BILL ANALYSIS �
AB 1172
Page 1
ASSEMBLY THIRD READING
AB 1172 (Bocanegra)
As Amended
January 6, 2014
Majority vote
LOCAL GOVERNMENT 9-0 REVENUE & TAXATION 8-0
-----------------------------------------------------------------
|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Bocanegra, Dahle, Harkey, |
| |Bradford, Gordon, | |Mullin, Nestande, Pan, V. |
| |Melendez, Mullin, Rendon, | |Manuel P�rez, Ting |
| |Waldron | | |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 16-0
-----------------------------------------------------------------
|Ayes:|Gatto, Bigelow, Allen, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Holden, Linder, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Weber | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Requires the California Research Bureau (CRB), 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 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.
AB 1172
Page 2
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.
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 : According to the Assembly Appropriations
Committee, costs of approximately $50,000 to the CRB for
preparation of the report.
COMMENTS : 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.
AB 1172
Page 3
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."
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 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.
AB 1172
Page 4
The Legislature may wish to consider the following policy
questions:
1)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 Legislature 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.
2)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 Legislature may wish to consider the value of a report
given the vast differences between Florida and California's
tax systems.
3)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 Legislature 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
AB 1172
Page 5
constraints, may be more valuable than the information
requested by this bill that is specific to another state.
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.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0002989