BILL ANALYSIS �
AB 2234
Page 1
Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 2234 (Ting) - As Introduced: February 21, 2014
Majority vote. Fiscal committee.
SUBJECT : State Board of Equalization: surveys: assessment
procedures: counties and cities and counties
SUMMARY : Makes specified changes to survey requirements
applicable to the Board of Equalization (BOE) in determining the
adequacy of the procedures and practices employed by county
assessors in their valuation of property. Specifically, this
bill :
1)Requires the BOE, when appropriate, to provide a former county
assessor, whose administration is being reviewed, the right to
appeal BOE appraisals made within the county if differences
have not been resolved before completion of a field review.
2)Requires the BOE to complete each survey within three months
after beginning the survey and to repeat or supplement the
survey at least once every seven years.
3)Requires the BOE to include, in its written survey report, the
best practices the county assessor may adopt.
4)Requires the BOE to meet with the former assessor, whose
administration is being reviewed, to discuss and confer on
those matters which may be included in the written survey
report.
5)Requires the BOE to issue the final survey report within nine
months after beginning the survey.
EXISTING LAW :
1)Requires the BOE to make surveys in each county and city and
county to determine the adequacy of the procedures and
practices employed by the county assessor in the valuation of
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property for the purposes of taxation. [Government Code (GC)
Section 15640.]
2)Provides a county assessor with the right to appeal appraisals
made within the county where differences have not been
resolved before completion of a field review. (GC Section
15640.)
3)Requires the BOE to conduct surveys of the assessment
procedures and practices in the several counties and cities
and counties as rapidly as feasible, and shall repeat or
supplement each survey at least once in five years. (GC
15643.) (Emphasis added.)
4)Requires the BOE to prepare a written report setting forth its
finding and recommendations upon completion of a survey of the
procedures and practices of a county assessor. Before
preparing its written survey report, the BOE shall meet with
the assessor to discuss and confer on those matters which may
be included in the written survey report. (GC Section 15645.)
5)Requires the BOE to issue the final survey report within two
years after the date the board began the survey. (GC Section
15645.)
FISCAL EFFECT : This bill does not impact property tax revenues.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
AB 2234 is a streamlining measure that promotes uniformity
in the property tax assessment process and best practices
to improve the performance of county assessor offices.
This bill improves the efficiency of [BOE] performance
audits conducted on every county assessor's office
throughout the State and requires report findings to
provide specific recommendations that the county assessor
may adopt to improve existing practices. By reducing the
delay between when the survey was conducted and the
issuance of the findings and requiring clear and succinct
recommendations, AB 2234 will ensure the timely auditing
and reporting of county assessor offices and promote
uniform, effective, and efficient assessment practices.
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2)Opponents of this bill state that "[e]xisting law requires the
BOE to conduct examinations of county assessment practices
every 5 years, and allows the BOE and the assessor up to 2
years to discuss topics in need of additional information
before the final report is issued. By increasing the time
between each examination to 7 years, the information provided
in the report may be outdated, less reflective of changes in
the housing market, and less meaningful for policymakers and
the public." Additionally, opponents state that "AB 2234
requires the BOE to analyze two more years of data, yet forces
the agency to complete its work and issue a report in half the
time. [Opponents] are concerned that this could jeopardize
the accuracy, quality and usefulness of the report." Finally,
opponents state, "[i]n a letter to the BOE after the
conclusion of the report for his county, Santa Clara County
Assessor Larry Stone wrote: 'I strongly believe that the
independent audit conducted by the BOE provides a critical,
professional examination of the appraisal practice and
assessment procedures in an assessor's office, and is designed
not only to protect the integrity of the property tax system,
but to encourage standardization in assessment procedures
among county assessors.'"
3)Committee Staff Comments:
a) Background . The assessment practices survey program is
one of California's ways of promoting uniformity, fairness,
and integrity in the property tax assessment process. The
BOE periodically reviews the practices and procedures of
every county assessor's office. Although local governments
are primarily responsible for assessing local property
taxes, assessment practices surveys fulfill the State's
public policy interest of addressing the inherent
subjective nature of assessing property, and the financial
interest that comes from state law requiring minimum
funding for schools. The BOE must proceed with the surveys
as rapidly as feasible, and must repeat the survey at least
once every five years.
Assessors are required to respond to the survey and provide
an explanation as to how they have implemented, intend to
implement, or the reasons for not implementing
recommendations made by the BOE. A copy the response is
then made available to the Assembly, Senate, BOE, and the
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local county board of supervisors. Annual responses are
required until all of the issues expressed by the BOE have
been resolved.
b) Scope of Assessmen t. Under GC Sections 1564 and 15642,
the scope of assessment shall include the adequacy of the
procedures and practices employed by the assessor in the
valuation of property for tax purposes. The survey shall
assess the practices as they relate to the uniform
treatment of property, so that all property is treated
equitably and no class of property systematically
undervalued or overvalued. Additionally, the survey must
show the volume of assessment work, the responsibilities of
the assessor, and the extent to which the practices of the
assessor is consistent with or different from law and
regulation.
c) Best Practices . This bill requires that surveys include
"best practices" that may be adopted by the county
assessor, but fails to provide a definition for the term.
Therefore, it is unclear as to what the BOE is required to
include in the final report. It appears that the provision
encourages the BOE to provide specific recommendations that
may help assessors in resolving issues raised in the
report. In fact, proposed amendments offered by the
author, which are outlined below, provide that specific
recommendation be included along with examples from other
counties. Providing recommendations, in general, may
improve uniformity of practices among the various counties.
Including examples in the final report may also inform
other assessors of uniform solutions, which would allow for
the adoption of certain recommendations without the need
for an audit.
d) Current Length of Survey . The survey process, from the
initial field work to the publication process, takes on
average 24 months. Quality control and the write-up take
up the most amount of time, 4.8 months and 3.9 months,
respectively. On-site field work is generally completed in
a little over two months. Over the last year, the BOE has
been working on improving the way in which surveys are
conducted so as to complete them in a shorter period of
time. In an effort to reduce time for the assessment
surveys from two years to 18 months, the BOE is
implementing the following changes: (i) reducing the size
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of the survey report; (ii) providing questionnaires to
assessors prior to commencement of field work on non-core
assessment topics to determine if further inquiry is
required; (iii) rearranging and having simultaneous
internal reviews of the report by different BOE divisions
and county-assessed properties divisions; and, (iv)
shortening review times where appropriate.
This bill would require the BOE to complete the survey
within three months and issue the final report within nine
months. It appears from the information provided, that the
BOE would have no problem completing the field work within
a three-month period of time. In fact, as noted above,
field work is generally completed in about two months, and
new updates to auditing procedures will likely bring that
down to about one and one-half months. However, the
language states that the field work must be completed
within three months. This may preclude the BOE from
returning to the county should the need arise. In general,
it is unclear to committee staff whether the current
two-year timeframe is an appropriate length of time for
completing audits of county assessment procedures and
practices. The benefits of a speedy audit must be weighed
against any possible degradation in quality. It may be
helpful, therefore, to compare these timeline with those
from the State Auditor.
e) California State Auditor . The Auditor's office promotes
the efficient and effective management of public funds and
programs by providing citizens and the State with
independent, objective, accurate, and timely evaluations of
state and local governments' activities. Performance
auditing is an objective examination of evidence to provide
an independent assessment of the performance and management
of an organization. Similar to the goals of assessment
practices survey, performance audits look at a program's
effectiveness, internal controls, and compliance with laws
and regulations.
According to the Auditor's office, of the 40 audits
completed in 2013, 25 to 30 were performance audits. Small
audits take about six months to complete, and medium to
large audits take anywhere between eight to nine months to
complete. Each audit has about two to three staff members
and one manager. Of the total number of performance
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audits, about two to ten are medium to large in any given
year. The Auditor's office also stated that very few
audits take more than a year to complete. The audit of the
Department of Parks and Recreation's budget, for example,
is the only audit taking more than one year to complete in
2013.
f) Implementation Concerns . The BOE's staff analysis
raises concerns with completing the survey within nine
months. Specifically, the analysis states "[w]hile the
bill lengthens the cycle for conducting county surveys from
once every five years to every seven years, it shortens the
time to complete the written survey report from two years
to nine months. Furthermore, it establishes a three month
period from start to finish in which the BOE must complete
the onsite field survey work at the assessor's office - no
such limitation presently exists. While three months is
typically sufficient for staff to complete the onsite
survey work, the proposed limitation could preclude BOE
staff from returning to the assessor's office should the
need arise for further investigation."
g) Author's Proposed Amendments . The author has provided
the following proposed amendments:
i) Maintains the requirement that each survey must be
repeated and supplemented at least once in five years;
ii) Eliminates the "best practices the county assessor
may adopt" from the survey report and instead provides
that the survey must include recommendations specific to
the issues raised and comparable examples from other
counties that may be adopted to improve practices; and,
iii) Requires that the final report be issued within 18
months for surveys commenced on or after January 1, 2015,
and within nine months if the survey is commenced on or
after January 1, 2016.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
AB 2234
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Opposition
California Taxpayers Association
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098