BILL ANALYSIS
AB 2136
Page 1
Date of Hearing: May 10, 2010
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Anthony J. Portantino, Chair
AB 2136 (V. Manuel Perez) - As Amended: May 6, 2010
2/3 vote. Urgency. Fiscal committee.
SUBJECT : Disaster relief: County of Imperial earthquake
SUMMARY : Adds the earthquake that struck Imperial County on
April 4, 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 Imperial County for
property tax losses resulting from the reassessment of
properties damaged by the Earthquake.
2)Provides that any dwelling that qualified for a homeowners'
property tax exemption before April 4, 2010, that was damaged
or destroyed by the Earthquake, and that has not changed
ownership since April 4, 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 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.
AB 2136
Page 2
5)Takes effect immediately 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
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
AB 2136
Page 3
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.
FISCAL EFFECT : A fiscal estimate for this bill is pending.
COMMENTS :
1)According to the author's office, the purpose of this bill is
to provide immediate tax relief to individuals and businesses
affected by the Earthquake. Specifically, the author states,
"AB 2136 supplements a number of existing provisions in state
tax law that can be helpful both to local jurisdictions and to
individuals after a natural disaster."
2)Committee Staff Comments:
a) The Earthquake : At approximately 3:40 p.m. on April 4,
2010, a magnitude 7.2 earthquake struck 16 miles
south-southwest of Guadalupe Victoria, Baja California,
Mexico, approximately 40 miles south of the United States
border. The Earthquake was widely felt in southern
California, particularly in Imperial County, south of the
Salton Sea. The Earthquake damaged or destroyed numerous
homes, businesses, schools, water treatment and storage
facilities, and other public facilities in Imperial County.
While two deaths have been reported in Mexico, no deaths
have been reported in California. On April 5, 2010,
Governor Arnold Schwarzenegger proclaimed a state of
emergency in Imperial County.
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 May 5, 2010. For additional
discussion of this bill, please refer to their analysis.
c) Related Bills introduced in the current legislative
session:
i) AB 1662 (Portantino) would provide similar disaster
relief in connection with certain wildfires that occurred
AB 2136
Page 4
in Los Angeles and Monterey Counties. AB 1662 is
currently pending in the Assembly Appropriations
Committee.
ii) AB 1690 (Chesbro) would provide similar disaster
relief in connection with the recent earthquake that
struck Humboldt County. AB 1690 is set to be heard in
this Committee along with this bill.
iii) AB 1766 (Gaines) would provide similar disaster
relief in connection with the wildfire that started on
August 30, 2009, in Placer County. AB 1766 is set to be
heard in this Committee along with this bill.
iv) Should these bills all continue to progress through
the Legislature, appropriate amendments should be taken
to prevent chaptering out issues.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098