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HomeMy WebLinkAboutMINUTES - 04071992 - 1.82 1 . 8 TO: BOARD OF SUPERVISORS Contra FROM: Phil Batchelor, County Administrator Costa A County ,p Aril 1 1992 DATE: SUBJECT: LEGISLATION: SB 1683 (Leroy Greene) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: Agree to CO-SPONSOR SB 1683 by Senator Leroy Greene if the bill is amended to include provisions amending Revenue & Taxation Code Section 4703 in order to provide for a temporary, one-year increase in the allowable property tax delinquency rate for the secured property tax roll which serves as the trigger which must be maintained in order for the County General Fund to benefit from the surplus funds in the tax losses reserve fund from 3% to 4% . BACKGROUND: Generally, the law requires the Auditor-Controller to distribute property taxes based on the amount actually received. In this way, all jurisdictions share in the uncertainty about the level of delinquencies and hence the amount each jurisdiction will receive. There is, however, an alternate method of distributing property taxes known as the "Teeter Plan" after a former County Administrator in this County. Under this alternative, the County agrees to distribute a fixed percentage of the property tax to other jurisdictions, regardless of the amount that is actually received. This protects other jurisdictions from the uncertainty about the actual level of collections . One of the conditions of this alternative is Revenue & Taxation Code Section 4703, which requires the creation of a tax losses reserve fund, consisting of an amount equivalent to 4% of the total of all taxes and assessments levied on the secured roll for that year. Once the fund reaches 4% in a given year, any further amounts may be deposited in the general fund. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): �Z" h ACTION OF BOARD O prl APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE K UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. CC: County Administrator Auditor-Controller ATTESTED Treasurer-Tax Collector PHIL BATCHELOR,CLERK OF THE BOARD OF County Counsel SUPERVISORS AND COUNTY ADMINISTRATOR Les Spahnn, SRJ. Jackson, Barish & Associates BY •� DEPUTY M382 (10/88) -2- As an incentive to collect property taxes and keep the delinquencies down to an absolute minimum, Section 4703 also provides that this tax losses reserve fund need be maintained at only 3% of the total of all taxes and assessments levied on the secured roll and everything above that can be transferred to the general fund. However, this is only permitted where the delinquency rate has been 3% or less for three consecutive years . If the delinquency rate slips above 3% again in only one year, then the County must maintain the tax losses reserve fund at the full 4% for another three consecutive years before they can reduce it again. Contra Costa County has maintained its delinquency rate at just below 3% for the past several years. Primarily because of the recession, the Treasurer-Tax Collector and Auditor-Controller are warning that delinquencies are up substantially this year and as a result we may be unable to hold the delinquency rate below 3% . The difference between keeping the tax losses reserve fund at 3% versus 4% is worth $4 million a year to this County. Hence, over a three year period we effectively lose $12 million if we have to build the reserve back up to 4% and then keep our delinquencies below 3% for another three years . We are, therefore, suggesting a one-year exception which would allow the delinquency rate as of June 30, 1992 to be as high as 4%, and still allow the County to draw down the surplus funds in the tax losses reserve fund for the 1992-93 fiscal year. This will protect the County against the possibility of slipping slightly over the 3% delinquency rate on June 30, 1992 . The Treasurer-Tax Collectors ' Association is sponsoring SB 1683, which includes a number of technical amendments to the codes . They have agreed to include the amendments we wish to make to the "Teeter Plan" in order to provide this one-year exception to the 3% or less for three consecutive years rule. The bill has not actually been amended yet, but we anticipate that it will be amended within a few days . Therefore, we are recommending that the Board of Supervisors agree to co-sponsor SB 1683 if it is amended to include this County' s provisions as noted above.