BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1214 (Anderson) - Property Tax Postponement Program.
Amended: May 6, 2014 Policy Vote: G&F 6-0
Urgency: No Mandate: Yes
Hearing Date: May 19, 2014 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1214 would re-enact a modified version of the
Senior Citizens and Disabled Citizens Property Tax Postponement
Program (PTP), and allow income-eligible senior citizens and
disabled persons to apply to the State Controller to defer
payment of property taxes, as specified, beginning on July 1,
2016.
Fiscal Impact:
SCO administrative costs of approximately $3.6 million
(37.2 PY) in 2016-17, $3.4 million (37.2 PY) in 2017-18,
$3.3 million (35.5 PY) in 2018-19, and $3.1 million (33.8
PY) ongoing. Costs in the first three years include IT
improvements to the PTP accounting system and associated
databases.
Unknown General Fund costs, likely in the range of $10
million annually, to pay property tax claims, decreasing
gradually over a period of 5-10 years as loan repayments
partially offset claim amounts. Eventually loan payments
and accumulated interest could fully offset program
expenditures.
Potential reimbursable mandate costs for duties imposed on
county tax administration officials. Staff notes that
Legislative Counsel did not key this bill as a reimbursable
mandate, but the previous PTP program was deemed to have
imposed reimbursable activities on local agencies, resulting
in annual General Fund expenditures of up to $285,000
annually before the program was suspended in 2009.
Background: The PTP was originally enacted by Chapter 1242 of
1977 to provide property tax relief to eligible senior citizens,
and was later expanded to include blind and disabled persons.
Under the program, senior citizens could defer payment of
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property taxes by requesting that the State Controller (SCO) pay
the amount deferred to the county. The SCO recovers payment by
securing a lien on the property, ensuring repayment of deferred
property taxes with accrued interest upon sale of the home. The
PTP was funded by an annual General Fund allocation of $12.7
million appropriated to the SCO to pay the face amount of all
certificates of eligibility for the program. The PTP was
permanently suspended and all funding was eliminated by SBx3 8
(Ducheny), Chap. 4/2008-09 3rd Ex. Session, as a budget action
to address severe General Fund shortfalls during the recession.
Prior to suspension, the program was available to persons over
the age of 62, as well as blind and disabled persons, with an
income of less than $39,000 per year and at least 20 percent
equity in their homes.
Proposed Law: SB 1214 would re-enact the PTP program, with
modifications. Specifically, this bill would:
Authorize the SCO to accept new claims for property tax
postponement, beginning on July 1, 2016.
Delete the previous program's $12.7 million annual
appropriation, and instead create the Senior Citizens and
Disabled Citizens Property Tax Postponement Fund (PTP
Fund), an interest bearing fund, continuously appropriated
to the Controller to fund the program, including
administrative costs and property tax postponement
disbursements.
Transfer any outstanding PTP loan repayments from
impound accounts remaining as of January 1, 2015 into the
PTP Fund.
Delete references to and authority for impound accounts,
and instead require all loan repayments to be made directly
to the PTP Fund.
Require the SCO to transfer any funds in the PTP in
excess of $10 million to the General Fund.
Increase a fee that the SCO can charge to provide lien
status information from $10 to $30. This information is
only available to a person or entity having a legal and
equitable interest in the property.
Restrict PTP eligibility by requiring an applicant to
have at least a 40 percent equity interest in the property,
rather than 20 percent equity.
Require the SCO to provide information that is required
to enforce a tax sale, including social security numbers,
upon request of the tax collector. The tax collector must
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certify under penalty of perjury that the information is
required, and this information would not be considered a
public record subject to inspection.
Clarify that postponement only applies for property
taxes for the fiscal year in which the taxpayer makes the
claim, and excludes past delinquent taxes.
Require taxpayers to file applications from September
1st to April 10th of the fiscal year, instead of May 15th
to December 10th of the calendar year,
Replace references to certificates of eligibility and
warrants with references to electronic fund transfers to
properly reflect modern processes.
Clarify that all costs, fees, and interest for a fiscal
year, in addition to the taxes, are cancelled if an
application is timely filed before property taxes become
delinquent.
Require the SCO, in the event of willful neglect, to
notify the claimant and provide a copy of the notification
to the tax collector of the taxes due and the 30-day
deadline, and allows the tax collector to return funds and
deny the claim.
Require the SCO to notify a claimant when it
electronically transfers property taxes after initially
reversing its decision to deny the claim.
Related Legislation: AB 2231 (Gordon), which is currently on the
Assembly Appropriations Committee Suspense File, would re-enact
the Senior Citizens and Disabled Citizens Property Tax
Postponement Program and is substantially similar to this bill.
Staff Comments: SB 1214 requires that any amounts of repaid
property taxes from the previous PTP that remain in impound
accounts as of January 1, 2015 must be transferred to the PTP
Fund. The SCO indicates that approximately $3.5 million is
currently on deposit in impound accounts. This amount could be
used to initiate PTP activities in 2016-17, and would nearly
offset first year SCO administrative costs, but it would be
insufficient to fund any property tax payments for new
applicants. Prior to suspension of the previous program, the
SCO distributed approximately $12 million in claims per year on
average. Demand for the new program is unknown, but the program
would likely require a General Fund augmentation of $10 million
annually over a number of years. Eventually, the program could
become totally self-sufficient over the long-term as loan
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repayments and interest offset demand for new claims.