For more information, please contact Dorothy Holzem at 916.650.8133, or Betsy Hammer at 916.650.8108.
Tax Amnesty for Marijuana Dispensaries – Comments Requested
A sales tax amnesty proposal has been introduced as Assembly Bill 567 (Gipson) to provide medical marijuana dispensaries a six month window to get current on sales tax payments or risk losing their dispensary license. The amnesty program would carry strict compliance requirements and threatens dispensaries with license revocation if they are eligible to participate but chose not to do so. Dispensaries eligible for the amnesty program would not be assessed a monetary penalty, which is sent to the state General Fund, if they pay their full back taxes plus interest owed in addition to following other requirements.
The State Board of Equalization estimates the State and local governments could recoup between $50 - $100 million in unpaid sales tax, with potentially $20 million or more being returned to counties pursuant to current allocations of state and local sales and use taxes. Counties may wish to consider if granting the BOE authority to revoke locally issued licenses for non-compliant dispensaries is an appropriate approach. Comments should be sent to Dorothy Holzem, CSAC Legislative Representative.
Property Tax Measure Stalls but Possible Threat Remains – Comments Requested
Senior homeowners seeking property tax exemptions when buying more expensive homes would have been helped by Senate Bill 378 (Beall) and companion measure Senate Constitutional Amendment 9 (Beall). The proposal would expand on the voter-approved Proposition 60 that allows homeowners age 55 and over (and permanently disabled individuals) gain a property tax exemption through a base year value transfer from their previous home to a new residence of equal or lesser value. Neither bill is still moving following CSAC lobbying efforts against the measures but the sponsors, the California Realtors Association, will pursue this topic through new legislation in 2016.
SB 378 stalled in Senate Appropriations Committee when it was given a $7 million dollar price tag by the Board of Equalization and Department of Finance estimated substantial new Proposition 98 obligations to cover that loss, totaling upwards of $350 million.
However, the sponsors refute the claim that counties, cities, special districts and schools would lose money. This is because of the reassessment of home values for all properties involved in the transaction. This may hold true in some circumstances, but counties with Proposition 90 ordinances (the ability to transfer base year values across county lines) should take a close look at potential fiscal impacts to their property tax revenues.
CSAC opposed the measure unless counties would be able to “opt-in” to the expanded program, much like the authority granted under Proposition 90. Each housing market and local property values are unique, and the Board of Supervisors should retain authority in budget decisions of this nature.
CSAC is seeking feedback on potential local fiscal impacts in light of real estate and property value trends in counties as California prepares for the next economic downturn. Comments should be sent to Dorothy Holzem, CSAC Legislative Representative.
Report on County Mandate Payment Deficiencies Available
The State Controller’s Office has prepared a report of current state mandate debt where counties sought reimbursement for services rendered. The report breaks down each mandate claim by county, as of December 31, 2015. The report is available here. Note: This report does not include interest payment calculations, which total an estimated $200 million statewide for all local agencies.
This debt is generally referred to as “post-2004” mandate debt. It follows the “pre-2004 mandate” debt that was fully repaid in the FY 2015-16 budget and provided counties with approximately $580 million for services rendered with interest.
For 2016, CSAC is focused on a two-pronged approach to address the current outstanding mandate debt that totals nearly $1.2 billion statewide for local agencies. First, CSAC will be working with the Administration to develop a pay down plan to make counties whole before the Brown Administration leaves office. In addition, CSAC will explore mandate reimbursement reform opportunities to help ensure on-time payments to local agencies for any new mandates and that the state avoids backlogs that could lead to dangerous liabilities.
New Year, New Mandate Reimbursements Explored
With an eye towards maximizing reimbursements for state-mandated services, the CSAC Mandate Service Committee met to discuss the Governor’s proposed budget and bills with potential mandate impacts. This Committee meets regularly to determine potential reimbursement opportunities and to navigate the CSM process and includes county, city, and special district representatives.
The Committee discussed the Governor’s budget proposal in the context of state mandates. The Committee had previously considered AB 953, 2015, Weber at its December meeting, and the Governor’s budget proposal includes $10 million to start paying for the initial costs that cities and counties will begin to immediately incur. Costs will likely increase significantly as the bill is fully implemented, but this may present an interesting strategy for state mandates: receive the money up front, rather than going through the lengthy and complicated reimbursement process.
The Committee also discussed several bills from the 2015 legislative session that may have potential mandate impacts: in the public safety arena, AB 1343, 2015, Thurmond and in the world of elections, AB 44, 2015, Mullin; AB 477, 2015, Mullin; AB 683, 2015, Low; AB 1020, 2015, Ridley-Thomas; and AB 1461, 2015, Gonzalez.
CSAC welcomes county officials from all departments to participate. Mandate Service Committee meetings are scheduled for the Thursday prior to the Commission on State Mandates hearings (schedule available here); attendees have the option of calling in to the meeting or attending in person at the CSAC offices. Interested parties should contact Betsy Hammer (email@example.com) to receive updates and join the committee for future meetings.