Existing law regulates real property acquired and operated by the state as wildlife management areas, and authorizes the Department of Fish and Wildlife, when income is directly derived from that real property, as provided, to annually pay to the county in which the property is located an amount equal to the county taxes levied upon the property at the time it was transferred to the state. Existing law further authorizes the department to pay the assessments levied upon the property by any irrigation, drainage, or reclamation district. Existing law requires those payments to only be made from funds that are appropriated to the department for those purposes.

This bill would require, instead of authorize, the department to make these payments subject to appropriation by the Legislature.

Existing law regulates real property acquired and operated by the state as wildlife management areas, and authorizes the Department of Fish and Wildlife, when income is directly derived from that real property, as provided, to annually pay to the county in which the property is located an amount equal to the county taxes levied upon the property at the time it was transferred to the state. Existing law further authorizes the department to pay the assessments levied upon the property by any irrigation, drainage, or reclamation district. Existing law requires those payments to only be made from funds that are appropriated to the department for those purposes.

This bill would require, instead of authorize, the department to make these payments subject to appropriation by the Legislature.

 VETO  

Bill No: SB 1188

Author:

:

Vote:

SENATE NATURAL RES. & WATER COMMITTEE: 9-0, 4/12/16

AYES: Pavley, Stone, Allen, Hertzberg, Hueso, Jackson, Monning, Vidak, Wolk

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

SENATE FLOOR: 37-0, 5/31/16

AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Leno, Leyva, Liu, McGuire, Mendoza, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk

NO VOTE RECORDED: Lara, Mitchell, Runner

ASSEMBLY FLOOR: 77-0, 8/18/16 - See last page for vote

SUBJECT:

SOURCE: Rural Counties Representatives of California

DIGEST: This bill requires, instead of authorizes, the Department of Fish and Wildlife (DFW) to pay annual in lieu payments and specified assessments to counties in which wildlife management areas are located.

ANALYSIS:

Existing law:

1. Exempts state lands, including wildlife management areas, from property taxes.
2. Authorizes DFW to compensate counties for lost property taxes and certain assessments resulting from the establishment of a wildlife management area. Payments to counties are equal to the county taxes levied upon the property at the time the state acquired the property, plus an assessments levied upon the property by any irrigation, drainage, or reclamation district.

This bill requires, instead of authorizes, DFW to pay annual in lieu payments to counties in which wildlife management areas are located. It also requires, instead of authorizes, DFW to pay assessments levied upon the property by any irrigation, drainage, or reclamation district.

Background

DFW operates 11 wildlife management areas covering over 700,000 acres throughout the state. Typically wildlife management areas are located in rural areas and they are designed to protect natural ecosystems (such as wetlands) and improve habitat for fish and wildlife. Also, these areas often provide hunting, fishing, wildlife viewing, and outdoor education opportunities.

According to the California Constitution, state lands (including wildlife management areas) are exempt from the property tax. However, state law specifies that DFW shall provide those counties containing wildlife management areas with payments from funds available to the department. These “payments in lieu of taxes” (PILT) are designed to offset lost property tax revenues that counties and other local governments would be able to collect on these properties if they were not state-owned.

PILT payments were made between 1957 and 2002 from the General Fund. A partial payment was made in FY 2002-03. Since then the state stopped providing PILT payments in the budget in order to achieve cost savings.

The Legislative Analyst’s Office (LAO) recently noted that some local governments may be providing services (for example, maintaining local facilities) on wildlife management areas that they do not receive property tax revenue from.

In the Budget for FY 2015-16, DFW received $644,000 from the General Fund to resume PILT payments in 2015-16. The funding was allocated to 36 counties containing wildlife management areas with an average payment of just under $17,900.

Until 2015, the language of Section 1504 from the Fish and Game Code made PILT payments mandatory. Pursuant to SB 83 (Committee on Budget and Fiscal Review, Chapter 24, Statutes of 2015), PILT payments became optional. SB 83 also precludes counties from spending these payments on school districts.

Comments

Policy considerations in providing PILT. As the LAO recently pointed out, PILT payments are in line with existing statutory direction and longstanding historical practice before 2002. In addition, some local governments might provide services on state wildlife management areas from which they do not receive property taxes. For example, some counties might incur costs to maintain local facilities on DFW wildlife management areas, and might step in to provide law enforcement services when necessary.

That said, no other state department that makes PILT payments to local jurisdictions for state-owned land. This includes other state properties for which local governments might provide some services, such as state buildings owned by the Department of General Services and state parks. The Administration has also argued that the lost property taxes can be particularly challenging for rural counties. While there is some variation, on average, PILT payments to these counties would be a fraction of a percent of their non-school property tax revenues.

Staff comments from the Senate Appropriations Committee. Staff notes that the cost pressures associated with this bill could equate to an annual appropriation of $644,000. Staff also notes the $8 million in PILT arrears. If enacted, this bill would become effective in 2017, and any resulting obligations for PILT arrears would begin at that time.  This bill does not impact any arrears that may have accrued prior to enactment of the bill.

Related/Prior Legislation

SB 83 (Committee on Budgets, Chapter 24, Statutes of 2015) made in lieu payment permissive, and prohibited the allocation of in lieu payments to a school district, a community college district, or a county superintendent of schools.

SB 234 (Wolk, 2015) would have made a one-time appropriation of $19 million from the General Fund to the department to pay for outstanding PILT obligations to counties (The bill was held in the Senate Appropriations Committee).

SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and would have continuously appropriated $2 million annually for future PILT payments (The bill was held in the Senate Appropriations Committee).

AB 1452 (Wolk, 2007) would have appropriated $7,415,000 to pay PILT arrears (The bill was subsequently amended to a different subject area).

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for PILT.

SUPPORT: (Verified 10/10/16)

Rural County Representatives of California (source)

Alpine County Board of Supervisors

California Central Valley Flood Control Association

California State Association of Counties

Colusa County Board of Supervisors

Glenn County Board of Supervisors

Humboldt County Board of Supervisors

Inyo County Board of Supervisors

Lake County Board of Supervisors

Marin County Board of Supervisors

Merced County Board of Supervisors

Modoc County Board of Supervisors

Mono County Board of Supervisors

Nevada County Board of Supervisors

Northern California Water Association

San Diego County Board of Supervisors

Shasta County Board of Supervisors

Siskiyou County Board of Supervisors

Sutter County Board of Supervisors

Tehama County Board of Supervisors

Yolo County Board of Supervisors

Yuba County Board of Supervisors

OPPOSITION: (Verified 10/10/16)

None received

ARGUMENTS IN SUPPORT: According to the author of the bill, “While urban areas throughout the state have mostly recovered from the impacts of the Great Recession, rural areas of the state continue to struggle to provide core services. SB 1188 seeks to provide these much needed and duly owed, funds back to the affected counties by reverting Fish and Game Code to the original intent of the law by changing ‘may’ back to ‘shall.’”

According to the sponsor of the bill, Rural County Representatives of California (RCRC), “While RCRC appreciates that the Brown Administration included funding in the State Budget for PILT for the 2015-16 fiscal year after over a decade of non-payment, and has proposed to fund PILT in the 2016-2017 fiscal year, future Administrations may well choose to simply not make PILT payments – leaving counties without recourse due to the now permissive nature of the language. SB1188 will help ensure that PILT payments are made to counties both today and in the future, honoring the implicit state commitment that began over six decades ago.”

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 1188 without my signature.

The Department of Fish and Wildlife's wildlife areas are a vast network of public lands that provide hunting, fishing and refuge for wildlife. Payments in lieu of taxes keep rural counties whole so that the Department can maintain and acquire wildlife areas for the public's benefit.

Last year, after twelve years of departure, I included these payments as part of the State's base budget, and I will continue to do so.

ASSEMBLY FLOOR: 77-0, 8/18/16

AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

NO VOTE RECORDED: Dababneh, Roger Hernández, Kim

Prepared by:

10/19/16 10:47:48

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1188

Author:(McGuire, et al.)

As Introduced Ver:February 18, 2016

Majority vote

SENATE VOTE: 37-0

SUMMARY: Requires the Department of Fish and Wildlife (DFW), when income is derived from wildlife management areas, to make payments in lieu of taxes to the counties in which the state wildlife management areas are located, subject to appropriation by the Legislature. Specifically, this bill:

1. Requires, instead of authorizes, the DFW, when income is derived directly from real property acquired and operated by the state as a wildlife management area, to pay annually to the county in which the property is located an amount equal to the county taxes levied upon the property at the time the property was transferred to the state.
2. Requires, instead of authorizes, the DFW to also pay assessments levied upon the property by any irrigation, drainage, or reclamation district.

EXISTING LAW:

1. Authorizes the DFW, when income is derived directly from real property acquired and operated by the state as a wildlife management area, to pay annually to the county in which the property is located, an amount equal to the county taxes levied upon the property at the time the property was transferred to the state.
2. Authorizes the DFW to also pay assessments levied upon the property by any irrigation, drainage, or reclamation district.
3. Provides that these in lieu payments shall be made only from funds that are appropriated to the DFW for these purposes.

FISCAL EFFECT: According to the Assembly Appropriations Committee, ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for payments in lieu of taxes. Payments are required to be made from funds appropriated to the DFW by the Legislature for this purpose.

COMMENTS: This bill amends existing law, which currently authorizes but does not require the state to make payments in lieu of taxes to counties for loss of property tax revenues which would otherwise have been received for lands within the county that are operated by the state as wildlife management areas. This bill requires rather than permits these payments, but continues the condition that these payments shall only be made from funds appropriated by the Legislature to the DFW for that purpose.

State lands, including wildlife management areas, are exempt from property taxes under the State Constitution. In 1949, California established a process to offset impacts to county property tax revenues when the state acquires private property for wildlife management areas, by requiring the state to make payments to counties known as payments in lieu of taxes. Payments in lieu of taxes help small and rural counties fund a variety of programs and services that benefit county residents. The in lieu program was established with the intention of mitigating the effects of the state's land acquisition on county revenue sources.

However, the state, from fiscal year 1998-1999 through 2002-2003, only made partial in lieu payments to counties, and suspended the payments completely after 2002-2003. According to the Legislative Analyst's Office, the amount of unpaid in lieu payments in arrears is close to $8 million. According to the author and sponsor of this bill, the non-payment of these in lieu payments has been particularly burdensome on small rural counties. Last year, $644,000 was included in the 2015-16 State Budget to pay for the current year's in lieu payments. Budget trailer bill language included in SB 83 (Committee on Budget), Chapter 24, Statutes of 2015, also made the payments permissive. The State Budget for 2016-17 also includes $644,000 for the next fiscal year's payment. While the Governor's budget includes funding for the annual in lieu payment for the upcoming fiscal year, this bill seeks to ensure that counties in the future are not left without recourse due to the now permissive nature of the law.

The state's failure to pay in lieu payments has been a subject of contention for several years. It is possible that continued failure on the part of the state to pay counties the monies to which they are entitled may create negative sentiment toward existing and future wildlife management areas.

Making the statute mandatory rather than permissive may not totally solve the problem, since payment of the in lieu payments is still dependent on the Governor and the Legislature including the annual appropriations for the payments in the DFW's budget. This is demonstrated by the fact that even when the payments were mandated by statute, as they were prior to last year, the state was not making them.

Supporters note that many of California's rural counties are home to important state wildlife areas and also have other federal and state owned lands within their boundaries. In either case, these lands do not generate property tax revenues, an important source of funding for local programs and services for county residents. This bill reverses a change in statute made last year that made the program permissive rather than mandatory. Many of the counties in support of this bill note that they are owed significant amounts in arrears for unpaid in lieu payments. This bill will help ensure the state honors its commitment to make future in lieu payments to counties.

No formal opposition to this bill has been received.

Analysis Prepared by: Diane Colborn / W., P., & W. / (916) 319-2096 FN: 0004052

Date of Hearing: August 3, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 1188

Author:(McGuire) – As Introduced Ver:February 18, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires, rather than permits, the Department of Fish and Wildlife (DFW) to pay annual in lieu payments and specified assessments to counties in which state wildlife management areas are located.

FISCAL EFFECT:

Ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for payments in lieu of taxes (PILT). Payments are required to be made from funds appropriated to DFW by the Legislature for this purpose.

COMMENTS:

1. Purpose. According to the author, payments in lieu of taxes help small and rural counties fund a variety of programs and services that benefit county residents. The in lieu program was established with the intention of mitigating the effects of the state's land acquisition on county revenue sources. This bill is intended to ensure that counties in the future are not left without recourse due to the now permissive nature of the law.
2. Background. State-owned lands, including wildlife management areas, are exempt from property taxes under the State Constitution. However, existing law requires DFW to compensate counties for lost property taxes and certain assessments resulting from the establishment of a wildlife management area. No other state department makes PILT payments to local jurisdictions for state-owned lands.

These PILT payments are equal to the county taxes levied upon the property at the time the state acquired the property, plus any assessments levied upon the property by any irrigation, drainage, or reclamation district. State PILT payments were only partially paid from FY 1998-99 until FY 2002-03, when they were suspended.

In the budget for FY 2015-16, DFW received $644,000 from the General Fund to resume PILT payments in 2015-16. The funding was allocated to 36 counties containing wildlife management areas with an average payment of just under $17,900.

Last year's resources trailer bill, SB 83 (Committee on Budgets) made in lieu payments permissive, and prohibited the allocation of in lieu payments to a school district, a community college district, or a county superintendent of schools. This bill requires payments, upon appropriation by the Legislature, but retains the prohibition of in lieu payments to schools.

According to the LAO, the PILT arrears equal approximately $8 million. This bill does not impact any arrears accrued prior to enactment.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: June 28, 2016

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Marc Levine, Chair

SBPCA Bill Id:SB 1188

Author:(McGuire) – As Introduced Ver:February 18, 2016

SENATE VOTE: 37-0

SUBJECT: Wildlife management areas: payment of taxes and assessments

SUMMARY: Requires the Department of Fish and Wildlife (DFW), when income is derived from wildlife management areas, to make payments in lieu of taxes to the counties in which the state wildlife management areas are located, subject to appropriation by the Legislature. Specifically, this bill:

1. Requires, instead of authorizes, the DFW, when income is derived directly from real property acquired and operated by the state as a wildlife management area, to pay annually to the county in which the property is located an amount equal to the county taxes levied upon the property at the time the property was transferred to the state.
2. Requires, instead of authorizes, the DFW to also pay assessments levied upon the property by any irrigation, drainage, or reclamation district.

EXISTING LAW:

1. Authorizes the DFW, when income is derived directly from real property acquired and operated by the state as a wildlife management area, to pay annually to the county in which the property is located, an amount equal to the county taxes levied upon the property at the time the property was transferred to the state.
2. Authorizes the DFW to also pay assessments levied upon the property by any irrigation, drainage, or reclamation district.
3. Provides that these in lieu payments shall be made only from funds that are appropriated to the DFW for these purposes.

FISCAL EFFECT: According to the Senate Appropriations Committee, ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for “payments in lieu of taxes.”

COMMENTS: This bill amends the existing law, which currently authorizes but does not require the state to make payments in lieu of taxes to counties for loss of property tax revenues that would otherwise have been received for lands within the county that are operated by the state as wildlife management areas. This bill changes the "may" to "shall" but continues the condition that these payments may only be made from funds appropriated by the Legislature to the DFW for that purpose.

1. Author's Statement: Prior to last year, the law stated that when income is derived from real property acquired and operated by the state as a wildlife management area, the DFW shall pay annually to the county in which the property is located an amount equal to the taxes levied on the property at the time the title to the property was transferred to the state. This requirement became optional last year as a result of language included in SB 83 (Committee on Budget), Chapter 24, Statutes of 2015, which changed the shall to may.

In 1949, California established a process to offset impacts to county property tax revenues when the state acquires private property for wildlife management areas. Payments in lieu of taxes help small and rural counties fund a variety of programs and services that benefit county residents. The in lieu program was established with the intention of mitigating the effects of the state's land acquisition on county revenue sources. However, the state stopped appropriating funds for the in lieu payments, and the DFW stopped making the annual payments, thirteen years ago. According to the author and sponsor, the non-payment of in lieu payments has been particularly burdensome on small rural counties. While the Governor's budget includes funding for the annual in lieu payment for the upcoming fiscal year, this bill is necessary to ensure that counties in the future are not left without recourse due to the now permissive nature of the law.

1. Background: State lands, including wildlife management areas, are exempt from property taxes under the State Constitution. Until last year, state law required the state to compensate counties for lost property taxes and certain assessments through payments to counties of what are known as "payments in lieu of taxes". However, the state, from fiscal year 1998-1999 through 2002-2003, only made partial in lieu payments to counties, and suspended the payments completely after 2002-2003. According to the Legislative Analyst's Office, the amount of unpaid in lieu payments in arrears is close to $8 million. Last year, $644,000 was included in the 2015-16 budget to pay for the current year's in lieu payments. Budget trailer bill language also made the payments permissive. The proposed budget for 2016-17 also includes $644,000 for the next fiscal year's payment.
   
   The state's failure to pay in lieu payments has been a subject of contention for several years. It is possible that continued failure on the part of the state to pay counties the monies to which they are entitled may create negative sentiment toward existing and future wildlife management areas.
   
   Making the statute mandatory rather than permissive may not totally solve the problem, since payment of the in lieu payments is still dependent on the Governor and the Legislature including the annual appropriations for the payments in the DFW's budget. This is demonstrated by the fact that even when the payments were mandated by statute, as they were prior to last year, the state was not making them.
2. Prior and Related Legislation: SB 234 (Wolk) of 2015, would have appropriated $19,000,000 from the General Fund to the DFW to make in lieu payments to counties for past due amounts. SB 234 was held in the Senate Appropriations Committee.
   
   SB 1410 (Wolk) of 2014, would have appropriated $19 million to cover in lieu payments in arrears and would have continuously appropriated $2 million annually for future payments. SB 1410 was held in the Senate Appropriations Committee.
   
   AB 1452 (Wolk) of 2007, would have appropriated $7.415 million for in lieu payments in arrears, but was subsequently amended to address an unrelated issue.
   
   SB 83 (Committee on Budget), Chapter 24, Statutes of 2015, amended the law to make the payments permissive instead of required.
3. Support Arguments: Many of California's rural counties are home to important state wildlife areas and also have other federal and state owned lands within their boundaries. In either case, these lands do not generate property tax revenues, an important source of funding for local programs and services for county residents. This bill reverses a change in statute that was made by the Department of Finance last year that made the program permissive rather than required. Many of the counties in support of this bill note that they are owed significant amounts in arrears for unpaid in lieu payments. This bill will help ensure that the state honors its commitment to make in lieu payments to counties in the future.
4. Opposition Arguments: None received.

REGISTERED SUPPORT / OPPOSITION:

Support

Rural County Representatives of California (Sponsor)

Alpine County Board of Supervisors

California Central Valley Flood Control Association

California State Association of Counties

Colusa County Board of Supervisors

Del Norte County Board of Supervisors

Glenn County Board of Supervisors

Humboldt County Board of Supervisors

Inyo County Board of Supervisors

Lake County Board of Supervisors

Lassen County Board of Supervisors

Marin County Board of Supervisors

Merced County Board of Supervisors

Modoc County Board of Supervisors

Mono County Board of Supervisors

Monterey County Board of Supervisors

Napa County Board of Supervisors

Nevada County Board of Supervisors

Northern California Water Association

San Diego County Board of Supervisors

Shasta County Board of Supervisors

Sierra County Board of Supervisors

Sonoma County Board of Supervisors

Sutter County Board of Supervisors

Tehama County Board of Supervisors

Tulare County Board of Supervisors

Yolo County Board of Supervisors

Yuba County Board of Supervisors

Opposition

None on file.

Analysis Prepared by: Diane Colborn / W., P., & W. / (916) 319-2096

 THIRD READING  

Bill No: SB 1188

Author:

:

Vote:

SENATE NATURAL RES. & WATER COMMITTEE: 9-0, 4/12/16

AYES: Pavley, Stone, Allen, Hertzberg, Hueso, Jackson, Monning, Vidak, Wolk

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16

AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

SUBJECT:

SOURCE: Rural County Representatives of California

DIGEST: This bill requires, instead of authorizes, the Department of Fish and Wildlife (DFW) to pay annual in lieu payments and specified assessments to counties in which wildlife management areas are located.

ANALYSIS:

Existing law:

1. Exempts state lands, including wildlife management areas, from property taxes.
2. Authorizes DFW to compensate counties for lost property taxes and certain assessments resulting from the establishment of a wildlife management area. Payments to counties are equal to the county taxes levied upon the property at the time the state acquired the property, plus an assessments levied upon the property by any irrigation, drainage, or reclamation district.

This bill requires, instead of authorizes, DFW to pay annual in lieu payments to counties in which wildlife management areas are located. It also requires, instead of authorizes, DFW to pay assessments levied upon the property by any irrigation, drainage, or reclamation district.

Background

DFW operates 11 wildlife management areas covering over 700,000 acres throughout the state. Typically wildlife management areas are located in rural areas and they are designed to protect natural ecosystems (such as wetlands) and improve habitat for fish and wildlife. Also, these areas often provide hunting, fishing, wildlife viewing, and outdoor education opportunities.

According to the California Constitution, state lands (including wildlife management areas) are exempt from the property tax. However, state law specifies that DFW shall provide those counties containing wildlife management areas with payments from funds available to the department. These “payments in lieu of taxes” (PILT) are designed to offset lost property tax revenues that counties and other local governments would be able to collect on these properties if they were not state-owned.

PILT payments were made between 1957 and 2002 from the General Fund. A partial payment was made in FY 2002-03. Since then the state stopped providing PILT payments in the budget in order to achieve cost savings.

The Legislative Analyst’s Office (LAO) recently noted that some local governments may be providing services (for example, maintaining local facilities) on wildlife management areas that they do not receive property tax revenue from.

In the Budget for FY 2015-16, DFW received $644,000 from the General Fund to resume PILT payments in 2015-16. The funding was allocated to 36 counties containing wildlife management areas with an average payment of just under $17,900.

Until 2015, the language of Section 1504 from the Fish and Game Code made PILT payments mandatory. Pursuant to SB 83 (Committee on Budget and Fiscal Review, Chapter 24, Statutes of 2015), PILT payments became optional. SB 83 also precludes counties from spending these payments on school districts.

Comments

Policy considerations in providing PILT. As the LAO recently pointed out, PILT payments are in line with existing statutory direction and longstanding historical practice before 2002. In addition, some local governments might provide services on state wildlife management areas from which they do not receive property taxes. For example, some counties might incur costs to maintain local facilities on DFW wildlife management areas, and might step in to provide law enforcement services when necessary.

That said, no other state department that makes PILT payments to local jurisdictions for state-owned land. This includes other state properties for which local governments might provide some services, such as state buildings owned by the Department of General Services and state parks. The Administration has also argued that the lost property taxes can be particularly challenging for rural counties. While there is some variation, on average, PILT payments to these counties would be a fraction of a percent of their non-school property tax revenues.

Staff comments from the Senate Appropriations Committee. Staff notes that the cost pressures associated with this bill could equate to an annual appropriation of $644,000. Staff also notes the $8 million in PILT arrears. If enacted, this bill would become effective in 2017, and any resulting obligations for PILT arrears would begin at that time.  This bill does not impact any arrears that may have accrued prior to enactment of the bill.

Related/Prior Legislation

SB 83 (Committee on Budgets, 2016) makes in lieu payment permissive, and prohibits the allocation of in lieu payments to a school district, a community college district, or a county superintendent of schools.

SB 234 (Wolk, 2015) would have made a one-time appropriation of $19 million from the General Fund to the department to pay for outstanding PILT obligations to counties. The bill was held in the Senate Appropriations Committee.

SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and would have continuously appropriated $2 million annually for future PILT payments. The bill was held in the Senate Appropriations Committee.

AB 1452 (Wolk, 2007) would have appropriated $7,415,000 to pay PILT arrears. The bill was subsequently amended to a different subject area.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for PILT.

SUPPORT: (Verified 5/27/16)

Rural County Representatives of California (source)

Alpine County Board of Supervisors

California Central Valley Flood Control Association

California State Association of Counties

Colusa County Board of Supervisors

Glenn County Board of Supervisors

Humboldt County Board of Supervisors

Inyo County Board of Supervisors

Lake County Board of Supervisors

Marin County Board of Supervisors

Merced County Board of Supervisors

Modoc County Board of Supervisors

Mono County Board of Supervisors

Nevada County Board of Supervisors

Northern California Water Association

San Diego County Board of Supervisors

Shasta County Board of Supervisors

Siskiyou County Board of Supervisors

Sutter County Board of Supervisors

Tehama County Board of Supervisors

Yolo County Board of Supervisors

Yuba County Board of Supervisors

OPPOSITION: (Verified 5/27/16)

None received

ARGUMENTS IN SUPPORT: According to the author of the bill, “While urban areas throughout the state have mostly recovered from the impacts of the Great Recession, rural areas of the state continue to struggle to provide core services. SB 1188 seeks to provide these much needed and duly owed, funds back to the affected counties by reverting Fish and Game Code to the original intent of the law by changing ‘may’ back to ‘shall.’”

According to the sponsor of the bill, Rural County Representatives of California (RCRC), “While RCRC appreciates that the Brown Administration included funding in the State Budget for PILT for the 2015-16 fiscal year after over a decade of non-payment, and has proposed to fund PILT in the 2016-2017 fiscal year, future Administrations may well choose to simply not make PILT payments – leaving counties without recourse due to the now permissive nature of the language. SB1188 will help ensure that PILT payments are made to counties both today and in the future, honoring the implicit state commitment that began over six decades ago.”

Prepared by:

5/28/16 16:57:33

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 1188 (McGuire) - Wildlife management areas: payment of taxes and assessments

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 1188 requires, instead of authorizes, the Department of Fish and Wildlife (department) to pay annual in lieu payments and specified assessments to counties in which wildlife management areas are located.

Fiscal Impact:

• Ongoing annual cost pressures of $644,000 (General Fund) for annual obligations to counties for “payments in lieu of taxes” (PILT).

Background:

State lands, including wildlife management areas, are exempt from property taxes under the State Constitution. However, existing law (Fish and Game Code §1504) requires the department to compensate counties for lost property taxes and certain assessments resulting from the establishment of a wildlife management area. These PILT payments are equal to the county taxes levied upon the property at the time the state acquired the property, plus any assessments levied upon the property by any irrigation, drainage, or reclamation district. State PILT payments were only partially paid from FY 1998-99 until FY 2002-03, when they were completely suspended.

The PILT arrears and ongoing payments to counties have been a topic in budget discussions in recent years. According to the LAO, the PILT arrears equal approximately $8 million. At its April 9, 2015 hearing, the Senate Budget subcommittee #2 passed a motion that added an $8 million appropriation to the 2015-16 budget to pay PILT arrears. This appropriation was later removed, and replaced with a $644,000 appropriation to pay current year PILT payments. Budget trailer bill language also made the payments permissive. The FY 2016-17 budget currently includes $644,000 for the state’s PILT Program.

Proposed Law:

SB 1188 requires, instead of authorizes, the department to pay annual in lieu payments to counties in which wildlife management areas are located. It also requires, instead of authorizes, the department to pay assessments levied upon the property by any irrigation, drainage, or reclamation district. Under current statute, payments may only be made if funds are appropriated for this purpose.

Related Legislation:

SB 83 (Committee on Budgets) made in lieu payment permissive, and prohibited the allocation of in lieu payments to a school district, a community college district, or a county superintendent of schools.

SB 234 (Wolk, 2015) would have made a one-time appropriation of $19 million from the General Fund to the department to pay for outstanding PILT obligations to counties (held in the Senate Appropriations Committee).

SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and would have continuously appropriated $2 million annually for future PILT payments (held in the Senate Appropriations Committee).

AB 1452 (Wolk, 2007) would have appropriated $7,415,000 to pay PILT arrears (bill was subsequently amended to a different subject area).

Staff Comments:

Staff notes that the cost pressures associated with this bill could equate to an annual appropriation of $644,000. Staff also notes the $8 million in PILT arrears. If enacted, this bill would become effective in 2017, and any resulting obligations for PILT arrears would begin at that time.  This bill does not impact any arrears that may have accrued prior to enactment of the bill.

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SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Fran Pavley, Chair

2015 - 2016 Regular

Bill No: SB Hearing Date: April 12, 2016

Subject: Wildlife management areas: payment of taxes and assessments

BACKGROUND AND EXISTING LAW

The Department of Fish and Wildlife (DFW) operates 11 wildlife management areas covering over 700,000 acres throughout the state. Typically wildlife management areas are located in rural areas and they are designed to protect natural ecosystems (such as wetlands) and improve habitat for fish and wildlife. Also, these areas often provide hunting, fishing, wildlife viewing, and outdoor education opportunities.

According to the California Constitution, state lands (including wildlife management areas) are exempt from the property tax. However, state law specifies that DFW shall provide those counties containing wildlife management areas with payments from funds available to the department. These “payments in lieu of taxes” (PILT) are designed to offset lost property tax revenues that counties and other local governments would be able to collect on these properties if they were not state-owned.

PILT payments were made between 1957 and 2002 from the General Fund. A partial payment was made in FY 2002-03. Since then the state stopped providing PILT payments in the budget in order to achieve cost savings.

The Legislative Analyst’s Office (LAO) recently noted that some local governments may be providing services (for example, maintaining local facilities) on wildlife management areas that they do not receive property tax revenue from.

The state does not pay property taxes (CA Constitution, Article XIII, §3.)) LAO also recently noted that no other state department makes PILT payments to local jurisdictions for state-owned lands.

In the budget for FY 2015-16, DFW received $644,000 from the General Fund to resume PILT payments in 2015-16. The funding was allocated to 36 counties containing wildlife management areas with an average payment of just under $17,900.

Until 2015, the language of §1504 from the Fish and Game Code (FGC) made PILT payments mandatory. Pursuant to SB 83 (Chapter 24, Statutes of 2015), PILT payments became optional. SB 83 also precludes counties from spending these payments on school districts.

PROPOSED LAW

This bill would amend FGC §1504 to change “may” to “shall” in two locations.

As a result of this change, when income is derived directly from real property acquired and operated by the state as wildlife management areas, DFW will be required to pay annually to the county in which the property is located. The amount owed to the county will be equal to the county taxes levied upon the property at the time title to the property was transferred to the state.

ARGUMENTS IN SUPPORT

According to the author of the bill “While urban areas throughout the state have mostly recovered from the impacts of the Great Recession, rural areas of the state continue to struggle to provide core services. SB 1188 seeks to provide these much needed and duly owed, funds back to the affected counties by reverting Fish and Game Code to the original intent of the law by changing “may” back to “shall.”

According to the sponsor of the bill, “While RCRC appreciates that the Brown Administration included funding in the State Budget for PILT for the 2015-16 fiscal year after over a decade of non-payment, and has proposed to fund PILT in the 2016-2017 fiscal year, future Administrations may well choose to simply not make PILT payments – leaving counties without recourse due to the now permissive nature of the language. SB1188 will help ensure that PILT payments are made to counties both today and in the future, honoring the implicit state commitment that began over six decades ago.”

ARGUMENTS IN OPPOSITION

None received.

COMMENTS

Policy considerations in providing PILT. As the LAO recently pointed out, PILT payments are in line with existing statutory direction and longstanding historical practice before 2002. In addition, some local governments might provide services on state wildlife management areas from which they do not receive property taxes. For example, some counties might incur costs to maintain local facilities on DFW wildlife management areas, and might step in to provide law enforcement services when necessary.

That said, no other state department that makes PILP payments to local jurisdictions for state-owned land. This includes other state properties for which local governments might provide some services, such as state buildings owned by the Department of General Services and state parks. The administration has also argued that the lost property taxes can be particularly challenging for rural counties. While there is some variation, on average, PILT payments to these counties would be a fraction of a percent of their non-school property tax revenues.

Does not restore funding counties have not received since fiscal year 2002-03. Unlike previous legislative efforts to make PILT payments mandatory, there is no provision to repay counties for the lack of payments that started in 2002-03. SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and instituted a $2 million annual appropriation for PILT payments (held in the Senate Appropriations Committee)

AB 1452 (Wolk, 2007) would have appropriated $7,415,000 from the General Fund to DFW to pay PILT arrears (bill subsequently amended into a different subject area).

SUGGESTED AMENDMENTS

None.

SUPPORT

Alpine County Board of Supervisors

California State Association of Counties

Colusa County Board of Supervisors

Humboldt County Board of Supervisors

Marin County Board of Supervisors

Nevada County Board of Supervisors

Rural County Representatives of California (sponsor)

San Diego County Board of Supervisors

Sutter County Board of Supervisors

Yolo County Board of Supervisors

OPPOSITION

None received.

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