BILL ANALYSIS �
AB 2210
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2210 (Smyth) - As Amended: April 30, 2012
SUBJECT : County assessors: notification.
SUMMARY : Requires a county assessor to, upon request, estimate
whether annual property valuations for the county have decreased
by 3% or more, and if so, to notify the requesting body and
other specified state and local agencies of the decrease.
Specifically, this bill :
1)Requires the assessor, within 30 days of receiving the request
by the governing body of the jurisdiction and in cooperation
with the tax collector, to estimate whether property
valuations have decreased by 3% or more.
2)Requires, if property valuations have decreased by an
estimated 3% or more, the assessor to issue a written report
notifying the requesting body before the end of the 30 day
period.
3)Requires the assessor, within 15 days of notifying the
requesting body, to 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 estimated decrease in property valuation.
4)Requires that, 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 existing law.
5)Makes findings and declarations related to the need for
up-to-date financial revenue information at the county level.
EXISTING LAW 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.
FISCAL EFFECT : Unknown. This bill is keyed fiscal and a
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state-mandated local program.
COMMENTS :
1)AB 2210 is intended to ensure that local governments may
receive adequate notice of any substantial decrease in
property tax valuations in order to help them make more
informed budget decisions. This measure is author-sponsored.
2)The genesis for this bill comes out of recent events in Los
Angeles County, where the Assessor is under investigation for
allegedly soliciting campaign contributions in exchange for
lowered property valuations. As part of that investigation,
it became known that the Assessor alerted the Los Angeles
County Board of Supervisors in April 2012 that the county's
property valuations and resulting tax base would be
dramatically lower than what he had
forecast in December 2011. Specifically, the Assessor
originally told the board in December 2011 that the estimated
decrease in the property tax base would be roughly $2.6
billion, but in his April 2012 communication to the board
revised the estimated decrease to $13.5 billion.
According to the author, "�a] drop of this magnitude has far
reaching impacts. The state is required to ensure schools are
funded at minimum levels, so any drop in property tax falls on
the state to backfill. Likewise, cities, school districts,
district hospitals, and other local municipalities that rely
on property taxes must adjust as property tax rolls are
adjusted. The blind-sided nature of the announced drop in LA
County complicates matters even further for every level of
budget planning."
3)Under existing law, the governing body of a local taxing
jurisdiction may ask (by February 20th) the assessor's office
to provide by May 15th an estimate of the assessed valuation
of the property within the jurisdiction. The purpose would be
to give the governing body a rough sense of what kind of
revenues to expect from property taxes, which would then help
guide that body's budget-making process.
This bill would authorize a kind of "early warning" notification
if the assessor's estimate of property valuation for the
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succeeding year would constitute a decrease of 3% or more. As
written, the assessor would be required to, upon request,
complete an estimation of property valuations within 30 days
of an initial request. If valuations were estimated to drop
more than 3%, the assessor would be required to issue a
written report to the governing body before the 30 days had
elapsed.
Furthermore, the assessor's office would be required to notify
the Department of Finance, the county board of supervisors,
the governing boards of the cities within that county, all
affected school districts, and any other public entity
affected by the decrease in property valuation within 15 days
of notifying the governing body that made the initial request.
According to the Santa Clara County Assessor's Office (SCCAO),
"�t]he idea of assessors forecasting assessed values was
started in 1965, and was originally limited to Los Angeles
County. The practice was expanded in the early 1970's in
response to hyper inflation and significant economic
turbulence. It was created for a bygone, pre-Proposition 13
era when assessors were raising assessed values en masse."
4)This bill is opposed by SCCAO, which contends that assessors
should not be in the estimation business at all: "By
necessity, training and law, assessors must look backward on
transactions that have actually occurred in the real estate
marketplace. Assessors do not possess the skill set or
information required to accurately project future property tax
revenue. Forecasting is the proper role of economists and
budget analysts. As assessor, I regularly decline requests by
cities and school districts to provide projections, and would
be unable to comply, with any degree of accuracy or
reliability, the estimates demanded in AB 2210?
The problem faced by Los Angeles County, whereby County
officials relied on the assessor to forecast property tax
revenue, only to subsequently learn that the forecast missed
the projected targets, underscores why AB 2210 is the wrong
solution?The problem in Los Angeles, the only county I am
aware of in which the assessor was requested to provide these
types of "hard and fast" estimates to their Board of
Supervisors, has not surfaced before because most years
assessed values were increasing, so policy makers were not
concerned if an assessor's conservative estimates did not
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reflect actual property tax revenue."
SCCAO points out that it does provide preliminary semi-annual
data on assessment roll activity to the Department of Finance,
but the data is heavily qualified and used only as part of a
larger data set: "?our comments are based on limited data
available, and are typically driven by point-in-time workload
completion statistics, and not changes in the market place.
Moreover, since the deadline for businesses to report their
business personal property is May 7th, we obviously have no
reliable information regarding the unsecured assessment roll
until mid-June?Real time data is useful in indicating trends.
However, I would jeopardize the trust, confidence and
credibility of my office by rendering projections that are not
based upon reliable, current market data."
5)SCCAO contends that this bill should move away from mandating
future roll estimates: "Instead of applying a flawed and
outdated practice to all of California, I would recommend that
you amend AB 2210 to prohibit assessors from forecasting
assessed values. In the final analysis you do not want the
governmental entity that is constitutionally mandated to
enroll accurate assessed values, to also be predicting those
same values in advance. I would urge you to work with
assessors to provide more timely information about the current
state of the assessment roll and the work completed."
The Committee may wish to inquire as to what specific interim
data could be provided by assessors to local decision-making
bodies that would be more reliable and useful in budget
planning than the general estimate already required upon
request under existing law.
6)This bill is keyed a state mandate which means that if the
Commission on State Mandates deems this a reimbursable
mandate, then the state could be responsible for the notice
and other costs associated with this bill.
7)Supporting arguments : According to the author, "�t]he
scandals in the Cities of Bell and Vernon demonstrated the
need for more transparency in local government. Likewise, the
brewing scandal in the Los Angeles County Assessor's Office
proves that further transparency is needed to ensure that
governing bodies have the appropriate information to make
informed decisions when budgeting?"
AB 2210
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Opposition arguments : According to the Santa Clara County
Assessor's Office, "�a]s proposed, AB 2210 would amplify
statewide the very problem you are seeking to correct.
Thousands of cities, schools and counties would come to rely
upon estimates from the assessor that are little more than an
informed guess."
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
Santa Clara County Assessor's Office
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958