Existing law requires the Department of Fish and Wildlife, when income is derived directly from real property acquired and operated by the state as a wildlife management area, as defined, 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 title to the property was transferred to the state, and any assessments levied upon the property by any irrigation, drainage, or reclamation district.

This bill would appropriate $19,000,000 from the General Fund to the department to make payments to counties for unpaid amounts under these provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular

SB 234 (Wolk) - Wildlife management areas: payments

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

Bill Summary:

SB 1410 would make a one-time appropriation of $19 million from the General Fund to the Department of Fish and Wildlife (DFW) to pay for outstanding obligations for “payments in-lieu of taxes” to counties.

Fiscal Impact:

One-time cost of $19 million (General Fund) for past PILT obligations.

Background:

State lands, including wildlife management areas, are exempt from property tax under the state constitution. However, existing law (FGC §1504) requires DFW to compensate counties for loss property taxes and assessments as a result of the establishment of a wildlife management area. These “payments in-lieu of taxes” (PILT) 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 have been completely suspended since FY 2002-03 and were only partially paid since FY 1998-99.

Proposed Law:

This bill would make a one-time appropriation of $19 million to fulfill the state’s outstanding obligations of PILT to counties. This bill is an urgency measure.

Related Legislation:

SB 1410 (Wolk, 2014) would have appropriated $19 million to pay the PILT arrears and 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:

The PILT arrears to the counties also has been a discussion topic through the budget. According to the LAO, the actual PILT arrears is approximately $8 million. The arrears amount was reduced because there has been overlap in PILT payments and Proposition 98 payments made to counties for school funding that is not covered by property tax revenues. Essentially, in the past, when the state was receiving a PILT and Proposition 98 payments, the lost tax revenue from wildlife management areas for education was being paid twice. If the Proposition 98 payments are accounted for, the amount due to counties is 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. Should this budget action stand in the final budget, this bill would provide an unnecessary payment.

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Fran Pavley, Chair

2015 - 2016 Regular

Bill No: SB 234 Hearing Date: March 24, 2015

Subject: Wildlife management areas: payments

BACKGROUND AND EXISTING LAW

1. The Department of Fish and Wildlife [department] operates 111 wildlife managements areas covering over 700,000 acres in locations throughout the state. Typically the wildlife management areas are located in rural areas and are designed to protect natural ecosystems and improve habitat for fish and wildlife in addition to providing recreational, hunting, fishing, wildlife viewing and outdoor education opportunities.

2. Longstanding existing law specifies that the department provide counties containing wildlife management areas with ongoing annual payments, as specified, from funds available to the department (Fish and Game Code (FGC) §1504) . 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 those properties if they were not state-owned.

3. From 1957 – 2002, PILT payments were made from the General Fund. A partial PILT payment was made in FY 2002/03. Since then the state has not made any PILT payments.

4. According to the department, the May 2014 estimate of PILT arrears is $18,682,283, or about $19 million, due to 36 counties. The annual amount due under PILT is approximately $1.6 million.

5. 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. Data to evaluate this are not available.

6. 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.

7. In the FY 2015/16 budget proposal from the Administration, resumption of annual PILT payments of approximately $644,000 is proposed. (The difference between this proposal and the department’s calculations is discussed below.)

PROPOSED LAW

This bill would appropriate $19 million from the General Fund to the department to make payments to the counties for unpaid amounts due under PILT and make supporting legislative findings and declarations.

ARGUMENTS IN SUPPORT

According to the author, “SB 234 ensures the [department] is able to make unpaid in lieu or tax payments to counties that transferred property to the state to be used as wildlife areas.”

“The in lieu fees program was established with the intention of mitigating the effects of the State’s land acquisition policies on county revenues sources. However, adequate funding for this program has not been provided since 2001 – 02, leaving the burden on counties to struggle to provide for their residents with reduced revenues. The non-payment of PILT monies has been especially burdensome on small, rural counties. While the Governor’s budget includes funding for PILT payments in the upcoming fiscal year, this legislation is still necessary to make the impacted counties whole.”

According to RCRC, Mono and other counties, “[t]hese PILT payments are intended to offset adverse impacts to county property tax revenues when the state acquires private property for wildlife management areas.”

Yuba County adds, “[l]ike other California counties, we are committed to fulfill our responsibility to provide mandated services to public lands yet struggle each year to overcome inadequate funding. It’s important to understand that the solvency of California is not truly achieved until obligations are fully met at the local level.”

ARGUMENTS IN OPPOSITION

None received.

COMMENTS

Current budget action on PILT. As noted above, the Governor’s budget for FY 2015/16 has proposed a $644,000 allocation from the General Fund to the department to be used to resume PILT payments to the affected 36 counties. The proposed payments range from less than $20 (Placer and San Luis Obispo Counties) to $132,485 (Riverside County) with an average payment of just under $17,900. The Governor’s estimate of PILT includes funding for counties, cities and special districts, but not school districts. According to the Administration, providing PILT payments to school districts would be duplicative of existing state General Fund payments to support schools. The Administration has also proposed trailer bill language that makes PILT payments discretionary (by modifying FGC §1504) and that requires that no PILT funds be allocated to school districts or similar. The Senate Budget Subcommittee #2 has not heard this item yet, and the Assembly Budget Subcommittee #3 held it open at its March 4, 2015 hearing.

What is the appropriate amount for arrears? The most recent department calculations indicate approximately $19 million is the total amount due for PILT arrears. The department calculation does not make the adjustment for school districts that is made in the Governor’s recent budget proposal. LAO estimates that the PILT arrears using the Administration’s adjustment to exclude school districts is approximately $7,785,000.

Related recent (non-Budget) legislation

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 the department to pay PILT arrears. (bill subsequently amended into a different subject area)

SUPPORT

Rural County Representatives of California (sponsor)

California State Association of Counties

County of Yolo

Del Norte County

Humboldt County

Mono County

San Diego County Board of Supervisor

Supervisor from Tulare County

Yuba County Board of Supervisors

1 Individual

OPPOSITION

None Received

-- END --