BILL ANALYSIS
AB 2136
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CONCURRENCE IN SENATE AMENDMENTS
AB 2136 (V. Manuel Perez and Salas)
As Amended August 20, 2010
2/3 vote. Urgency
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|ASSEMBLY: |69-0 |(May 24, 2010) |SENATE: |34-0 |(August 24, |
| | | | | |2010) |
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Original Committee Reference: L. GOV.
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.
The Senate amendments :
1)Delete the provisions that added the Earthquake to the list of
disasters eligible for full state reimbursement of local
agency costs.
2)Specify that loans provided under the "CalHome Program
Disaster Assistance" for Imperial County that have been made
to rehabilitate, reconstruct, or replace lower income
owner-occupied manufactured homes shall be due and payable in
10 years, with 20% of the original principal to be forgiven
annually for each additional year beyond the fifth year that
the manufactured home is owned and continuously occupied by
the borrower.
3)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
AB 2136
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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
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:
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1)Provided a mechanism for reimbursing Imperial County for
property tax losses resulting from the reassessment of
properties damaged by the Earthquake.
2)Provided 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)Provided 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)Added the Earthquake to the list of disasters eligible for the
higher state share of costs.
5)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.
6)Takes immediate effect as an urgency measure.
FISCAL EFFECT :
1)The State Board of Equalization estimates General Fund costs
of $78,000 in fiscal year 2010-11 and declining amounts
thereafter for reimbursing Imperial County for its property
tax losses and extending the homeowners' exemption.
2)This bill's income tax provisions will result in minor revenue
losses of likely less than $7,000 per year for the next
several years.
3)According to the Senate Appropriations Committee, providing
CalHome loan forgiveness would accelerate up to $10 million in
revenue losses by ten years, beginning in 2015.
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COMMENTS : 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."
Committee Staff Comments:
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.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
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