BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 85
Author: Cogdill
Amended: 9/10/09
Vote: 21
PRIOR SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 77-1, 9/11/09 - See last page for vote
SUBJECT : Local Government Finance
SOURCE : Author
DIGEST : Assembly Amendments delete the Senate version
expressing the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2009. The bill now
provides limited property tax relief to seven counties.
ANALYSIS :
Specifics of this bill:
1. Freezes "negative sum" property tax allocations at the
2010-11 levels for two years - 2011-2012 and 2012-13 --
and then allows the negative sum amounts to resume
growth in line with current law. The freeze applies to
six counties (Alpine, Lassen, Mariposa, Plumas,
Stanislaus, and Trinity) that had a portion of their
property taxes shifted to school districts under
legislation passed following voter approval of
CONTINUED
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Proposition 13 in 1978.
2. Increases the countywide property tax allocation (and
reduces school districts' allocation) by $100,000 in
2011-12 and $200,000 in 2012-13 and thereafter for the
county with the second lowest percentage share of
combined county-wide and less than countywide property
taxes as of 2006-07. This provision affects Yolo
County.
Comments
Rationale . The bill is intended to provide relief to
specific county governments that, according to the bill's
proponents, have been adversely affected by laws enacted
subsequent to voter approval of Proposition 13 in 1978
governing the allocation of property taxes collected within
each county.
Negative sum counties . Following voter approval of
Proposition 13, which cut local property taxes by more than
50 percent, the state responded with a one-time "bailout"
of local government. This included $858 million in block
grants, of which $436 million went to counties. The
following year, the Legislature adopted a longer term
bailout, by permanently restructuring the allocation of
property taxes AB 8 (L. Greene), Chapter 282, Statutes of
1979. AB 8 shifted some of the schools' property tax
revenues to local agencies and replaced the schools' losses
with increased subventions from the state General Fund.
The AB 8 formula specifically shifted additional property
taxes to counties in an amount equal to their 1978-79 block
grants, plus a portion of Aid to Families with Dependent
Children (AFDC) costs not covered by the state buyout,
minus the new state grants for county health services.
For six "negative sum" counties, the state grants for
health services exceeded their 1978-79 block grants plus
the adjustment for AFDC costs. Consequently, rather than
shifting additional property tax revenue from schools to
these counties, these counties shifted property tax revenue
to schools. In these six counties, property tax revenues
were reduced rather than augmented to balance the
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relatively larger health and welfare payments.
Post Proposition 13 allocation of property taxes. There
are major differences in the percentages of property taxes
that are currently allocated to cities, counties, special
districts and school districts across within counties
across the state. As of 2006-07, the share of property
taxes that were allocated to county governments averaged 20
percent but ranged from 6.6 percent to over 60 percent.
The county with the lowest share of property taxes
allocated to county government in 2006-07 was Orange. The
second lowest was Yolo, with a county share of 9.6 percent.
Part of the difference is that a key element of the AB 8
formula was that the shift of property taxes from schools
to non-school local governments within each county was
based partly on each local government's share of property
tax collections before Proportion 13 was enacted. This in
turn reflected, among other things, varying pre-Proposition
13 property tax rates imposed by local jurisdictions.
Other factors include: (a) the value of homes and
businesses in various areas; (b) the percentage of
population and businesses located in cities versus
non-incorporated county areas; (c) how municipal services
are divided among cities, counties, and special districts;
and (d) state laws that have been enacted since Proposition
13 that govern the sharing of property taxes upon
incorporation of new cities.
Although differences in allocations are due to a variety of
complex factors, representatives of counties with
below-average allocations have long advocated for state
relief, normally involving a reallocation of property taxes
from schools to counties governments.
Proposed amendments . The amendments increase the
countywide property tax allocation to the county with the
second lowest percentage share of combined county-wide and
less-than-countywide property tax shares as of 2006-07.
Previous legislation
The provision of this bill that freezes "negative sum"
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adjustments is the most recent in a long list of proposals
to cap these amounts in the six counties.
SB 215 (Denham), of 2007, SB 9 (Denham), of 2006, SB 756
(Denham), of 2003, and AB 698 (Cannella), of 1996, died in
the Senate Appropriations Committee, and AB 1069 (Cardoza),
of 1997, was held under submission by this committee.
Governor Wilson vetoed AB 472 (Cardoza), of 1997, stating
that that the counties received additional fiscal relief
when the state took over trial court funding.
The provision of this bill raising the county government's
property tax allocation in the county with the second
lowest share in the state is similar in concept to a
provision included in SBX3 8 (Ducheny), Chapter 4, Statutes
of 2009. That bill increased the countywide allocation to
the county with the lowest share of countywide allocation
or property taxes by $25 million in 2009-10 and $50 million
in 2010-11 and thereafter. Previously, several bills had
been proposed to provide more general relief to "low
wealth" counties (generally defined as counties in which
the countywide share of property taxes is below the
statewide average.). For example, AB 2682 (Daucher) of
2006 and AB 405 (Duvall) of 2007 would have required that
schools' shares of tax increment revenue available upon the
expiration of redevelopment areas be reallocated to
counties. SB 1909 (Machado), which was vetoed by the
Governor in 2004, established an 11 percent floor for
property taxes allocation to county governments.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
According to the Assembly Appropriations Committee (1)
reallocations of property tax revenues from school
districts to counties totaling about $290,000 in 2011-12
and $580,000 in 2012-13 and thereafter, consisting of:
(a) about $190,000 in 2011-12 and $380,000 in 2012-13 and
thereafter due to provision freezing the "negative sum"
adjustment for two years; (b) about $100,000 in 2011-12 and
$200,000 in 2012-13 and thereafter due to the provision
that raises the specified countywide property tax share;
and (2) Under Proposition 98, the state GF will be required
to backfill the loss in property taxes to schools.
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, DeVore, Emmerson, Eng, Feuer,
Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,
Jones, Knight, Krekorian, Lieu, Logue, Bonnie Lowenthal,
Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Ruskin, Salas, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NOES: Evans
NO VOTE RECORDED: Saldana, Vacancy
DLW:do 9/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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