BILL ANALYSIS �
AB 1172
Page 1
Date of Hearing: January 15, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1172 (Bocanegra) - As Amended: January 6, 2014
SUMMARY : Requires the California Research Bureau, on or before
December 1, 2015, to provide the Legislature with a report that
evaluates the impact of Florida's "Save Our Homes" portability
statute on Florida's state and local revenue, and the potential
revenue impacts on California if a similar statute were enacted
in California. Specifically, this bill :
1)Requires the California Research Bureau (CRB), on or before
December 1, 2015, to provide a report to the Legislature that
evaluates the impact of Florida's "Save Our Homes" portability
statute (Florida Statute Section 193.155 (8)) on Florida's
state and local revenue, and the potential revenue impacts on
California if a similar statute were enacted in California.
2)Requires the CRB to submit the report to the Legislature in
compliance with specified requirements in existing law.
3)Repeals this section on December 1, 2019.
EXISTING LAW :
1)Provides that all property is taxable unless explicitly
exempted by the California Constitution or federal law.
2)Limits the maximum amount of any ad valorem tax on real
property at 1% of full cash value.
3)Requires assessors to reappraise property whenever it is
purchased, newly constructed, or when ownership changes.
4)Allows homeowners over the age of 55 to transfer, subject to
limitations, their existing assessed value to a new home, of
equal or lesser market value, within the same county.
5)Allows homeowners over the age of 55 to transfer, subject to
limitations, their existing assessed value to a new home, of
equal or lesser market value, in a different participating
county, only if the county has adopted an ordinance.
AB 1172
Page 2
6)Authorizes a county board of supervisors, in consultation with
all other local affected agencies within the county's
boundaries, to adopt an ordinance to allow an intercounty
transfer described in 5) above, subject to specific
requirements.
7)Allows disabled homeowners to transfer, subject to
limitations, their existing assessed value from an existing
home to a newly purchased home of equal or lesser market
value.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)This bill requires the CRB to submit a report to the
Legislature, on or before December 1, 2015, that evaluates the
impact of the Florida State "Save Our Homes" portability
statute on Florida's state and local revenue, and the
potential revenue impacts on California if a similar statute
were enacted in California. This bill is author-sponsored.
The Florida Department of Revenue describes the "Save Our
Homes" portability statute, as follows, "After the first year
a home receives a homestead exemption and the property
appraiser assesses it at just value, the amount the assessment
can increase for each following year cannot be more than 3% or
the percent change in the Consumer Price Index whichever is
less. This is called the "Save Our Homes" (SOH) assessment
limitation. The accumulated difference between your assessed
value and the just (market) value is your SOH benefit.
Portability allows most Florida homestead owners to transfer
(or "port") their SOH benefit from their old homestead to a
new homestead, lowering the tax assessment (and consequently,
the taxes) for the new homestead."
2)According to the author, "Since the passage of Proposition 13
in 1978, property is generally taxed on the value at the time
of acquisition, with increases thereafter limited to 2% per
year. The 2% increase is generally not enough to keep up with
the natural rise in home prices in the market. The 2% limit
eventually creates a gap between the assessed value of the
property and its actual market value, which generally
increases the longer the owner holds on to the property. The
AB 1172
Page 3
disparity between assessed property value and market value
that comes from an acquisition value system leads to serious
economic inefficiencies. Specifically, it increases the cost
of purchasing property and imposes moving penalties.
"Florida's portability statute, which allows a homeowner to
transfer the tax savings accumulated over the years to a new
home, may help address the moving penalties experienced by
homeowners when moving to bigger homes. Instead of
discouraging homeowners from moving into homes that better
suit their needs, the portability statute allows homeowners to
make the move without fear of having to pay substantially
higher property taxes."
Proponents of Proposition 13 argue that it has provided
property owners in California with substantial protections
from higher property tax rates and frequent reassessments.
The author argues that an unintended consequence of
Proposition 13 is that it provides taxpayers with a strong tax
incentive not to move to housing that more closely meets their
demand.
3)The Committee may wish to consider the following policy
questions:
a) The CRB, as part of the California State Library,
provides nonpartisan research services, which may include
the preparation of reports, to the Governor, Legislature,
and to other elected state officials. According to the
CRB, requests of this nature can be made absent legislation
through a more informal process that includes discussions
and a written request from a client.
The Committee may wish to ask the author why this bill is
necessary if the report in this bill can be requested by
simply contacting the CRB.
b) Florida does not have a state-level property tax. Local
governments, including cities, counties, school boards, and
special districts, levy property taxes that are generally
set on an annual basis with the oversight of the Florida
Department of Revenue.
The Committee may wish to consider the value of a report
given the vast differences between Florida and California's
AB 1172
Page 4
tax systems.
c) In California, Proposition 60 (1986) and Proposition 90
(1988) allow disabled homeowners and those over the age of
55, subject to certain conditions, to transfer a property's
base year value from an existing residence to a replacement
residence within the same county. Eligible homeowners may
transfer their existing assessed value to a new home within
their current county of residence, and may transfer to
other counties if the destination county has enacted a
resolution.
Currently, eight counties (Alameda, El Dorado, Los Angeles,
Orange, San Diego, San Mateo, Santa Clara and Ventura) have
approved ordinances pursuant to Proposition 90. Several
counties (Contra Costa, Inyo, Kern, Riverside, Modoc,
Monterey, and Marin) have repealed this ordinance due to
fiscal constraints.
The Committee may wish to consider if further study on
California's existing laws, especially among the counties
that repealed the Proposition 90 ordinance due to fiscal
constraints, may be more valuable than the information
requested by this bill that is specific to another state.
4)Support arguments : According to the Howard Jarvis Taxpayers
Association, this bill will expand the knowledge base and
increase empirical data as to the financial impact of
portability.
Opposition arguments : Opposition may argue that the bill is
unnecessary and can be accomplished by a written request to
the CRB.
5)This bill is double-referred to the Revenue and Taxation
Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Howard Jarvis Taxpayers Association
Opposition
AB 1172
Page 5
None
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958