A Speech to the Orange County Board of Supervisors on AB 818, presented April 2, 1998

By James S. "Jim" Bone

Under present law, the current assessor, Brad Jacobs, can stop the county from applying for the $6.8 million in state funds for the 1998/99 fiscal year. These funds will be vital if the county is to recover from the appeals, training, and appraisal backlogs that either now exist, or will result from the current rapid rise in property values. Unfortunately, Mr. Jacobs does not recognize the need for the money and refuses to agree to the application. The following plan has been tentatively approved by members or staff of the Board of Equalization, the BOE Property Taxes Department, the Finance Department, the Assessor's Association, the California Taxpayers' Association, and the Orange County Taxpayers Association. I recommend the Board of Supervisors adopt this plan, make it possible for the new assessor to apply for funds, and correct the problems Mr.Jacobs and Mr. Guillory have created.

A PLAN TO ALLOW ORANGE COUNTY TO APPLY FOR AB 818 FUNDS IN THE 1998/99 FISCAL YEAR

The Property Tax Administration Program was enacted in 1995 as R&T Code Section 95.31. It provides that any eligible county may elect to participate, with the recommendation of the county assessor. The plan provides loans for specific purposes to correct assessment and assessment appeals problems created by the recent recession. The loans must be repaid within one year. However, one extension may be granted by the Director of Finance. The Director may also consider the accomplishments of the county in achieving its goals as outlined in its loan application, as a form of repayment. These achievements include reduction of the county's backlogs of appeals, reductions in pending Prop. 8 and new construction appraisals and assessments, and other performance measures.

THE PROBLEM:

Our current assessor will not recommend Orange County make application for the loan program, which denies Orange County access to the funds. Unfortunately, although Mr. Jacobs will retire at the end of his current term on January 4, 1999, the new assessor will not take office until after the deadline for next year's application has passed. As a result, the next assessor's decision as to county participation will only be relevant for the 1999-2000 year, and Orange County could will still lose the 1998-99 funding.

THE SOLUTION:

The obvious solution to the dilemma is to change the law in such a way as to make application without Mr. Jacobs' recommendation. Prior to Mr. Jacobs pending retirement, the county explored this alternative. At that time, the assessors' association resisted any change that would allow overall control of the assessors' staff plans to be outside of the hands of the county assessors. However, with Jacobs' retirement and 10 new assessors statewide, a law change in the current session that simply defers the date for application until the new assessor take office is consistent with the CAA objectives. If enacted, it would enable Orange County to qualify for the 1998-1999 year, and let us apply for up to 6.8 million dollars we can certainly use if we qualify and the loan is approved.

THE PLAN:

To achieve that goal, the county must find a legislative vehicle. The choices are either specific legislation, an amendment to a current bill outside the normal property tax channels, or an amendment to a technical corrections bill sponsored by the Board of Equalization, known as a ‘board bill,'which shows as a Rev & Tax Committee bill on the legislative systems.

I recommend the use of a low-profile, non-controversial technical property tax bill sponsored by the BOE. In order to use that process, Orange County would need to get support from the Finance Department and the Board of Equalization, and either support or at least no opposition from the California Taxpayers' Association, the California Assessors' Association, the Orange County Taxpayers Association, and CSAC.

Finally, the county would need to monitor the legislation and help get the bill passed. I used the internet to locate SB 2237, a technical corrections bill that the Senate Revenue and Taxation Committee introduced on March 3. It is a joint BOE/CAA bill, that already contains a minor amendment to Section 95.31. However, that minor amendment may have some opposition, and other provisions of the bill are not yet fully acceptable to the California Taxpayers' Association. SB 2235 might be more preferable, but I have not looked into the specifics of the bill.

THE PARTICIPANTS:

The following brief summaries explain my connection with various individuals, their expressed concerns and positions, and their relationship to the plan:

Martin Helmke, Legislative Analyst for Senate Rev & Tax;

I have worked with Martin on a number of bills, and I have a link to one of his bill-monitoring Excel files on my California Property Tax Resources home page. He thinks the plan will work, and will help us with the wording. However, in order to use a technical corrections bill we must have all issues resolved and all groups

Ernie Dronenberg, BOE member for our district;

Ernie was the opening speaker at my California Property Tax Conference a few years ago. He and his Chief of Staff, Craig Wilson, will support, if the California Assessors' Association also support the amendment.

Dick Johnson, Director of Property Taxes for the BOE;

I have worked with Dick on the Assessors' Handbook project for almost two years. He will help us, but also cautions we must have a consensus. He referred me to David Ginsborg in Larry Stone's Santa Clara Assessor's Office, Pedro Reyes in Finance, and to his staff member Dean Kinnee who has worked with Pedro.

Dean Kinnee, BOE Staff;

Dean is presently the supervisor of the Appeals Handbook project for the BOE. Since BOE has never done an appeals handbook, Dean asked me to submit the subject matter outline for the handbook. They are just finishing writing the handbook to my outline. Dean worked with Pedro Reyes, understands that Mr. Reyes is a key factor in Orange County's success, and could be invaluable in working out problems for Orange County in that area.

Carol Evans, Executive V.P. for Cal-Tax;

I have been involved in projects with Cal-Tax for 8 years. I was the principal editor for Cal-Tax in the AH 501 project which contains the language on the Irvine residents' 1900 series bond problem, and Carol was the Cal-Tax coordinator. They opposed AB 818, but she felt their board would not get involved in a local matter such as ours and would probably take no position. However, if we use SB 2237, it contains a change in the 571 filing deadline that some of their members don't like, and they are still working with the assessors and the board on that. She suggested we consider SB 2235 which might be less controversial.

David Ginsborg, California Assessors' Assn. Legislative Committee staff;

He expects their board will insist that control remain with the assessor. He doesn't believe they would have any objection to either moving the deadline past January 4th or allowing the assessor-elect to recommend. (As Todd Spitzer pointed out, allowing the assessor-elect to recommend won't work for this session because the deadline would lapse before the bill could take effect.)

Pedro Reyes, Finance Department;

Pedro is well aware of Orange County's situation, and is willing to work with us. However, he is opposed to any more county-specific language in the code. He would much rather find a change that would benefit multiple counties. He is the one who was firm on the ‘assessor-elect' alternative. Unfortunately, I didn't point out the effective date problem. An alternative you should explore would be to defer the deadline to February 1 for any county where the incumbent assessor will not be in office to implement that county plan. I think that would meet his criteria and still let Orange County attain its objective.

Reed Royalty, President of OC Tax;

I am on the OC Tax Board. Reed will ask the board for its support for Orange County in this matter.

California State Association of Counties:

Orange County is a member of CSAC, and you should be able to get their support. However, I am told they will not oppose the assessors.

Please note that all of the above persons made certain I understood that they represent groups which must officially act in this process. Their personal indications of support or agreement are informal and subject to their board or organization ratification. On the other hand, these individuals are very knowledgeable about their organizations and have great influence in their groups' decisions.

SUMMARY AND CONCLUSION:

At this date in an election year, Orange County should be taking some action to ensure it will be possible to apply for the AB 818 money for the next fiscal year. The plan outlined above is a workable plan. It has the benefit of using an existing bill, the legislative system that is in place for our type of change, and it recognizes and respects the relationships of the various groups and individuals that can impact the process.

I hope Orange County will assume responsibility for the plan, negotiate the necessary change with Mr. Reyes and the Assessors' Association, work out draft wording from Martin Helmke or BOE legal, and ask Ernie Dronenberg to carry it forward with BOE. The county's Sacramento representatives should be asked to monitor the bill's progress and be alert to any problems with it. If issues are with the bill are identified early enough, it should be possible to move the amendment to a more acceptable, non-controversial vehicle. If I can help in any way, please let me know.