BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
684 (Cogdill)
Hearing Date: 05/28/2009 Amended: A.I. 02/27/2009
Consultant: Mark McKenzie Policy Vote: Loc Gov 5-0
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BILL SUMMARY: SB 684 would cap "negative bailout" property tax
allocations at their 2010-11 levels, beginning in the 2011-12
fiscal year.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Increase in school aid $187* General
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* The estimated impact would increase annually by a similar
amount (approximately $375,000 in 2012-13, $562,000 in 2013-14,
$749,000 in 2014-15, etc.) and actual amounts would depend upon
property tax growth rates. See staff note below.
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STAFF COMMENTS: SUSPENSE FILE.
In 1978, after the passage of Proposition 13, the Legislature
provided one-time block grants to local agencies and reduced
county health and welfare payments. AB 8 (L. Greene) Chapter
282, Statutes of 1979, permanently reallocated local property
tax by shifting school property tax revenue to other local
agencies and increasing General Fund support to schools. County
property tax allocations were based on the amount of their
1978-79 block grant, plus the state buyout of Aid to Families of
Dependent Children (AFDC) program costs, minus a new state grant
for county health services. In Alpine, Lassen, Mariposa,
Plumas, Stanislaus and Trinity counties, the state grant for
health services exceeded the 1978-79 block grant and the AFDC
buyout. Consequently, rather than shifting additional property
tax revenue from schools to these counties, county property tax
revenue was shifted to schools and, in some cases, to cities and
special districts. In these six "negative bailout" counties,
property tax revenues were reduced rather than augmented to
balance out the relatively larger health and welfare payments.
SB 684 would freeze the reallocation of "negative bailout"
property tax funds away from these six counties at the 2010-11
level, beginning in the 2011-12 fiscal year. In future years,
"negative bailout" counties would benefit from the growth in
property tax revenues, while schools in those counties would be
deprived of the growth in property tax revenues. The General
Fund would be required to backfill schools for these losses in
the six "negative bailout" counties.
Staff notes that the fiscal estimate noted above is derived from
a ten-year sample of actual "negative bailout" amounts for
Stanislaus County, the largest of these six counties, and
estimated amounts from the remaining five affected counties
using property tax data in the State Controller's Assessed
Valuation Annual Report. The ten-year average increase in the
"negative bailout" amount for Stanislaus County from 1998-99 to
2008-09 is $152,326. The 2007-08 assessed valuation for
Stanislaus
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SB 684 (Cogdill)
County represents 81.36% of the total assessed valuation for the
six affected counties. For purposes of estimation, this
analysis assumes that there would be a similar ratio for the
"negative bailout" amounts, resulting in a total estimated
General Fund impact of $187,225 in 2011-12. Since this bill
would cap the "negative bailout" property tax allocations at
2010-11 levels, the fiscal impact would increase annually by a
similar amount. The actual fiscal impact would depend upon the
property tax growth rates, which have fluctuated from -6.9% to
+16.97% in Stanislaus County over the past 10 years.
Staff notes that SB 684 is not the first attempt to cap
"negative bailout" amounts in these six counties. SB 215
(Denham, 2007), SB 9 (Denham, 2006), SB 756 (Denham, 2003), and
AB 698 (Cannella, 1996) died in the Senate Appropriations
Committee, and AB 1069 (Cardoza, 1997) died in the Assembly
Appropriations Committee. Governor Wilson vetoed AB 472
(Cardoza, 1997), arguing that the counties received additional
fiscal relief when the state took over trial court funding.