BILL ANALYSIS
AB 1690
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Date of Hearing: May 10, 2010
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Anthony J. Portantino, Chair
AB 1690 (Chesbro) - As Introduced: January 27, 2010
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Disaster relief: County of Humboldt earthquake.
SUMMARY : Adds the earthquake that occurred in Humboldt County
on January 9, 2010 (2010 Earthquake) 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 a mechanism for reimbursing Humboldt County for
property tax losses resulting from the reassessment of
properties damaged by the 2010 Earthquake.
2)Provides that any dwelling that qualified for a homeowners'
property tax exemption before January 9, 2010, that was
damaged or destroyed by the 2010 Earthquake, and that has not
changed ownership since January 9, 2010, 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.
3)Provides that any taxpayer's excess disaster loss resulting
from the 2010 Earthquake 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.
4)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.
5)Takes immediate effect as an urgency measure.
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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
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.
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
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taxpayers.
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 :
1)Property Tax Reassessment : The State Board of Equalization
(BOE) estimates that the cost of reimbursing Humboldt County's
property tax losses would be $405,072.
2)Homeowners' Exemption : BOE estimates that extending the
homeowners' exemption to homes that are uninhabitable on the
lien date will result in revenue losses of less than $12,000.
3)Income Tax Losses : The revenue losses related to the disaster
loss treatment provisions of this bill are currently unknown.
Specifically, the Franchise Tax Board analysis notes, "The
revenue impact has not been determined at this time, but will
be developed as the bill moves through the legislative
process."
COMMENTS :
1)The author states:
AB 1690 would allow special tax treatment, called disaster
loss treatment, for losses sustained as a result of the
January 9, 2010 earthquake in Humboldt County. The purpose
of this bill is to provide immediate tax relief to
individuals and businesses affected by the earthquake.
Traditionally, when a disaster has occurred in California,
the state has enacted legislation to keep counties whole
with respect to any loss of property tax revenue they
experience from reduced property values resulting from the
disaster. This bill follows a longstanding policy of
backfilling county losses resulting from reduced property
values.
2)The County of Humboldt notes:
The Humboldt County Board of Supervisors is authorized to
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reassess property that was damaged or destroyed by the
earthquake. This reassessment would have a significant
adverse impact on the County's property tax revenues if not
reimbursed by the state. This bill would amend existing
law that already provided similar relief to other counties
on over twenty previous occasions, by including this
incident in Humboldt County among the disasters eligible
for reimbursement.
3)Committee Staff Comments:
a) The 2010 Earthquake : On Saturday, January 9, 2010, a
6.5 magnitude earthquake struck the northern coast of
California, disrupting utilities and damaging at least 175
structures. On January 12, 2010, Governor Schwarzenegger
proclaimed a state of emergency in Humboldt County due to
the earthquake.
b) Double Referral : This bill was double-referred with the
Committee on Local Government, and passed out of that
committee by a vote of 8-0 on April 14, 2010.
c) Related Bills :
i) AB 1662 (Portantino), of the current Legislative
Session, would provide similar disaster relief in
connection with certain wildfires that occurred in Los
Angeles and Monterey Counties. AB 1662 is currently
pending in the Assembly Appropriations Committee.
ii) AB 1766 (Gaines), of the currently Legislative
Session, would provide similar disaster relief in
connection with the 49 Fire that began in Placer County
in August 2009. AB 1766 is scheduled to be heard by this
Committee along with this bill.
iii) Should these bills all continue to progress through
the Legislature, appropriate amendments should be taken
to prevent chaptering out issues.
REGISTERED SUPPORT / OPPOSITION :
Support
County of Humboldt
AB 1690
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Regional Council of Rural Counties
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098