BILL ANALYSIS �
AB 1957
Page 1
Date of Hearing: April 11, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1957 (Gordon) - As Amended: March 15, 2012
SUBJECT : Tax collection.
SUMMARY : Authorizes counties to permit tax collectors to reduce
the quantity of information required to be published in a
newspaper regarding real property defaulted to the county,
lowers the minimum interest rate for property tax refunds and
adds tax collection to the kinds of course content eligible for
the continuing education requirements of county treasurers and
tax collectors. Specifically, this bill :
1)Authorizes the board of supervisors to allow, by resolution,
the tax collector to post certain notices on the tax
collector's website instead of in a newspaper, provided that
the tax collector publishes in a newspaper a 'shortened
publication' stating the tax collector's website, the specific
Internet address at which the notice may be viewed, and the
location of public access computer terminals that may be used
to view the notice.
2)Eliminates the requirement that counties pay interest on
property tax refunds at the greater of 3% per annum or the
"county pool apportioned rate", and instead, requires payment
only at the "county pool apportioned rate", as specified.
3)Authorizes elected and appointed county treasurers, tax
collectors and treasurer-tax collectors to count course
material on tax collection towards meeting their statutory
continuing education program requirements.
4)Makes certain other technical and non-substantive amendments.
EXISTING LAW :
1)Requires a tax collector to publish notice of due and
delinquency dates, penalties, and payment options, on or
before the day when taxes are payable to the tax collector.
Existing law also requires a tax collector to publish notice
of an impending default, power and intent of collector, an
affidavit of collector, a delinquent list, and an intended
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sale. Existing law requires the notices to be published in a
newspaper, as specified.
2)Requires the payment of interest on property tax refunds at
the greater of 3% per annum or the county pool apportioned
rate.
3)Requires a county treasurer, whether elected or appointed, to
complete a valid continuing course of study on or before June
30 of each two-year period, and to provide certification
of completion of that course to the Controller. The continuing
education program is required to consist of, at a minimum, 24
hours or an equivalent amount of continuing education units
within the discipline of treasury management, public finance,
public administration, governmental accounting, or directly
related subjects, as specified.
FISCAL EFFECT : None
COMMENTS :
1)This bill intends to make three separate changes to statutes
of interest to county treasurers and tax collectors: a) to add
tax collection to the kinds of course content eligible for the
continuing education requirements of county treasurers, b) to
substantially reduce the information required to be published
in newspapers in conjunction with the public sale
of property defaulted to the county, and, c) to lower the
interest rate ceiling for property tax refunds. AB 1957 is
sponsored by the California Association of County Treasurers
and Tax Collectors.
2)State law currently requires county treasurers, tax collectors
and treasurer-tax collectors to complete a prescribed course
of study during the person's term of office or employment
(48 hours over four years for elected officials, or 24 hours
over two years for appointed officials) within the disciplines
of treasury management, public finance, public administration,
governmental accounting, or directly related subjects. This
bill would simply add tax collection to that list of subjects
eligible for continuing education credit.
Similar changes were made in the 1999 Local Agency Omnibus Act
(SB 275, Committee on Local Government), adding public
administration and governmental accounting to the subject
list.
AB 1957
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3)Under current law, counties must pay interest on property tax
refunds at the greater of 3% per year or the "county pool
apportioned rate". The statute defines the county pool
apportioned rate as "the annualized rate of interest earned on
the total amount of pooled idle funds from all accounts held
by the county treasurer, in excess of the county treasurer's
administrative costs with respect to that amount" as of a
particular date. This bill would remove the 3% floor and
simply peg the refund interest rate to the county pool
apportioned rate, allowing the counties to save money on tax
refund interest rate payments.
According to the sponsor, "�w]ith the current economic
situation, a county's pool apportioned rate may be or will
drop to less than 3 percent. If the pool rate drops below 3
percent, as it does often in a down economy, the county pays
more in interest than the interest that the county can earn."
The California Taxpayers Association opposes the lowering the
floor on the tax refund interest rate, stating that
"Sacramento, for example, charges taxpayers an annualized
interest rate of approximately 9 percent on underpayments, but
under this bill, would only pay taxpayers a rate of less than
3 percent on overpayments. Such a policy unfairly
disadvantages taxpayers."
Currently, the pool rate for all 58 counties is below 3%,
ranging from 0.0045% in Plumas county to 2.58% in Tulare
county. The rates for the state's five largest counties are:
Los Angeles (1.29%), Orange (0.56%), San Diego (0.66%), San
Bernardino (0.994%), and Santa Clara (0.7903%).
4)One other piece of this bill is the proposal to dramatically
shorten the length of the public notice that counties are
required to publish detailing the impending default and sale
of tax-defaulted property.
Current law requires tax collectors to annually publish a notice
of impending default for individuals who fail to pay taxes on
real property. The notice must be in the form of an
affidavit, and must show the amount due, time of default,
specified details regarding redemption, and certain facts
related to the proposed listing and sale of the defaulted
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property. It may also include the names of the owners and
specific parcel numbers. Publications must be made once a week
for three successive weeks in a regularly published paper of
general circulation in the county. The resulting publication
can be very long, potentially requiring dozens of column
inches. Counties are also separately required to make
reasonable efforts to contact the assessee of the property in
default (see, e.g., Revenue and Taxation Code section 3704.7).
The notice of intended sale must also be published once a week
for three successive weeks in a paper of general circulation.
It must include date, time and place of the intended sale, a
description of the property, name of the last assessee,
minimum acceptable bid, and specified details regarding
redemption and disposition of remaining proceeds. Reasonable
efforts must also be made to contact the owner directly.
In order to minimize publishing costs, this bill would
authorize the board of supervisors, by resolution, to permit
the tax collector to instead make the required posting on his
or her website. The tax collector would only need to
physically publish a "shortened publication" stating that the
notice is available on the tax collector's website, and
provide the website addresses for the tax collector and the
notice. It must also include information on the location of
public computer terminals to access the specified websites.
As an example, Kern County expects the shortened publication
to take up less than 10 column inches. That county also
operates an online listing of properties it has the power to
sell (along with owner names and amounts owed), which runs to
150 pages and includes a web link to a satellite map for each
of the parcels in question.
5)The justification for this change in notice requirements is
largely monetary: the sponsor states that giving county
treasurer-tax collectors the "option to display ?required
notices on the County website?would realize significant cost
savings for cash-strapped local governments, while maintaining
an important taxpayer notification system." For example, "Kern
County during the 2010-2011 fiscal year alone spent $98,143.25
for all publications required by current law. As additional
examples Monterey and Ventura Counties spent $33,450.87 and
$25,898.88 last fiscal year, respectively. With this
supplementary tool?the newspaper publication could be
AB 1957
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shortened to one-tenth of its current size, realizing
significant savings for the county."
The California Newspaper Publishers Association (CNPA) opposes
this "shortened publication" alternative because they believe
it will "objectively make this information hard to get" and
reduce public attention to the matter. Seeing the published
long-form notices as a means to "deputize�] the entire
community" and "create�] social pressure" via "a shame factor
that cannot be duplicated by a brief referral ad to an obscure
government website". As such, "�a]llowing public notices to
be solely posted on an Internet web site is a breach of the
public trust and private property rights." CNPA contends that
any fair public notice must be independently published,
tangible and preserved, conveniently accessible, and
verifiable.
Furthermore, CNPA counters that the publishing costs cited by
the author as the impetus for the bill can be recouped to some
extent via existing law. Revenue and Taxation Code 2621
authorizes tax collectors to recover $10 dollars on each
separate valuation on the roll for preparing the delinquent
tax records and giving notice of delinquency. To the extent
that this recovery provision is insufficient to recoup the
full cost of publishing, CNPA argues that it should simply be
raised instead of truncating the notice.
6)While the proposed "shortened publication" provision is
permissive, it represents a substantial shift away from the
traditional notice regime. The alternative published notice
would likely be very short, requiring only a brief statement
announcing the availability of the notice online, two website
addresses, and the location of a public access computer
terminal in the county. There would be no information
published about any of the individual properties being listed
or sold.
The real question at hand is whether or not individuals in the
community continue to derive sufficient useful notice from the
printed notices now required by law to justify the expense of
publishing them.
According to the sponsor, there is some limited data to
suggest that traditional public notices are not particularly
AB 1957
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effective. For example, Kern County advertised the names of
1,208 individuals who were owed money (unclaimed warrants) by
the county, and paid $9,670 to run those ads for two
consecutive weeks. The county received only 49 claims, at an
average of $165 per claim. This represented a 4% response
rate at a cost of $197 per respondent - meaning that the ads
themselves cost the county more than the taxpayers received as
a result of the notice. The neighboring county of Merced
similarly claims about a 1% response rate. Incomplete reports
from 36 counties show that county tax collectors spent $1.37
million on notice publication in FY 2010-11.
Conversely, targeted advertising is viewed as much more
effective. The sponsor contends that while Los Angeles County
"has seen no correlation between newspaper notification and
redemption", the county did find "a strong correlation between
mailing of 'courtesy' notices in June and payment of
delinquent taxes before the end of the fiscal year?" According
to their figures, nearly 29% of the county's total delinquent
amount ($634.6 million) was paid in the month following the
mailing of the 'courtesy' notice."
According to opponents, newspapers are still heavily relied
upon by Americans: more than 71% of U.S. adults, or nearly 166
million people, read a newspaper in print or online in the
past week. However, only 62% of adult Americans had broadband
Internet connections at home, according to a 2011 Pew report.
As such, printed newspapers remain the most read, most
reliable place to read and establish legal proof of public
notices.
Opponents also cite a 2001 survey by the Arizona Newspapers
Association that found strong levels of support in Arizona for
newspaper-based public notices:
a) 82% of individuals surveyed regularly or sometimes read
or looked at legal notices in newspapers while 87% never
looked at legal notices on the web.
b) 63% of respondents felt that it was important or very
important to continue publishing legal and public notices
in the newspaper.
c) 58% of respondents felt that newspaper-based public
notices helped make local officials more careful about they
spend taxpayers' money.
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d) 68% of respondents felt that public agencies should
publish legal and public notices only in newspapers (7%
said notices should be published on the web only and 2%
said both).
The Committee may wish to inquire of supporters and opponents
as to how and by whom the current published notices are
utilized, and also whether or not those notices provide
benefits sufficient to justify their ongoing cost.
The Committee may also wish to consider whether an increase in
the $10 ceiling in the county's cost recovery provisions might
be a more direct and less disruptive means of addressing the
financial strain borne by the counties.
1)In 2009, this Committee heard AB 715 (Caballero), which would
have authorized city clerks to publish and post the full text
of city ordinances on that city's Internet Web site instead of
in a newspaper of general circulation. That bill was passed
by the committee (9-0), and passed on the Assembly floor
(75-0), but was subsequently amended to address an unrelated
issue.
2)Support arguments : The sponsor argues that the bill would
"realize significant cost-savings for cash-strapped local
governments, while maintaining an important taxpayer
notification system?�W]ith the current economic climate and in
the wake of increased costs from realignment of state services
to county governments, the ability to publish shortened
notices �in] newsprint and give unlimited information to the
public on the internet would provide significant fiscal relief
to counties."
The provision lowering the interest rate floor on property tax
refunds would benefit counties by saving money.
Opposition arguments : CNPA contends that this bill would "harm
the public's right to know about important government
processes and harm private property rights." It would put
important information on websites that few people visit, while
newspapers "thrust this essential information" out and
"deputizes the entire community" to address the problem.
Posting on websites provides none of the permanency,
reliability and accessibility provided by newspaper
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publishing, and represents a breach of the public trust and
private rights.
The provision lowering the interest rate floor on property tax
refunds would harm tax payers by imposing a double standard
that is unfair to taxpayers.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of County Treasurers and Tax Collectors
�SPONSOR]
Opposition
Bay Area News Group
Brehm Communications Inc.
California Newspapers Partnership
California Newspaper Publishers Association
California Taxpayers Association
Howard Jarvis Taxpayers Association
The Press-Enterprise
The Record
The Star News
Individual letters (2)
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958