Property Tax Bills Moving Through the Legislature

Two bills that would address property tax issues are moving through the state legislature.  One bill has garnered support from business and agriculture entities while the other has strong opposition.

• AB 2372 (Ammiano) passed through the Assembly Revenue and Taxation Committee this week with substantial amendments, however the amendments are not in print and have not been thoroughly analyzed.  The bill would trigger reassessment when at least 90 percent of a property's ownership changes in any three-year period. It would not apply, however, to incremental changes of ownership through stock market trades. The amended bill is attempting to address a practice that Real Estate Investment Trusts have been using to make a transfer, but avoid triggering a reassessment under Prop 13.  This practice was popularized by several high profile hotel transfers that avoided the tax increases.  The bill is intended to be narrowly tailored to prevent unintended consequences.  The California Chamber of Commerce and other business entities have removed their opposition and are now supportive. The association is watching this very carefully and analyzing the impacts. 
• SB 1021 (Wolk), a majority-vote bill, would pave the way for major tax increases on California business property in the form of school parcel taxes. A significant tax threat to all California property owners was approved by the Senate last week, in a 21-15 vote. The bill would allow more than 1,000 school districts to impose unlimited tax increases on commercial property owners.  The bill is being strongly opposed by a coalition of business, real estate and agriculture interests.

We will continue to engage on the issues and inform the legislature of our concerns as well as help the coalitions refine their positions and advocate. 

Groundwater Regulation Becoming Major Policy Issue

As the drought and discussions on the Governor's water action plan continue, constituencies are pushing hard for a comprehensive method to regulate groundwater in California.  From water entities such as ACWA, the Water Foundation and environmental groups all releasing groundwater regulation proposals, the Legislature is also positioned to take action.  Two bills have been introduced AB 1739 (Dickinson) and SB 1168 (Pavley) to provide comprehensive regulation of groundwater with the State Water Resources Control Board as the regulating entity. 

Governor Brown is expected to release his administration's proposal next week.  The Governor has outlined a plan mandating all groundwater basins to implement local governing bodies and develop groundwater management plans over the next five years.  For basins that do not have "sustainable yield" the districts will need to make progress towards that goal.  The administration has also outlined its intentions to provide local entities with tools such as funding and groundwater experts to help develop and implement the plans.  The Governor included $142 million in his May revise to address drought and groundwater issues. 

Below are links to both bills (they are expected to be significantly amended in the near future).

http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_1701-1750/ab_1739_bill_20140422_amended_asm_v98.pdf 

http://www.leginfo.ca.gov/pub/13-14/bill/sen/sb_1151-1200/sb_1168_bill_20140423_amended_sen_v97.pdf 

Anti GMO Bill Heads to Senate Suspense

A bill mandating labeling for all foods that contain GMO ingredients was sent to the Senate Appropriations Suspense File this week.  SB 1381 (Evans) was substantially amended by the author in an attempt to reduce costs of the bill below the suspense threshold and have the bill move out of committee.  However, the analysts still identified $1.1 million in costs to implement the bill and $850,000 costs to the state for ongoing costs dealing with enforcement and compliance.

A large coalition of agriculture, food, business, technology, biotech and pharmaceutical entities are opposing the bill.  The Los Angeles Times recently published an editorial opposing the legislation.  The bill will be eligible to come off the suspense file and be voted on by the members of the committee on May 23. 

Governor Releases May Revise

On Tuesday, the Governor released his May Revisions to his January budget proposal.  The nearly $160 billion spending plan included modest increases for social service programs, but also billions of dollars to address long-term debt.  The May revision reflects the state's best projection of revenues for the coming fiscal year and touches off a rush of budget negotiations at the Capitol ahead of the adoption of an annual spending plan in June.

Brown's new plan says 1.4 million more people than projected in January signed up for Medi-Cal under the Obamacare rollout this year, which will cost the state about $1.2 billion more than the Governor's budget predicted five months ago.  Brown's budget also confirmed that state revenue had grown enough to trigger a 2 percent pay increase for most state employees beginning July 1. Brown and 14 of the 21 bargaining units agreed to contracts that included the triggered pay hike. The budget projects that the raise will cost $183.7 (m) for the fiscal year, $90.3 (m) of it from the general fund.

Brown's budget plan also includes $142 (m) to cover expenses from the ongoing drought.

The revised budget release follows the announcement last week that Brown and legislative leaders had reached agreement on a major component of the annual spending plan, a rainy-day fund measure that, if approved by voters, would set aside 1.5 percent of general fund revenue every year, plus revenue from capital-gains taxes in especially lucrative tax years.

The measure would replace a reserve measure already on the Nov. 4 ballot but criticized by public employee unions and, in recent weeks, Republicans who acknowledged problems with its wording.

Assembly Swears in New Speaker

The California Assembly has sworn in Toni Atkins, a Democrat from San Diego, as the 67th speaker of the California Assembly.  Speaker Atkins will be eligible to serve for the rest of this term and through 2016, when she will be termed out of the California Assembly.  She is expected to announce some new committee and leadership assignments as the budget closes and the session progresses into the summer. 

UC Cooperative Extension Turns 100

As expected, the Grocery Manufacturers Assn. (GMA) this week announced it will sue the state of Vermont to overturn the state's new genetically modified ingredient (GM) labeling law.  The new state law mandates any human food product carry a label declaring it contains any ingredient derived from biotechnology. 

The case will come down to whether the presence or use of GM ingredients constitutes a health or safety risk to consumers, a risk about which the consumer needs to know.  GMA's argument will focus on the underlying decades of science, USDA's review and deregulation and the last 30 years of use across the crop area.  In addition to the use of less water and pesticides with GM crops, GMA will point out the expense and confusion of a patchwork of state laws requiring labeling.  

The state will argue a consumer's right to know what's in their food, with support from various activists groups.  Expecting the grocery industry to sue, Vermont lawmakers set up a defense fund to which consumers can contribute.