HomeMy WebLinkAboutMINUTES - 03121996 - C24 TO: BOARD OF SUPERVISORS `�E"SE;L••_ Contra
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FROM: PHIL BATCHELOR, COUNTY ADMINISTRATOR Costa
March 6 1996 Sri ---
DATE: rrq COW- County
SUBJECT: LEGISLATION: SB 1845 (Leslie) - ONE-TIME WINDFALL TO THE
SCHOOLS BECAUSE THE COUNTY IS A "TEETER" COUNTY
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
AGREE to SUPPORT SB 1845, authored by Senator Tim Leslie, if it is amended to
allow the five original "Teeter" counties a one-time credit against the transfer of
property taxes to the schools, as was done with counties which were newly
converting to being "Teeter" counties.
BACKGROUND:
A county has two options in distributing property taxes to other taxing jurisdictions:
1) distribute property taxes periodically as they are received, or 2) opt to become a
"Teeter' county, which provides an alternative method of distributing property taxes.
Under this alternative, the County guarantees each taxing jurisdiction its proper
share of property taxes and distributes that revenue to the other taxing jurisdiction,
regarding of when or whether the property taxes are actually paid. The County
establishes a Tax Loss Reserve Fund to insure that the County will eventually be
reimbursed for any delinquent taxes which have already been distributed to other
taxing jurisdictions. Because the County keeps all penalties and interest on
delinquent taxes, it is able to insure that the County General Fund never loses any
money from having advanced the property taxes to the other taxing jurisdictions.
This alternative has been available to counties for several decades, but until the
1994-95 fiscal year only five counties took advantage of these alternative provisions
(Contra Costa, Siskiyou, Modoc, EI Dorado & Solano).
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CONTINUED ON ATTACHMENT: YES SIGNATURE:&".4z
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE( . �/! LWze=C,
ACTION OF BOARD ON March 17 1 Q96 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS(ABSENT #3 ) 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.
ATTESTED March 12, 1996
Contact: County Administrator PHIL BATCHELOR,CLERK OF THE BOARD OF
cc: Auditor-Controller SUPERVISORS AND COUNTY ADMINISTRATOR
Les Spahnn; Heim, Noack, Kelly&Spahnn
1121 L Street, Suite 100
Sacramento, CA 95814 BY DEPUTY
10i
Those counties that first implemented the "Teeter" provisions for the 1994-95 fiscal
year were allowed to keep what otherwise would have been a one-time windfall for
the schools. This would have occurred because in non-Teeter counties, property
taxes are distributed as they are received. This means that the schools (and all
other taxing jurisdictions) do not receive their share of property taxes which become
delinquent until those taxes are actually paid.
The advantage for other taxing jurisdictions in "Teeter counties" is that the county
fronts the property taxes for all other jurisdictions and reimburses itself from the
property taxes and interest and penalties when the property taxes are paid or
ultimately from the Tax Loss Reserve Fund.
When a county switches from "non-Teeter" to "Teeter" status, all the other taxing
jurisdictions receive a one-time bonus because they no longer have to wait to
receive their share of delinquent taxes. When the property tax shift was made for
the 1994-95 fiscal year, Revenue & Taxation Code Section 97.3(a)(5) was added to
allow as a credit against the property taxes which were being transferred to the
schools, the schools' share of the delinquent property taxes where the county was
also switching to becoming a Teeter county. Since the schools now receive the
single largest share of the property taxes in most counties, they would also have
received the largest benefit from having the county switch to being a Teeter county.
This windfall, which the State would ultimately have received since the larger
transfer of property taxes to the schools would have reduced the State's obligation
to the schools, was left with the county in the form of a credit against what was being
transferred to the school through the ERAF.
The five original "Teeter" counties were disadvantaged when the bulk of the other
counties became Teeter counties in 1994-95, because since they were already
"Teeter" counties, the schools received all of the transfer, including the current year
delinquencies. As a result, these five counties were unable to offset their property
tax transfer with this one-time "windfall", which the State ultimately received through
reduced subventions to the schools.
Senator Leslie has introduced SB 1845 which, as introduced, would simply extend
through the 1996-97 fiscal year, the opportunity for counties to switch to being a
"Teeter" county and take advantage of this one-time opportunity to retain what would
otherwise have been a windfall. Senator Leslie represents two of the original
"Teeter" counties (Modoc and EI Dorado). We are asking those counties to ask
Senator Leslie to amend SB 1845 to permit the five original "Teeter" counties to
retain their share of the delinquent taxes and penalties, as all other counties that
have switch to being "Teeter" counties have been allowed to do. If Senator Leslie
is willing to amend SB 1845 along these lines, we believe the Board of Supervisors
should strongly support SB 1845.
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SENATE BILL No. 1845
Introduced by Senator Leslie
' February 22, 1996
An act to amend Section 97.36 of the Revenue and Taxation
Code,relating to local government finance, and declaring the
urgency thereof, to take-effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 1845, as introduced, Leslie. Local government finance:
property tax revenue allocations: Teeter Plan credit.
Existing property tax law requires that, -for purposes of
determining property tax revenue allocations in each county
for the 1992-93 and .1993-94 fiscal years, the amounts of
property tax revenue deemed allocated in the prior fiscal year
to the county, cities, and special districts be reduced in
accordance with certain formulas. It requires that the
revenues not allocated to the county, cities, and special
districts as a result of these reductions be transferred to the
. _.: :..: .r. ; Educational Revenue Augmentation Fund in that county for
y allocation to school districts, community college districts, and
the county office of education. Existing law modifies these
reductions and transfer provisions by decreasing a county's
-� reduction and transfer .amount, attributable in the 1994-95
fiscal year to the reduction determined for that county for the
1993-94 fiscal year, by the amount of increased allocations
made in the 1994-95 fiscal year to certain educational entities
as a result of the county's adoption for that fiscal year of a
specified alternative method for the distribution of ad
valorem property tax revenues.
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SB 1845 — 2 —
This bill would expand this modification to also decrease a
county's reduction and transfer amount, attributable in the
1996-97 fiscal year to the reduction determined for that
county in the 1993-94 fiscal year, by the amount of increased
allocations made -in. the 1996-97 fiscal year to certain
educational entities as a result of the county having first
adopted for the 1996-97 fiscal year that same specified
alternative method for the distribution of ad valorem
property tax revenues. By imposing new duties upon county
auditors in the annual allocation of ad valorem property tax
revenues, this bill would impose a state-mandated local
program.
The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated
by the state. Statutory provisions establish procedures for
making that reimbursement.
This bill would provide that no reimbursement is required
by this act for a specified reason.
This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee.: yes.
State-mandated local program: yes.
The people of the ,State of California'do enact as follows.•
1 SECTION 1. Section 97.36 of the Revenue and
2 Taxation Code is amended to read:
3 97.36. (a) Notwithstanding any other provision of
4 this chapter, for the 1994,4% designated fiscal year, the
5 amount of the revenue allocation-reduction with respect
6 to a qualified county that is attributable in that fiscal year
7 to the. reduction determined for that county for the
8 1993-94 fiscal year pursuant, to paragraph (1) of
9 subdivision (a) of Section 97.3 or its predecessor section
10 shall be -reduced by the amount of any increased
- ed
11 revenues, allocated in the 4994L% designated fiscal year
1.2 in that county to a ."qualifying school entity" as defined
13 in paragraph (5) of subdivision (a) of Section 97.3 or its
14 predecessor section, that would not have been so
. 15 allocated but for that county being a qualified county. For
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- 3 — SB 1845
tse a 1 . purposes of this section, a "qualified. county" means a
the 2 county or city or county that has first implemented for the
that 3 1994-95 or 1996-97 fiscal year the alternative procedure
ased 4 for the distribution of property tax levies that is
•tain 5 authorized by Chapter 2 (commencing with Section
first 6 4701) of Part 8.
ified 7 (b) Forpurposes of this section, `designated fiscalyear`
rem 8 means the 1994-95 fiscal year with respect to a qualified
-inty 9 county that first implemented for the 1994-95 fiscal year
tax 10 the alternative method for the distribution of property
ocal 11 tax levies that is authorized by Chapter 2 (commencing
12 with Section 4701) of Part 8, and the 1996-97 fiscal year
urse 13 with respect to a qualified county that first implemented
ited 14 for the 1996-97fiscal ysar that same alternative method
for 15 SEC. 2. No reimbursement is required by this act
16 pursuant to Section 6 of Article XIII B of the California
fired 17 Constitution because this act provides for offsetting
18 savings to local agencies or school districts that result in
.tely 19 no net costs to the local agencies or school districts, within
20 the meaning of Section 17556 of the Government Code.
yes. 21 Notwithstanding Section 17580 of the Government
22 Code, unless otherwise specified,the provisions of this act
23 shall become operative on the same date that the act
►ws• 24 takes effect pursuant to the California Constitution.
25 SEC. 3. This act is an urgency statute necessary for the
and 26 immediate preservation of the public peace, health, or
27 safety within the meaning of Article IV of the
I of 28 Constitution and shall go into immediate effect. The facts
the 29 constituting the necessity are:
)ect 30 In order to provide timely and essential fiscal relief to
rear 31 counties that have not received equal treatment with
the 32 respect to the annual allocation of ad valorem property
of 33 tax revenues, it is necessary that this act take effect
tion 34 immediately.
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