchise Tax Board has not yet provided
a revenue estimate for the carry forward provisions of this
bill.
COMMENTS : The author has provided the following statement in
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support of this bill:
On August 26, 2009, the Station Fire in Los Angeles County
was reported burning in the Angeles Forest. This mostly
rural area contains forested and chaparral vegetation and
abuts many foothill communities in Los Angeles County. Aided
by winds and hot temperatures the fire quickly spread out of
control. A report issued by the U.S. Department of
Agriculture subsequently attributed extremely dry vegetation,
extremely steep terrain and inaccessible fire locations to
the spread of the fire and the inability of fire personnel to
contain it.
Ultimately the fire consumed over 160,000 acres, destroyed
209 structures of which 89 were homes and caused the deaths
of two fire fighters. Because the Station Fire denuded the
hillsides and steep terrain of the Angeles Forest, heavy
rains in February of 2010 . . . caused mudslides and flash
flooding that has destroyed or damaged at least 86 homes.
AB 1662 would allow victims who lost homes and other property
to claim disaster loss treatment, for losses sustained as a
result of the August, 2009 Station Fire in Los Angeles
County. The purpose of this bill is to provide immediate tax
relief to individuals and businesses affected by that
wildfire. As an urgency measure, this bill would be
effective and operative immediately upon enactment.
AB 1662 would provide disaster-related tax relief for losses
sustained as a result of the wildfire that occurred in Los
Angeles County in August 2009. 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.
Committee Staff Comments:
1)Related legislation:
a) AB 1690 (Chesbro) of 2010 would provide similar disaster
assistance for losses sustained as a result of the earthquake
that struck Humboldt County on January 9, 2010. AB 1690 is
currently in the Senate Rules Committee;
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b) AB 1766 (Gaines) of 2010 would provide similar disaster
relief in connection with the 49 Fire that began in Placer
County in August 2009. AB 1766 is currently in the Senate
Rules Committee; and,
c) AB 2136 (V. Manuel Perez) of 2010 would provide similar
disaster relief in connection with the earthquake that struck
Imperial County. AB 2136 is currently in the Senate Rules
Committee.
Should these bills all continue to progress through the
legislative process, appropriate amendments should be taken to
prevent chaptering out issues.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0004551