BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 902 HEARING: 6/29/11
AUTHOR: Alejo FISCAL: No
VERSION: 2/17/11 TAX LEVY: No
CONSULTANT: Grinnell
FEES FOR TAX SALE ADMINISTRATION
Allows Boards of Supervisors to increase fees for
administering tax sales.
Background and Existing Law
County boards of supervisors can levy authorized fees or
charges in amounts reasonably necessary to recover the
costs of providing products or services or the cost of
enforcing regulations (AB 151, Hannigan, 1983). The fees
or charges may reflect the average cost of providing
products or services or enforcing regulations, plus limited
indirect costs. If any person disputes the fee, then the
board of supervisors may request the auditor to study
whether the fee is reasonable.
Despite generally deregulating county fees 30 years ago,
state law set a large number of fees, including civil fees,
county recorder fees, and fees charged by agricultural
commissioners in absolute amounts until the Legislature
updated many of these by tying them instead to the county's
reasonable costs (SB 676, Wolk, 2009). However, many fees
charged by treasurer-tax collectors collected out of
proceeds of the sale remain as dollar amounts fixed in law
long ago, such as:
The fee for tax collectors to make reasonable
efforts to contact the last known assessee in person
not more than 120 days or less than 20 days prior to
the sale, which is currently fixed at $100.
The fee to reimburse the county for obtaining names
and last known mailing addresses, and for sending
notices required by law to persons of interest in the
initial tax sale when someone redeems the
tax-defaulted property, capped at $35 in existing law.
The fee for providing notice for all or any portion
of each separately-valued parcel of real property
AB 902 -- 2/17/11 -- Page 2
subject to a tax sale and sold to private parties,
also limited to $35.
Proposed Law
Assembly Bill 902 deletes the fixed fee amounts that tax
collectors may charge out of tax sale proceeds for making
reasonable efforts to contact last known assesses,
obtaining names and last known mailing addresses, and
sending and providing notices as part of tax sales. The
measure instead provides that county boards of supervisors
may fix the fees to reimburse the tax collector's actual
and reasonable costs. The bill specifies that the fee for
reimbursing the expense for obtaining names and last known
mailing addresses, and for sending notices required by law
to persons of interest in the initial tax sale when someone
redeems the tax-defaulted property must be distributed to
the county general fund. The measure also makes conforming
changes.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the Author, "Under
current law, a county with plans to offer at tax sale
residential, tax-defaulted property must make a reasonable
effort to contact the delinquent owner in person before
proceeding with a sale. A county is required to charge a
party of interest up to $100 to reimburse the costs of
locating and personally serving him or her, although costs
typically run higher than this cap. Cost drivers, such as
fuel, insurance and inflation, have eroded the ability of
tax collectors to recover their expenses above the $100 cap
currently in statute. AB 902 will remove the statutory cap
and instead tie the fee to the actual cost of providing
services. AB 902 removes the unfair financial burden from
counties by allowing reimbursement for costs incurred."
AB 902 -- 2/17/11 -- Page 3
2. The monster in the closet . In November, 2010, voters
approved Proposition 26, which reclassifies as taxes many
charges previously defined as fees, thereby triggering the
California Constitution's 2/3 vote requirements. The
initiative excluded from the definition of tax "a charge
imposed for a specific government service or product
provided directly to the payor that is not provided to
those not charged, and which does not exceed the reasonable
costs to the local government of providing the service or
product." Despite variances in reasonable costs from case
to case and county to county, AB 902's tie to the
reasonable costs of preparing a certificate of taxes paid
complies with the plain language of Proposition 26, and
therefore the Legislature can be enact the measure by a
majority vote of each house of the Legislature, and not the
2/3 supermajority required for bills increasing taxes While
Proposition 26 affects increases in everything from
environmental fees to tax swap bills to charges for using
parks and renting equipment, and many of those effects are
not yet tangible or even clearly understood, the initiative
does not change the Legislatures' authority to allow boards
of supervisors to increase fees to reflect reasonable costs
by majority vote.
3. Two for the road . The Committee will also hear AB 820
(Gordon) at its June 29, 2011 hearing. That bill deletes
the current statutory cap of $1 for assessors, tax
collectors, or auditors to prepare certificates of taxes
paid, providing instead for recovery of reasonable costs as
established by the board of supervisors.
Assembly Actions
Assembly Revenue and Taxation: 5-2
Assembly Floor: 48-24
Support and Opposition (06/22/11)
Support : California Association of County-Treasurer Tax
Collectors; California State Association of Counties;
Regional Council of Rural Counties; Dave Cortese,
President, Board of Supervisors, Santa Clara County; Board
of Supervisors, County of Fresno; County of San Luis
AB 902 -- 2/17/11 -- Page 4
Obispo; Board of Supervisors, Monterey County; Mary Lou
Andrade, Treasurer-Tax Collector, County of San Benito.
Opposition : Unknown.