BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 874 HEARING: 4/27/11
AUTHOR: Hancock FISCAL: No
VERSION: 3/21/11 TAX LEVY: No
CONSULTANT: Grinnell
QUALIFIED SPECIAL TAXES
Expands Exemptions for Qualified Special Taxes Imposed by
School and Community College Districts
Background and Existing Law
The California Constitution bars school districts from
imposing general taxes, but allows school districts,
community college districts, and county offices of
education to issue bonded indebtedness for school
facilities with 55% percent approval (Proposition 39,
2000). However, state law allows school districts and
community college districts to levy "qualified special
taxes" with 2/3 vote of the electorate, so long as the tax
is uniform as applied to all taxpayers. The district may
implement the tax for as long as it wants, spend the
proceeds for any purpose, and apply any tax rate it
chooses. Local agencies have only assessed parcel taxes
under this section.
Under qualified special tax law, school districts and
community college districts may exempt persons over the age
of 65 from the tax, and school districts may also exempt
persons receiving Supplemental Security Income (SSI)
regardless of age (AB 385, Lieber, 2006). Currently,
neither school districts nor community college districts
may exempt persons receiving Social Security Disability
Insurance (SSDI) from the tax.
Proposed Law
SB 874 allows both school districts and community college
districts to exempt persons receiving SSDI from qualified
special taxes. SB 874 also conforms the community college
district section of law to the school district part by
allowing community college districts to likewise exempt
SB 874 -- 03/21/11 -- Page 2
from the qualified special tax persons 65 years or older or
receiving SSI.
State Revenue Impact
No estimate
Comments
1. Purpose of the bill . According to the Author, "This
bill gives school and community college districts some
options when crafting local taxes measures by allowing them
to exempt certain classes of property owners. This will
allow them to exempt up to three classes of property owners
who are on fixed income - seniors who are over 65 years of
age, persons who are disabled and receive SSI, and/or
persons who are disabled and are receiving SSDI."
2. Are these exemptions warranted ? SB 874 allows school
districts and community college districts to exempt persons
receiving Social Security Disability Income (SSDI) when the
district levies a qualified special tax, and additionally
conforms the community college district law to the school
district one by allowing exemptions for persons over 65 and
those receiving Supplemental Security Income (SSI). SB 874
expands exemptions that school district and community
college district board may allow when designing a qualified
special tax; because the bill affects a locally designed
and imposed tax, neither school nor community college
districts must exempt the persons specified in the bill.
However, should the district boards exempt these taxpayers,
the tax will be higher for non-exempt taxpayers because of
the diminished base, all else equal. Additionally, the
bill could lead to exemptions for taxpayers with plenty of
income and wealthy by exempting persons based solely on
age.
3. Lead and follow . In 1987, the Legislature clarified a
constitutional ambiguity resulting from Proposition 62
(1982) by specifying in statute that school districts could
levy qualified special taxes at a 2/3 vote of the
electorate (AB 1440, Hannigan). The Senate amended that
measure to allow the exemption for persons over the age of
65 because at least one school district had previously done
so when it authorized the tax under Constitutional powers,
and enacting the statutory authority for the tax without
SB 874 -- 03/21/11 -- Page 3
the exemption could cause further legal trouble. In 1991,
the Legislature extended this allowance to community
college districts as part of an effort to broaden taxing
authority to more special districts; however, the measure
did not allow the exemption for persons over the age of 65
(SB 158 (Committee on Local Government). In 2006, the
Legislature allowed school districts to exempt individuals
receiving SSI from the tax (AB 385, Lieber), but did not
change the law for community college districts to do the
same. This bill expands the exemptions for both school
districts and community college districts to exempt persons
receiving SSDI, and imports into the community college
district law the previously allowed exemptions in the
school district law for persons over 65 and those receiving
SSDI.
4. What's the difference ? The Social Security
Administration (SSA) administers both the SSI and SSDI
programs. SSI is a federal income supplement program paid
out of general federal revenues for persons aged, blind,
disabled, and of limited income. SSDI is funded from
federal payroll taxes and provides benefits to disabled
persons because their disability serves as a barrier to
employment, but unlike SSI, eligibility is not restricted
by an individual's income. SSDI recipients are also
eligible for Medicare if they have been enrolled in SSDI
for two years.
Support and Opposition (04/25/11)
Support : Community College League of California.
Opposition : California Taxpayers Association.