BILL ANALYSIS �
AB 191
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Date of Hearing: April 6, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 191 (Berryhill and Galgiani) - As Introduced: January 26,
2011
Policy Committee: Local
GovernmentVote:8-1
Urgency: Yes State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill reverses a specified property tax shift to schools
from six counties that was a result of legislation passed
following enactment of Proposition 13 in 1978. The six counties
(Alpine, Lassen, Mariposa, Plumas, Stanislaus and Trinity) are
known as "negative bailout" or "negative sum" counties because
they had a portion of their property taxes shifted to school
districts after the enactment of legislation to address the
effects of Proposition 13 in 1979. Specifically, this bill:
1)Requires, for purposes of property tax revenue allocations,
the county auditor of a negative sum county, as defined, to
carry out calculations and allocations that would reverse the
shift of specified county property tax revenue allocated to
schools.
2)States that reimbursement to local agencies and school
districts shall be made if the Commission on State Mandates
determines that this act contains costs mandated by the state.
FISCAL EFFECT
Increase in General Fund expenditures of approximately $3
million annually to backfill local property taxes shifted from
school districts to six specified counties. Backfill amounts in
subsequent years would increase or decrease, depending on the
change in assessed valuations.
COMMENTS
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1)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.
2)Background-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. The bailout package 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.
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
3)Related legislation. This bill is substantially similar to AB
12 X1 (Berryhill and Galgiani).
4)Previous legislation. This bill is the most recent in a long
list of measures attempting to cap negative bailout amounts in
these six counties. SB 85, Chapter 5, Statutes of 2010,
(Cogdill) capped the amount of property tax reduction for the
negative bailout counties on a going-forward basis. SB 684
(Cogdill) was held on Suspense in this committee in 2009. SB
215 (Denham, 2007), SB 9 (Denham, 2006), SB 756 (Denham,
2003), and AB 698 (Cannella, 1996) died in Senate
Appropriations, and AB 1069 (Cardoza, 1997) was held on
Suspense in 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
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funding.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081