BILL ANALYSIS �
AB 1172
Page 1
Date of Hearing: January 23, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1172 (Bocanegra) - As Amended: January 6, 2014
Policy Committee: Local
GovernmentVote:9-0
Revenue and Taxation 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Research Bureau (CRB), by
December 1, 2015, to provide the Legislature a report evaluating
the impact of Florida's portability statute, a statue allowing
homeowners to sell their home and transfer specified property
tax preferences. The report will evaluate the effect of the
statute on Florida's state and local revenue and the potential
revenue impacts on California if a similar statute was enacted.
FISCAL EFFECT
General Fund costs of approximately $50,000 to the CRB for
preparation of the report.
COMMENTS
1)Purpose . According to the author, since Proposition 13 passed
in 1978, property is generally taxed on the value at the time
of acquisition, with annual increases limited to 2%. The
author explains the 2% increase is generally not enough to
keep up with the natural rise in home prices in the market,
creating a gap between the assessed value of the property and
its actual market value. The author explains the disparity
between assessed property value and market value leads to
serious economic inefficiencies, in particular it increases
the cost of purchasing property and imposes moving penalties.
The author contrasts California's system with Florida, which
has a portability statute. This statute allows a homeowner to
transfer the tax savings accumulated over the years to a new
AB 1172
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home and may help address the moving penalties experienced by
homeowners when moving to bigger homes. The author argues
instead of discouraging homeowners from moving into homes that
better suit their needs, the portability statute allows
homeowners to move without fear of paying substantially higher
property taxes. The author contends 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.
2)Support. 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.
3)Background . The Florida portability statute is named the
"save our homes" statute. In Florida, after the first year of
ownership a home receives a homestead exemption and the
property appraiser assesses it at market 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. The accumulated difference between
assessed value and the market value is the save our homes
benefit. Portability allows most Florida homestead owners to
transfer their benefit from their old homestead to a new
homestead, lowering the tax assessment (and consequently, the
taxes) for the new homestead.
4)Need for a bill . The CRB, 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.
5)California programs . This concept of transferring base year
value exists to a limited degree 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
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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.
6)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081