BILL NUMBER: AB 2210 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 30, 2012
INTRODUCED BY Assembly Member Smyth
FEBRUARY 23, 2012
An act to amend Section 99 of the Revenue and Taxation
Code Section 27421 of the Government Code ,
relating to local government finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2210, as amended, Smyth. Local agencies:
jurisdictional changes: allocation of property tax revenues.
County assessors: notification.
Existing law provides formulas for the computation of the
allocation of property tax revenues among local agencies when
various jurisdictional changes occur, as provided. Existing law
requires, upon the filing of a specified application or resolution
for a jurisdictional change, the executive officer to give notice of
the filing to the assessor and auditor of each county within which
the territory subject to the jurisdictional change is located.
Existing law requires the auditor to estimate the amount of property
tax revenue generated within the territory and to notify the
governing body of each local agency whose service area or service
responsibility will be altered by the amount of, and allocation
factors with respect to, property tax revenue that is subject to a
negotiated exchange. requires a county assessor, upon
the request of the governing body of the jurisdiction where the
assessor performs the duty of assessing taxes, to furnish an estimate
of the assessed valuation of property within the jurisdiction for
the succeeding fiscal year.
This bill would make a clarifying change to the auditor's
notification requirement described above. This bill would also make
other technical, nonsubstantive changes to the provisions described
above.
This bill would require the assessor, in cooperation with the tax
collector, to estimate whether property valuations have decreased by
3% or more and, if so, require the assessor to issue a written report
to the governing body within 30 days. This bill would require the
assessor to notify entities affected by the decrease in property
valuation. By increasing the duties of local officials, this bill
would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares the
following:
(a) County governments are primarily responsible for local
property tax assessments, but the state retains a vested interest in
promoting equitable property tax assessments due to the public policy
and financial implications inherent with the assessment process.
(b) It is incumbent upon the state to ensure that public policy
supports a transparent and impartial assessment process to minimize
impacts on taxpayers.
(c) Fluctuations in property tax revenue have direct financial
consequences for the state's general fund due to the state's
obligation to guarantee minimum funding for schools, which the state
must make up the difference when revenues fall short.
(d) Unanticipated and significant drops in projected property tax
revenue not only impact the state and counties, but local
municipalities within each county.
(e) It is imperative for all levels of government to have
appropriate information about unanticipated declines in revenue in a
timely manner that allows for appropriate responses.
SEC. 2. Secti on 27421 of the
Government Code is amended to read:
27421. (a) The county assessor in each
county who is designated to perform the duty of assessing property
for a local taxing jurisdiction shall, upon request of the governing
body of such jurisdiction, excluding a school district, furnish not
later than May 15th of each year an estimate of the assessed
valuation of property within such the
jurisdiction for the succeeding fiscal year. Such
The request shall be made on or before February 20th of
each year. The estimate required herein shall contain estimates of
the total of each of the items contained on the assessment roll as
well as the estimated total valuation.
(b) Within 30 days of receiving the request by the governing body
of the jurisdiction, the assessor, in cooperation with the tax
collector, shall estimate whether property valuations have decreased
by 3 percent or more. If property valuations have decreased by 3
percent or more the assessor shall issue a written report notifying
the governing body before the end of the 30 days.
(c) Within 15 days of notifying the governing body, the assessor
shall notify the Department of Finance, the board of supervisors of
the county, the governing board of cities, affected school districts,
and any other entity affected by the decrease in property valuation.
SEC. 3. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.
SECTION 1. Section 99 of the Revenue and
Taxation Code is amended to read:
99. (a) For the purposes of the computations required by this
chapter:
(1) In the case of a jurisdictional change, other than a city
incorporation or a formation of a district as defined in Section
2215, the auditor shall adjust the allocation of property tax revenue
determined pursuant to Section 96 or 96.1, or the annual tax
increment determined pursuant to Section 96.5, for local agencies
whose service area or service responsibility would be altered by the
jurisdictional change, as determined pursuant to subdivision (b) or
(c).
(2) In the case of a city incorporation, the auditor shall assign
the allocation of property tax revenues determined pursuant to
Section 56810 of the Government Code and the adjustments in tax
revenues that may occur pursuant to Section 56815 of the Government
Code to the newly formed city or district and shall make the
adjustment as determined by Section 56810 in the allocation of
property tax revenue determined pursuant to Section 96 or 96.1 for
each local agency whose service area or service responsibilities
would be altered by the incorporation.
(3) In the case of a formation of a district as defined in Section
2215, the auditor shall assign the allocation of property tax
revenues determined pursuant to Section 56810 of the Government Code
to the district and shall make the adjustment as determined by
Section 56810 of the Government Code in the allocation of property
tax revenue determined pursuant to Section 96 or 96.1 for each local
agency whose service area or service responsibilities would be
altered by the formation.
(b) Upon the filing of an application or a resolution pursuant to
the Cortese-Knox-Hertzberg Local Government Reorganization Act of
2000 (Division 3 (commencing with Section 56000) of Title 5 of the
Government Code), but prior to the issuance of a certificate of
filing, the executive officer shall give notice of the filing to the
assessor and auditor of each county within which the territory
subject to the jurisdictional change is located. This notice shall
specify each local agency whose service area or responsibility will
be altered by the jurisdictional change.
(1) (A) The county assessor shall provide to the county auditor,
within 30 days of the notice of filing, a report which identifies the
assessed valuations for the territory subject to the jurisdictional
change and the tax rate area or areas in which the territory exists.
(B) The auditor shall estimate the amount of property tax revenue
generated within the territory that is the subject of the
jurisdictional change during the current fiscal year.
(2) The auditor shall estimate what proportion of the property tax
revenue determined pursuant to paragraph (1) is attributable to each
local agency pursuant to Sections 96.1 and 96.5.
(3) Within 45 days of notice of the filing of an application or
resolution, the auditor shall notify the governing body of each local
agency whose service area or service responsibility will be altered
by the jurisdictional change of the amount of, and allocation factors
with respect to, property tax revenue estimated pursuant to
paragraph (2) that is subject to a negotiated exchange.
(4) Upon receipt of the estimates pursuant to paragraph (3), the
local agencies shall commence negotiations to determine the amount of
property tax revenues to be exchanged between and among the local
agencies. Except as otherwise provided, this negotiation period shall
not exceed 60 days. If a local agency involved in these negotiations
notifies the other local agencies, the county auditor, and the local
agency formation commission in writing of its desire to extend the
negotiating period, the negotiating period shall be 90 days.
The exchange may be limited to an exchange of property tax
revenues from the annual tax increment generated in the area subject
to the jurisdictional change and attributable to the local agencies
whose service area or service responsibilities will be altered by the
proposed jurisdictional change. The final exchange resolution shall
specify how the annual tax increment shall be allocated in future
years.
(5) In the event that a jurisdictional change would affect the
service area or service responsibility of one or more special
districts, the board of supervisors of the county or counties in
which the districts are located shall, on behalf of the district or
districts, negotiate any exchange of property tax revenues. Prior to
entering into negotiation on behalf of a district for the exchange of
property tax revenue, the board shall consult with the affected
district. The consultation shall include, at a minimum, notification
to each member and executive officer of the district board of the
pending consultation and provision of adequate opportunity to comment
on the negotiation.
(6) Notwithstanding any other provision of law, the executive
officer shall not issue a certificate of filing pursuant to Section
56658 of the Government Code until the local agencies included in the
property tax revenue exchange negotiation, within the negotiation
period, present resolutions adopted by each such county and city
whereby each county and city agrees to accept the exchange of
property tax revenues.
(7) In the event that the commission modifies the proposal or its
resolution of determination, any local agency whose service area or
service responsibility would be altered by the proposed
jurisdictional change may request, and the executive officer shall
grant, 30 days for the affected agencies, pursuant to paragraph (4),
to renegotiate an exchange of property tax revenues. Notwithstanding
the time period specified in paragraph (4), if the resolutions
required pursuant to paragraph (6) are not presented to the executive
officer within the 30-day period, all proceedings of the
jurisdictional change shall automatically be terminated.
(8) In the case of a jurisdictional change that consists of a city'
s qualified annexation of unincorporated territory, an exchange of
property tax revenues between the city and the county shall be
determined in accordance with subdivision (e) if that exchange of
revenues is not otherwise determined pursuant to either of the
following:
(A) Negotiations completed within the applicable period or periods
as prescribed by this subdivision.
(B) A master property tax exchange agreement among those local
agencies, as described in subdivision (d).
For purposes of this paragraph, a qualified annexation of
unincorporated territory means an annexation, as so described, for
which an application or a resolution was filed on or after January 1,
1998, and on or before January 1, 2015.
(9) No later than the date on which the certificate of completion
of the jurisdictional change is recorded with the county recorder,
the executive officer shall notify the auditor or auditors of the
exchange of property tax revenues and the auditor or auditors shall
make the appropriate adjustments as provided in subdivision (a).
(c) Whenever a jurisdictional change is not required to be
reviewed and approved by a local agency formation commission, the
local agencies whose service area or service responsibilities would
be altered by the proposed change, shall give notice to the State
Board of Equalization and the assessor and auditor of each county
within which the territory subject to the jurisdictional change is
located. This notice shall specify each local agency whose service
area or responsibility will be altered by the jurisdictional change
and request the auditor and assessor to make the determinations
required pursuant to paragraphs (1) and (2) of subdivision (b). Upon
notification by the auditor of the amount of, and allocation factors
with respect to, property tax subject to exchange, the local
agencies, pursuant to the provisions of paragraphs (4) and (6) of
subdivision (b), shall determine the amount of property tax revenues
to be exchanged between and among the local agencies. Notwithstanding
any other provision of law, no such jurisdictional change shall
become effective until each county and city included in these
negotiations agrees, by resolution, to accept the negotiated exchange
of property tax revenues. The exchange may be limited to an exchange
of property tax revenue from the annual tax increment generated in
the area subject to the jurisdictional change and attributable to the
local agencies whose service area or service responsibilities will
be altered by the proposed jurisdictional change. The final exchange
resolution shall specify how the annual tax increment shall be
allocated in future years. Upon the adoption of the resolutions
required pursuant to this section, the adopting agencies shall notify
the auditor who shall make the appropriate adjustments as provided
in subdivision (a). Adjustments in property tax allocations made as
the result of a city or library district withdrawing from a county
free library system pursuant to Section 19116 of the Education Code
shall be made pursuant to Section 19116 of the Education Code, and
this subdivision shall not apply.
(d) With respect to adjustments in the allocation of property
taxes pursuant to this section, a county and any local agency or
agencies within the county may develop and adopt a master property
tax transfer agreement. The agreement may be revised from time to
time by the parties subject to the agreement.
(e) (1) An exchange of property tax revenues that is required by
paragraph (8) of subdivision (b) to be determined pursuant to this
subdivision shall be determined in accordance with all of the
following:
(A) The city and the county shall mutually select a third-party
consultant to perform a comprehensive, independent fiscal analysis,
funded in equal portions by the city and the county, that specifies
estimates of all tax revenues that will be derived from the annexed
territory and the costs of city and county services with respect to
the annexed territory. The analysis shall be completed within a
period not to exceed 30 days, and shall be based upon the general
plan or adopted plans and policies of the annexing city and the
intended uses for the annexed territory. If, upon the completion of
the analysis period, no exchange of property tax revenues is agreed
upon by the city and the county, subparagraph (B) shall apply.
(B) The city and the county shall mutually select a mediator,
funded in equal portions by those agencies, to perform mediation for
a period not to exceed 30 days. If, upon the completion of the
mediation period, no exchange of property tax revenues is agreed upon
by the city and the county, subparagraph (C) shall apply.
(C) The city and the county shall mutually select an arbitrator,
funded in equal portions by those agencies, to conduct an advisory
arbitration with the city and the county for a period not to exceed
30 days. At the conclusion of this arbitration period, the city and
the county shall each present to the arbitrator its last and best
offer with respect to the exchange of property tax revenues. The
arbitrator shall select one of the offers and recommend that offer to
the governing bodies of the city and the county. If the governing
body of the city or the county rejects the recommended offer, it
shall do so during a public hearing, and shall, at the conclusion of
that hearing, make written findings of fact as to why the recommended
offer was not accepted.
(2) Proceedings under this subdivision shall be concluded no more
than 150 days after the auditor provides the notification pursuant to
paragraph (3) of subdivision (b), unless one of the periods
specified in this subdivision is extended by the mutual agreement of
the city and the county. Notwithstanding any other provision of law,
except for those conditions that are necessary to implement an
exchange of property tax revenues determined pursuant to this
subdivision, the local agency formation commission shall not impose
any fiscal conditions upon a city's qualified annexation of
unincorporated territory that is subject to this subdivision.
(f) Except as otherwise provided in subdivision (g), for the
purpose of determining the amount of property tax to be allocated in
the 1979-80 fiscal year and each fiscal year thereafter for those
local agencies that were affected by a jurisdictional change which
was filed with the State Board of Equalization after January 1, 1978,
but on or before January 1, 1979. The local agencies shall determine
by resolution the amount of property tax revenues to be exchanged
between and among the affected agencies and notify the auditor of the
determination.
(g) For the purpose of determining the amount of property tax to
be allocated in the 1979-80 fiscal year and each fiscal year
thereafter, for a city incorporation that was filed pursuant to
Sections 54900 to 54904, inclusive, of the Government Code after
January 1, 1978, but on or before January 1, 1979, the amount of
property tax revenue considered to have been received by the
jurisdiction for the 1978-79 fiscal year shall be equal to two-thirds
of the amount of property tax revenue projected in the final local
agency formation commission staff report pertaining to the
incorporation multiplied by the proportion that the total amount of
property tax revenue received by all jurisdictions within the county
for the 1978-79 fiscal year bears to the total amount of property tax
revenue received by all jurisdictions within the county for the
1977-78 fiscal year. Except, however, in the event that the final
commission report did not specify the amount of property tax revenue
projected for that incorporation, the commission shall by October 10
determine pursuant to Section 54790.3 of the Government Code the
amount of property tax to be transferred to the city.
The provisions of this subdivision shall also apply to the
allocation of property taxes for the 1980-81 fiscal year and each
fiscal year thereafter for incorporations approved by the voters in
June 1979.
(h) For the purpose of the computations made pursuant to this
section, in the case of a district formation that was filed pursuant
to Sections 54900 to 54904, inclusive, of the Government Code after
January 1, 1978, but before January 1, 1979, the amount of property
tax to be allocated to the district for the 1979-80 fiscal year and
each fiscal year thereafter shall be determined pursuant to Section
54790.3 of the Government Code.
(i) For the purposes of the computations required by this chapter,
in the case of a jurisdictional change, other than a change
requiring an adjustment by the auditor pursuant to subdivision (a),
the auditor shall adjust the allocation of property tax revenue
determined pursuant to Section 96 or 96.1 or its predecessor section,
or the annual tax increment determined pursuant to Section 96.5 or
its predecessor section, for each local school district, community
college district, or county superintendent of schools whose service
area or service responsibility would be altered by the jurisdictional
change, as determined as follows:
(1) The governing body of each district, county superintendent of
schools, or county whose service areas or service responsibilities
would be altered by the change shall determine the amount of property
tax revenues to be exchanged between and among the affected
jurisdictions. This determination shall be adopted by each affected
jurisdiction by resolution. For the purpose of negotiation, the
county auditor shall furnish the parties and the county board of
education with an estimate of the property tax revenue subject to
negotiation.
(2) In the event that the affected jurisdictions are unable to
agree, within 60 days after the effective date of the jurisdictional
change, and if all the jurisdictions are wholly within one county,
the county board of education shall, by resolution, determine the
amount of property tax revenue to be exchanged. If the jurisdictions
are in more than one county, the State Board of Education shall, by
resolution, within 60 days after the effective date of the
jurisdictional change, determine the amount of property tax to be
exchanged.
(3) Upon adoption of any resolution pursuant to this subdivision,
the adopting jurisdictions or State Board of Education shall notify
the county auditor who shall make the appropriate adjustments as
provided in subdivision (a).
(j) For purposes of subdivision (i), the annexation by a community
college district of territory within a county not previously served
by a community college district is an alteration of service area. The
community college district and the county shall negotiate the
amount, if any, of property tax revenues to be exchanged. In these
negotiations, there shall be taken into consideration the amount of
revenue received from the timber yield tax and forest reserve
receipts by the community college district in the area not previously
served. In no event shall the property tax revenue to be exchanged
exceed the amount of property tax revenue collected prior to the
annexation for the purposes of paying tuition expenses of residents
enrolled in the community college district, adjusted each year by the
percentage change in population and the percentage change in the
cost of living, or per capita personal income, whichever is lower,
less the amount of revenue received by the community college district
in the annexed area from the timber yield tax and forest reserve
receipts.
(k) At any time after a jurisdictional change is effective, any of
the local agencies party to the agreement to exchange property tax
revenue may renegotiate the agreement with respect to the current
fiscal year or subsequent fiscal years, subject to approval by all
local agencies affected by the renegotiation.