BILL ANALYSIS                                                                                                                                                                                                    �




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 2643                     HEARING:  6/27/12
          AUTHOR:  Ma                           FISCAL:  No
          VERSION:  5/29/12                     TAX LEVY:  No
          CONSULTANT:  Grinnell                 

                                 PROPERTY TAXES
          

           Enacts three changes to laws guiding property tax payment 
                                and collection.


                           Background and Proposed Law  

          County Treasurer-Tax Collectors administer the billing and 
          collection of the property tax, in addition to their 
          fiduciary duties over county treasuries.  Each year, the 
          California Association of County Treasurer-Tax Collectors 
          sponsor an omnibus bill that makes several technical 
          changes to the laws guiding property tax administration

          I.  Refunds and Replicated Payments.  Currently, if a tax 
          collector received a replicated payment, a payment of 
          property taxes on a property where the taxes have already 
          been paid, must be refunded to the taxpayer within 60 days. 
           However, some taxpayers who own multiple properties make 
          replicated payments on one property while being delinquent 
          on another.  Assembly Bill 2643 allows the tax collector to 
          apply replicated payments toward delinquent taxes due for 
          any property owned by that taxpayer, similar to refunds.

          II.  Penalty relief.  The California Constitution (Article 
          XIIA, Section 2(b)) allows a temporary reduction in 
          property tax when a property's fair market value declines 
          below its assessed value (Proposition 8, 1978).  Some 
          taxpayers who applied for Prop 8 reassessments haven't been 
          paying their existing bills, and then request cancellation 
          of penalties that result from failing to pay.  AB 2643 
          provides that when a taxpayer fails to pay property tax on 
          a property subject to Prop 8 review, penalty relief only 
          applies to the difference to the assessor's final 
          determination of value and the value on the assessment roll 
          for that fiscal year, not the entire penalty amount.  The 
          bill applies only to Prop 8 reassessments, and also 




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          provides that a taxpayer that paid 80% of the final amount 
          of tax within 30 days of the Prop 8 application can pay the 
          remainder without penalty. Tax collectors must inform 
          taxpayers of this requirement, which only becomes operative 
          if the county board of supervisors enacts an ordinance or 
          ordinance, and the tax collector also consents.

          III.  County Pool Rate.  Existing law establishes an 
          interest rate the county must pay to taxpayers who win 
          refunds of overpaid property taxes, stated as the higher of 
          three per cent per year or the county pooled money rate, 
          which is interest the county makes on its own idle funds, 
          and can rise or fall over time.  The treasurer must 
          calculate the pooled money rate at the annualized rate as 
          of June 30 of the preceding fiscal year for which he or she 
          calculates the refund.  The treasurer must advise the 
          Controller of the county pool rate no later than 60 days 
          after the end of the fiscal year.  AB 2643 extends the 
          period of time for treasurers to report to the Controller 
          from 60 to 90 days.  


                               State Revenue Impact
           
          No estimate.  


                                    Comments  

          1.   Purpose of the bill  .  According to the author, "AB 2643 
          makes some important changes to property tax collection 
          procedures, to make the law clearer for taxpayers. Current 
          law does not explicitly state what taxpayers' obligation is 
          regarding property taxes during an informal assessment 
          appeal.  This bill will clarify that taxpayers must pay 
          their property taxes during that time.    Secondly, this 
          measure authorizes tax collectors to apply duplicate 
          payments made on the same property to delinquent bills, 
          instead of returning the duplicate payment and then sending 
          the delinquent notice.    Finally, this bill clarifies that 
          tax collectors may wait 90 days to report the pool rate, 
          instead of the current 60 days.  This modest change in law 
          is reflective of the time needed to do the calculation.  
          These changes in law are intended to improve the taxpayer's 
          experience by making the procedures clear and reducing 
          confusion regarding the status of property tax payments 





          AB 2643 - 5/29/12-- Page 3



          made."


                                 Assembly Actions  

          Assembly Local Government Committee:  8-0
          Assembly Revenue and Taxation Committee:7-0
          Assembly Floor:                    76-0


                         Support and Opposition (6/21/12)

           Support  :  California Association of County Treasurer-Tax 
          Collectors, California State Association of Counties.

          Opposition  :  Unknown.