BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 684
                                                                  Page  1

          Date of Hearing:   August 19, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    SB 684 (Cogdill) - As Amended:  June 22, 2009 

          Policy Committee:                             Local  
          GovernmentVote:7-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable: No

           SUMMARY  

          This bill caps "negative bailout" property tax allocations at  
          their 2010-11 levels, beginning in the 2011-12 fiscal year. It  
          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 Proposition 13 in 1978.

           FISCAL EFFECT  

          A reduction of property tax allocations to school districts,  
          totaling $187,000 in 2001-12, $375,000 in 2012-13, and  
          increasing by similar amounts in subsequent years. Under  
          Proposition 98, the state GF will be required to backfill the  
          loss in property taxes to schools.

           COMMENTS  

          1)Following voter approval of Proposition 13, which cut local  
            property taxes by more than 50%, 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, 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. 









                                                                  SB 684
                                                                  Page  2

            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.  For six "negative bailout"  
            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 relatively larger health and welfare payments.

           2)Rationale  . Supporters of the bill state that the negative  
            bailout allocations exacerbate fiscal pressures faced by these  
            counties due to state budget actions and weak economic  
            activity. 

           3)Previous legislation  . The current bill is the most recent in a  
            long list of measures attempting 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) was held under submission by this committee.   
            Governor Wilson vetoed AB 472 (Cardoza, 1997), stating that  
            that the counties received additional fiscal relief when the  
            state took over trial court funding.  

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081