BILL ANALYSIS
AB 1690
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CONCURRENCE IN SENATE AMENDMENTS
AB 1690 (Chesbro)
As Amended August 19, 2010
2/3 vote. Urgency
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|ASSEMBLY: |42-28|(January 28, |SENATE: |33-0 |(August 23, |
| | |2010) | | |2010) |
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Original Committee Reference: REV. & TAX.
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.
The Senate amendments are technical in nature and prevent
chaptering out issues given the large number of disaster-related
bills pending in the current legislative session.
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
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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
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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Provided a mechanism for reimbursing Humboldt County for
property tax losses resulting from the reassessment of
properties damaged by the 2010 Earthquake.
2)Provided 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.
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3)Provided 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)Specified 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)Took immediate effect as an urgency measure.
FISCAL EFFECT :
1)The State Board of Equalization estimates that General Fund
expenditures for reimbursing Humboldt County for its property
tax losses and extending the homeowners' exemption would be
about $125,000 in fiscal year 2010-11, with declining amounts
in subsequent years.
2)This bill's income tax provisions will result in minor revenue
losses of likely less than $5,000 per year for the next
several years.
COMMENTS : 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.
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Committee Staff Comments: 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.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
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