BILL ANALYSIS
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THIRD READING
Bill No: SB 684
Author: Cogdill (R)
Amended: As introduced
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 5-0, 4/1/09
AYES: Wiggins, Cox, Aanestad, Kehoe, Wolk
SENATE APPROPRIATIONS COMMITTEE : 12-0, 5/28/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Walters, Wyland, Yee
NO VOTE RECORDED: Wolk
SUBJECT : Local government finance
SOURCE : Stanislaus County
DIGEST : This bill, beginning in 2011-12, requires the
county auditor of a negative sum county, when determining
the reduction of property tax revenues to the county, to
apply a reduction amount equal to its 2010-11 reduction
amount.
ANALYSIS : Proposition 13 (1978) reduced local property
tax revenues by 57 percent. The Legislature responded by
bailing out local governments with $858 million in block
grants. $436 million went to the counties [SB 154 (Rodda),
Chapter 292, Statutes of 1978]. The Legislature also cut
counties' payments for health and welfare programs by $1
billion.
CONTINUED
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In 1979, the Legislature permanently restructured 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 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.
This three-part package was intended to provide
proportionate bailout to all counties.
This bill, beginning in 2011-12, requires the county
auditor of a "negative sum" county, when determining the
reduction of property tax revenues to the county, to apply
a reduction amount equal to its 2010-11 reduction amount.
Background
For six counties (Alpine, Lassen, Mariposa, Plumas,
Stanislaus, and Trinity), 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 so-called "negative bailout
counties," property tax revenues were reduced rather than
augmented to balance the relatively larger health and
welfare payments.
In 1982, the Department of Finance discovered that the six
counties had not been shifting their "negative bailout"
amounts to schools. The Legislature forgave the past $5.5
million miscalculations, clarified that some counties would
receive a "negative bailout" amount, and required counties
to shift their "negative bailout" amounts in future years
[AB 2162 (Condit), Chapter 898, Statutes of 1983].
Since 1983, Stanislaus County has transferred more than $52
million in "negative bailout" to the schools. Its
"negative bailout" increases annually, just as property tax
revenues grow. Stanislaus County officials argue that the
"negative bailout" payments are an unintended consequence
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of AB 8 because the Legislature wanted to relieve the
fiscal pressures on counties, not increase them.
Stanislaus County officials want the Legislature to freeze
the growth in their "negative bailout" payments.
Prior legislation . This bill is not the first attempt of
the six counties to cap their "negative bailout payments."
In 1996, AB 698 (Cannella, 1996) died in the Senate
Appropriations Committee and AB 1069 (Cardoza, 1996) died
in the Assembly Appropriations Committee. In 1997,
Governor Wilson vetoed AB 472 (Cardoza, 1997), arguing that
the counties received additional fiscal relief when the
state took over trial court funding. The Senate Local
Government Committee passed SB 756 (Denham, 2003), SB 9
(Denham, 2006), and SB 215 (Denham, 2007), but those bills
died on the Senate Appropriations Committee's suspense
file.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Increase in school aid
$187*General
* 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.
SUPPORT : (Verified 5/28/09)
Stanislaus County (source)
AGB:mw 5/29/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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