BILL ANALYSIS �
AB 2231
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2231 (Gordon) - As Amended: April 21, 2014
Policy Committee: Local
GovernmentVote:9-0
Revenue & Taxation 9-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill reinstates the Senior Citizens and Disabled Citizens
Property Tax Postponement (PTP) program, allowing applications
to the State Controller to provide property tax deferment to
seniors and disabled persons to recommence on July 1, 2015. In
summary, this bill:
1)Establishes the Senior Citizens and Disabled Citizens Property
Tax Postponement Fund (Fund) within the State Treasury and
annually appropriates funds for the purposes of paying costs
and disbursements related to the PTP program; requires the
Controller to transfer moneys in the Fund in excess of $10
million to the General Fund (GF).
2)Increases the amount of equity required of applicants in a
residential dwelling from 20% to 40% of the full value of the
property to be eligible for the PTP program.
3)Requires loan payments and funds derived from the voluntary
sale of a residential dwelling that has a lien placed on it
due to the PTP program to be deposited into the Fund.
4)Repeals current law allowing the Controller to subordinate
liens for postponement of real property taxes, and instead
requires all liens under the PTP program to have the priority
of judgment liens.
5)Provides that taxes shall become due and payable in full if,
in addition to current law, the claimant is refinancing the
residential dwelling or has executed a reverse mortgage.
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6)Requires a county tax collector to notify the Controller
within 60 days of any property subject to a PTP program lien
that becomes tax defaulted.
7)Requires the Controller, upon request of the tax collector, to
provide information that is required for the preparation and
enforcement of the sale of property.
8)Makes various other modifications to the procedures for
filings for the PTP program as well as notifications and
payments with respect to tax delinquent properties.
FISCAL EFFECT
1)GF costs to the Controller of approximately $3.5 million in FY
2015-16 to reinitiate the program, eventually decreasing to
annual administration costs of approximately $3 million per
year. Over the long term, these costs may be offset, at least
in part, by ongoing interest on loans and the Fund, and fees
generated by the program.
2)In order to reinitiate the PTP program, a source of initial
seed capital funds and an appropriation to the Controller to
make the first loans will be required.
COMMENTS
1) Purpose. According to the author, this bill would reinstate
the PTP program and give seniors and disabled Californians
some financial flexibility. The bill would also incorporate
several changes to the suspended PTP program designed to
secure the PTP Fund ensure the program's long-term
sustainability.
The author claims the PTP program provided assistance to
nearly 6,000 California seniors and disabled persons over the
30 years it was previously in operation. After five years of
suspension, the homes of some former participants in the
program are now at risk of tax default sale. This bill would
provide relief to those on fixed incomes who are unable to pay
their tax bills and risk losing their homes.
2) Background to the PTP Program. The state currently has and
has had several property tax relief programs benefitting
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elderly and disabled persons, including property tax
reappraisal relief, property tax assistance, and property tax
postponement. Unlike assistance programs that refund a
percentage of property taxes paid, the PTP program provides a
direct grant to qualifying seniors and disabled persons who
own their residence, allowing recipients to defer payment of
all or a portion of their property taxes.
Historically, aggregate loan repayments have equaled or
exceeded the program's administrative costs, and over the
long-term, the program has been self-supporting. In addition
to allowing program participants to remain in their homes, the
PTP program has reduced county property tax default rates and
increased county tax collection revenues.
The state has not provided funding for the PTP program since
the 2007-08 budget and has not paid claims since 2008. On
February 20, 2009, the postponement program was indefinitely
suspended as part of the budget reductions to the state's GF
programs; the funding was eliminated, and the Controller was
prohibited from accepting new applications from that date.
3) Implementation and Seed Capital. The bill currently contains
no appropriation or other source of seed funding to reinitiate
loans, and the Controller has identified several
implementation concerns and areas where the program could be
further refined and improved. Should this bill be passed by
this Committee, the members may wish to encourage the author
to continue working with the Controller to resolve these
issues.
4) Related Legislation. AB 1322 (Patterson) of 2013 was similar
to this bill and would have reinstated the Senior Citizens'
PTP program that provided property tax deferment to seniors
and disabled persons. That bill was held on the Suspense File
of this Committee.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081