BILL ANALYSIS �
AB 504
Page 1
Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 504 (Williams) - As Amended: May 10, 2011
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes any newly unified school district in the
County of Santa Barbara to continue the collection of the parcel
taxes originally imposed and collected in former school
districts. Specifically, this bill:
1)Provides that the newly unified district may do all of the
following:
a) Continue to impose any qualified special taxes imposed
in any former school district, provided that the revenues
derived from those taxes remain segregated on a
geographical basis conforming to the former boundaries of
the school districts prior to unification.
b) Allow a segregation of revenues derived from the
imposition of the new special taxes on a geographical basis
conforming to the former boundaries of the school districts
prior to unification.
2)Declares that a special law is needed to allow school
districts in the County of Santa Barbara that have merged to
form a unified school district to continue to impose qualified
special taxes that used to be imposed in any of the former
school districts in order to provide critical program support
in the unified school district in areas such as music, art,
mathematics and technology.
FISCAL EFFECT
To the extent the taxing powers of the district are clarified,
AB 504
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this bill could reduce the amount of state funds needed for
education.
COMMENTS
1)Purpose. The author states, "Assembly Bill 504 is clarifying
legislation that allows Santa Barbara School Districts to
maintain existing parcel tax revenue allotments once their
elementary and high school districts unify. AB 504 would also
allow the unified Santa Barbara School District to continue to
levy future parcel taxes as they do now so that residents are
allowed to continue paying for the schools which serve their
community."
The author stresses the proposed legislation is a continuation
of the status quo in all respects except one. Now there will
be one district instead of two. The justification for
applying this legislation to a single local entity is based
upon the unique configuration of the Santa Barbara school
district, which is one of only a handful of districts
statewide made up of non-coterminous districts, and the only
known such district that is seeking to unify with existing
separate outstanding parcel taxes in place.
2)Arguments in Support . The proponents argue this bill is
necessary to preserve the intent of the local voters, who
passed the two parcel tax measures in 2008, if the school
districts decide to merge. They assert that the school
districts cannot afford to lose the parcel tax funding, as
they face epic budget cuts. Finally, the proponents reiterate
that AB 504 will ensure that the existing parcel tax revenues
will be segregated and used only for the purposes approved by
the voters.
3)Background . Prior to 1970, the state's K-12 schools largely
relied on local property taxes levied at different rates and
yielding different amounts per pupil. State court rulings in
the Serrano v. Priest equalization cases forced the state to
revise basic school finance and established the revenue limit
system. In order to reduce the differences in per-pupil
amounts, California created a system that combines local
property tax revenues with state general aid and allowed the
state to control the two revenue sources on a per pupil basis.
In 1978, Proposition 13 significantly reduced property tax
revenues, forcing the state to replace the lost revenues.
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School districts still have limited authority to generate
local revenues from qualified special taxes, but most school
funding is either received from the state or federal
governments, or controlled by the state through revenue limits
required to equalize per-pupil funding.
4)Parcel Tax. A parcel tax is a flat fee imposed by a local
government on each parcel, rather than on the assessed value
of property, located within the local entity's jurisdiction.
The same dollar amount of tax is assessed on each parcel of
property, whether the parcel is one acre or 100 acres.
Existing law does not specify how the special tax proceeds may
be spent, but a local school board can specify in the ballot
measure how the funds will be used. Generally, local parcel
taxes provide funding for teacher salaries, books, materials
and supplies, computers, and art, music and sports programs.
A parcel tax is a qualified special tax, allowable under
Proposition 13. Under existing law, a school district may
impose a qualified special tax within that district; however,
the special tax must apply uniformly to all taxpayers or real
property within the district and must be approved by a
two-thirds vote of the qualified electors of the district.
5)The Santa Barbara School Districts' Dilemma . The school
districts in question are comprised of non-coterminous
elementary and high school districts. The Santa Barbara high
school district includes the territory of four separate
"feeder" elementary districts, in addition to the Santa
Barbara Elementary School district. According to the author,
the Santa Barbara Elementary and High School Districts have
made more than $20 million in budget cuts over the last three
years, and, recently, have decided to unify their elementary
and secondary districts in order to save $6 million annually.
In fact, since 2004, those school districts have already acted
as unified and have been governed by a single board of
education and administration, even though they have maintained
separate revenue sources from two distinct parcel tax
measures.
While existing law allows non-coterminous school districts to
merge, it does not expressly address the continued collection
of existing parcel taxes or use of the parcel tax revenues.
In contrast, in the case of bonded indebtedness, existing law
specifically provides that a new district may sell unsold
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bonds and use the funds, but only for the purposes for which
the bonds were authorized initially. Furthermore, existing
law states that the funds derived from bonds issued by the
former district may only be used in that district's territory,
unless the new district assumes the bonded indebtedness, in
which case the money can be used for any purpose for which the
bonds were originally issued.
If the school districts were to unify, it is doubtful that the
newly created district will be able to continue collecting the
parcel taxes originally approved by the voters in two separate
school districts. There is no express statutory authorization
for a new unified district to continue the imposition and
collection of the voter approved parcel taxes once the former
districts are merged out of existence. As pointed out by the
proponents of this bill, while the unification of the school
districts would generate approximately $6 million in savings,
it will essentially terminate another source of revenue for
the schools - the parcel taxes originally approved by the
voters in the former school districts.
6)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081