BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1353 (Nielsen) - Williamson Act contracts.
Amended: As Introduced Policy Vote: G&F 7-0
Urgency: No Mandate: No
Hearing Date: April 28, 2014
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 1353 would repeal the sunset date on provisions
that authorize counties to increase the assessed value of lands
under Williamson Act contract and retain the additional property
tax revenues, under specified circumstances.
Fiscal Impact: No immediate state revenue impacts because
schools would receive the same amount of property taxes whether
or not counties exercise the authority to reduce the duration of
Williamson Act contracts and retain an increased property tax
allocation. Shorter contracts may allow schools to receive
property tax revenue increases sooner if a contract is not
renewed, which could result in future reductions in General Fund
expenditures pursuant to Proposition 98 minimum funding
guarantees.
Background: Under current law, landowners and local officials
may enter into voluntary contracts that restrict land uses under
the Williamson Act. These contracts generally run for 10 years,
but the duration is 20 years under more restrictive Farmland
Security Zones. The contracts automatically renew each year
unless an action is taken to non-renew or cancel the contract,
as specified. Williamson Act lands benefit landowners with
reduced property tax assessments for the duration of the
contracts. The state has historically provided subvention
payments from the General Fund to counties for the loss of
county general fund resources related to lands under Williamson
Act contracts, but in recent years these payments have been
substantially reduced or effectively eliminated.
To mitigate the impact on counties related to the loss of state
subvention funds, the Legislature passed AB 2530 (Nielsen),
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Chapter 391 of 2010, which allowed county officials to increase
the assessed values of Williamson Act contracted lands and
divert the resulting property tax revenues. After practitioners
discovered technical issues with AB 2530, the Legislature
re-enacted the provisions in a budget trailer bill (SB 863
(Budget and Fiscal Review Committee), Chapter 722 of 2010, which
also appropriated $10 million to the subvention program. In
March 2011, however, the Legislature repealed SB 863,
eliminating both the $10 million subvention payment and the
provisions that allowed counties to shorten Williamson Act
contracts. In order to allow the eight counties that had
initiated a process to implement the program, however, the
Legislature reinstated the provisions without the appropriation
for subvention payments in AB 1265 (Nielsen), Chapter 90 of
2011.
Under current law, as enacted by AB 1265, counties are
authorized to reduce the duration of a Williamson Act contract
by ten percent and increase the assessed value by ten percent,
if the state's open space subventions are less than half of a
county's foregone property tax revenue. The additional property
tax revenues are directed to the county. The contract continues
to be automatically renewed each year, unless the contract is
non-renewed or cancelled. If additional revenues do not occur,
the contracts are restored to the original duration. The
program established by AB 1265 does not apply to contracts that
have been non-renewed, contracts with cities, open space or
agricultural easements, scenic restrictions, wildlife habitat
contracts, or contracts with atypical terms. These provisions
are scheduled to sunset on January 1, 2015.
Proposed Law: SB 1353 would delete the January 1, 2015 sunset on
statutes enacted by AB 1265 that allow counties to shorten the
duration of Williamson Act contracts, increase the assessed
value on contracted lands, and divert the additional property
tax to counties.
Staff Comments: While these provisions allow for an increase in
the assessed value of the Williamson Act properties that would
be subject to the shorter duration, participating counties would
retain any increase in revenues to offset loss of subvention
funds. As such, there would be no state General Fund impact
because the schools would receive the same amount of tax
revenues with or without the bill. The only potential long term
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impact is that by implementing these provisions, some counties
and landowners may stay under contract, rather than
non-renewing. Under non-renewal, the schools would receive an
increase in property tax revenues when the contract expires.
When the school share of the property tax increases upon
expiration of a contract, there is a corresponding reduction in
state General Fund obligations related to the minimum funding
guarantees in Proposition 98.
According to the Department of Conservation, 11 counties
currently participate in the program enacted by AB 1265.