BILL ANALYSIS �
AB 866
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 866 (Yamada) - As Amended: April 6, 2011
Policy Committee: Local
GovernmentVote:9-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill enacts property tax relief provisions for Yolo County.
Specifically, this bill:
1)Increases the total amount of ad valorem property tax revenue
that is otherwise required to be allocated to that county by
the county equity amount; and decreases the total amount of ad
valorem property tax revenue that is otherwise required to be
allocated to the county Educational Revenue Augmentation Fund
(ERAF) by the county equity amount.
2)Finds and declares that a special law is necessary because of
the unique fiscal pressures being encountered by Yolo County
class in providing vital public services.
3)States that reimbursement to local agencies and school
districts shall be made if the Commission on State Mandates
determines that this bill contains costs mandated by the
state.
FISCAL EFFECT
Increase in General Fund expenditures of approximately $1.5
million annually to backfill local property taxes shifted from
school districts to the County of Yolo. Minor state-
reimbursable costs to the auditor of Yolo County for
recalculating the property tax allocations.
COMMENTS
1)Purpose . According to the author, AB 866 would provide Yolo
AB 866
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County relief from the obligation under the ERAF statutes to
shift property tax funds that are not in the County's
possession. When the City of West Sacramento incorporated in
1987, Yolo County transferred a significant portion of its
property tax revenues to the new city. Shortly afterwards,
West Sacramento formed a large redevelopment project area that
diverted even more property tax revenues from the County.
Subsequently, the state reclaimed the AB 8 bailout funds with
ERAF shifts, but, did not reclaim such funds from incorporated
cities. As a result, Yolo County, which has the lowest rate
of property tax retention in the state, seeks to adjust the
State's ERAF shift from the County for only the amount of the
AB 8 bailout amounts transferred to West Sacramento after its
incorporation.
2)Background . In 1979, the Legislature and governor shifted a
portion of schools' property tax revenues to cities, counties
and special districts to enhance those agencies' property tax
revenues following Proposition 13's enactment (AB 8, L.
Greene). To implement the 1992-93 and 1993-94 State Budgets,
the state permanently shifted approximately $3.4 billion in
property tax revenues from local governments to schools by
creating an ERAF in each county. In 1992, counties shifted
$525 million based on a consensus plan proposed by the CA
State Association of Counties, which was generally reflective
of their AB 8 balances. In 1993, counties shifted nearly $2
billion based on a combination of counties' taxable sales, AB
8, and other factors.
3)ERAF . Each year, property taxes are collected by the county
assessor, and are then allocated back to cities, special
districts, the incorporated county, and K-12 and community
college districts in accordance with formulas established over
time dating back to Proposition 13. In response to serious
budgetary shortfalls in the early 1990s, the Legislature and
administration permanently redirected over $3 billion of
property taxes from cities, counties and special districts to
schools and community college districts. These redirected
funds reduce the state's funding obligation for school and
community college districts by a like amount.
4)Relevant legislation . Yolo County has supported and
sponsored, over the last 15 years, a number of bills to
address the county's low property tax problems. Most
recently, SB 85 (Cogdill), Chapter 5, Statutes of 2010,
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contained provisions that provided property tax relief to Yolo
County, the county with the second lowest share of combined
countywide and less than countywide property tax shares as of
2006-07. SB 85 increased the countywide property tax
allocation (and reduced school districts' allocation) by
$100,000 in 2011-12 and $200,000 in 2012-13 and thereafter for
Yolo County.
5)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081