1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 MARCH 27, 2019 8 9 10 11 ITEM K4 12 LEGISLATIVE, RESEARCH & STATISTICS 13 DIVISION CHIEF'S REPORT; 14 ITEM K4.1 15 UPDATE ON LEGISLATIVE ISSUES 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board of Honorable Malia S. Cohen Equalization: Chair 4 Honorable Antonio Vazquez 5 Vice Chair 6 Honorable Ted Gaines First District 7 Honorable Mike Schaefer 8 Fourth District 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 For the Board of Brenda Flemings 13 Executive Director 14 Toya Davis Clerk 15 Board Proceedings 16 Mark Durham Chief 17 Legislative, Reasearch & Statistics Division 18 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MARCH 27, 2019 4 ---oOo--- 5 MS. DAVIS: Our next item is K4.1, 6 Legislative, Research & Statistics Division Update on 7 Legislative Issues. 8 The second part is the update on ACA 2, 9 AB 576. 10 Third item will be update on Joint Senate 11 Committee's Information Hearing. 12 And the fourth will be an overview of the 13 Governor's Proposed Budget for Fiscal Year 2019-2020. 14 Mr. Durham. 15 MS. COHEN: Thank you. 16 Welcome. 17 MR. DURHAM: Thank you. 18 Chair Cohen and Honorable Members, I'm 19 Mark Durham with the Legislative, Research and 20 Statistics Division. And first I'll provide you an 21 update on the Legislation. 22 So new bills that have been introduced: 23 On March 21st, the Governance and Finance 24 Committee introduced SB 791. Which establishes a new 25 formula for allocating the value of certified 26 aircraft, based on the time spent in the state in the 27 previous calendar year. 28 And since this was just introduced, we have 3 1 not done an analysis on this yet. 2 For the upcoming Property Tax Hearing, 3 there's one today with the Governor of Finance. It 4 actually started at 9:30 this morning. And they're 5 looking at two bills. They're looking at -- that 6 interest us. They were looking at SB 294, which is a 7 welfare exemption; and also SB 364, which is a 8 veteran's base year value factoring. 9 On November -- actually, excuse me. 10 On April 9th, 2019 the Assembly Budget 11 Committee 4 for State Administration has been 12 cancelled. 13 And then for key legislative days: 14 On May 31st is the last day for each House 15 to pass bills introduced in that house. 16 June 3rd is the date that the bills jump 17 over to the other House and the process begins again. 18 September 13th is the last day for a bill to 19 be passed. 20 And October 13th is the last day for the 21 Governor to sign veto bills that have been passed by 22 September 13th. 23 MS. COHEN: Excuse me, Mr. Durham. Do you 24 have notes or something for us? There's nothing in 25 our binder. 26 MR. DURHAM: No, it's just an update. 27 MS. COHEN: Okay. Thank you. 28 MR. DURHAM: So moving on to the update on 4 1 ACA 2. 2 ACA 2 has not been assigned a committee; so, 3 therefore, as of this date, there's no change of that 4 bill. 5 Assembly Bill 576 is the companion bill to 6 ACA 2. On March 21st, this bill was amended to 7 transfer the remaining powers and duties of the BOE 8 to the CDTFA, and the appellate functions to the OTA. 9 And basically what it did is it defines 10 CDTFA as the -- CDTFA as the department; OTA as the 11 office; and the BOE as the Board. 12 On March 25th the bill was rereferred to the 13 committee on Rev. and Tax. And that is scheduled to 14 be heard on April 22nd at the Rev and Tax Committee. 15 Moving on to Senate Bill 577, which is the 16 BOE spot bill, and amends Revenue and Taxation Code 17 15570.28. 18 This bill was amended on March 25th, and it 19 has not been assigned to a committee yet. 20 Any questions on those? 21 So moving on to the update on the Joint 22 Senate. 23 MS. STOWERS: Madam Chair. I'm sorry. 24 What's the introduction date for SB 791? 25 MR. DURHAM: 791 -- 26 MS. STOWERS: The aircraft. 27 MR. DURHAM: That was March 21st. 28 MS. STOWERS: Oh, okay. 5 1 MS. COHEN: Mr. Durham, in the future, it 2 would be helpful if you were able to submit 3 something, a document that -- with these important 4 dates. Just so we can have something -- 5 MR. DURHAM: Okay. 6 MS. COHEN: -- to follow along with your 7 conversation. We're a little bit at a disadvantage. 8 You're giving out these dates. And if we were able 9 to have something, again, in our binders to 10 supplement the conversation, it would just inform the 11 conversation a little better. 12 MR. DURHAM: Okay. 13 MS. COHEN: Thank you, Mr. Durham. 14 MR. DURHAM: Sure. 15 MS. COHEN: Thank you. 16 MS. STOWERS: So, Mr. Durham, this 17 particular bill, I think it might be helpful if you 18 gave a little background on -- you're going to do 19 your analysis. But -- I'll wait for the analysis. 20 MR. DURHAM: Okay. 21 MS. STOWERS: Members, this has been an 22 ongoing issue where the Board has to set the date of 23 when the aircrafts are going to be valued, whether 24 it's valued in January or March or -- yeah. Pick a 25 date. 26 The assessors in the industry have worked 27 together to come to a conclusion that it's best to 28 have it valued on a 365-day basis. 6 1 MS. COHEN: Mm-hm. 2 MS. STOWERS: But it requires some rule 3 changes on our part in order to get to that 365. 4 So that's what SB 791 is doing. And that 5 really is a very important piece of legislation that 6 I'm looking forward to seeing the bill analysis. 7 Don't want to -- I would dare not tell you 8 guys how to do your job. But that's something that 9 you want to sponsor or support. 10 MR. GAINES: Yes. 11 MS. COHEN: Thank you. I appreciate that 12 background. 13 MR. GAINES: If I'm understanding, 14 Ms. Stowers, that that is a -- that was a negotiated 15 agreement -- 16 MS. STOWERS: Yes. 17 MR. GAINES: -- moving forward -- 18 MS. STOWERS: Moving forward, yeah. 19 MR. GAINES: -- with legislation. 20 MS. STOWERS: Yeah. 21 MR. GAINES: Thank you. 22 MR. DURHAM: Okay. 23 Moving on to the update on the Joint Senate 24 Committee's Informational Hearing. 25 This was on March 6th, and the BOE Chair and 26 the Executive Director testified at a Joint 27 Governance and Finance and Budget and Fiscal Review 28 Subcommittee 4 on State Administration and General 7 1 Government. And I have not heard any comments or 2 received any action regarding this hearing. 3 Moving on to the final item, which is the 4 overview of the Governor's Proposed Budget for the 5 BOE, the timeline for the Governor's Proposed 6 Budget -- Proposed Budget is on January 10th. The 7 Governor submits the budget to the Legislature. By 8 midnight on June 15th, the Legislature must pass the 9 Budget Bill. 10 Once it's passed and signed by the Governor, 11 the Budget Bill becomes law, and becomes -- and it's 12 effective on July 1st. And the new fiscal year 13 begins. 14 For the the fiscal year 19/20, the 15 Governor's Proposed Budget, I guess it takes effect 16 on July 1st, 2019, becomes the Budget Act of 2019. 17 For the BOE, the proposed budget is 29.9 18 million. And this is comprised of the County 19 Assessed Standards Program, totaling 16.9 million. 20 And it's also the State Assessed Properties Program, 21 which totals 13 million. 22 Again, this is the 29.9 million. And we do 23 not anticipate any changes in this budget. And it's 24 been fairly consistent for the last several years. 25 And, again, this will become the Budget Act 26 of 2019, and it will become effective on July 1st, 27 2019. 28 And that concludes my update. 8 1 MS. COHEN: Thank you very much for your 2 update. 3 Colleagues, do you have any other questions 4 for Mr. Durham? 5 MR. GAINES: A statement, if I could. 6 MS. COHEN: Absolutely. I'll take a 7 statement. Yeah, absolutely. 8 MR. GAINES: Yeah. Just a statement in 9 terms of ACA 2 and AB 576. 10 I continue to make sure that I'm at the 11 Capitol speaking to Legislatures, and try to get a 12 sense of what folks are thinking. And I'm not seeing 13 a whole lot of appetite to move forward with changing 14 the BOE. 15 I mean, if you take a look at what happened 16 with AB 102 and the reforms that were put in that 17 legislation, we're doing everything we can to adhere 18 to those to make sure we have a good working 19 organization here. 20 And the impression I'm getting talking to 21 Legislators is why not just let that lie, and let us 22 implement. Let us get the -- get the BOE -- let's 23 give them some time to function under AB 102. 24 That doesn't mean we shouldn't be vigilant. 25 MS. COHEN: Mm-hm. 26 MR. GAINES: And we need to continue to make 27 sure that we're communicating our messages across, 28 you know, the aisle with both parties -- 9 1 MS. COHEN: Mm-hm. 2 MR. GAINES: -- and in both Houses. And 3 move forward and be vigilant. 4 MS. COHEN: Thank you. 5 Mr. Vazquez. 6 MR. VAZQUEZ: Yeah. 7 I just wanted to echo the same. 8 I think you're right. I think we need to 9 keep on it, and really keep their, you know, when 10 they say our foot to the metal here on this petal. 11 Especially moving forward. 12 And it's interesting in talking to some of 13 the members as I'm going around. Those that were 14 here and actually voted for AB 102 are now regretting 15 it. Because they're seeing what's not functioning in 16 this new body that they created. They thought it was 17 going to solve all the problems. And they're 18 realizing that it actually might have created some 19 new problems for them. 20 So I think we need to keep pushing real hard 21 on our end of it. And whatever you and staff can do 22 to provide us more ammunition and intelligence on 23 this is very helpful as we're meeting several of the 24 members. 25 MR. GAINES: I had one member tell me that 26 why would we reopen that? That was so painful when 27 they were voting on AB 102. It was a difficult 28 decision. 10 1 And here we are now just trying to make sure 2 we live in the spirit of that and implement it. And 3 in this case, he did not want to take another look at 4 it. 5 And I've heard similar comments from other 6 folks that I'm meeting with. 7 MS. COHEN: Thank you. 8 Mr. Schaefer. 9 MR. SCHAEFER: Do we know if Assemblyman 10 Nazarian has had any second thoughts since he's had 11 the benefit of feedback from his colleagues over the 12 last couple months? 13 MS. COHEN: I'm unaware of any information. 14 Mr. Durham, do you know of anything? 15 MR. DURHAM: I have not heard any. 16 MS. COHEN: Thank you. 17 Colleagues, any other specific questions 18 about the proposed budget? 19 Any follow-up questions about the Senate -- 20 the Joint Senate Informational Hearing? 21 MR. VAZQUEZ: The only thing I was 22 wondering -- and I don't know if this is appropriate. 23 But I wonder if the members feel, or a consensus to 24 invite some of these legislators out there to come 25 and make a presentation before us. Especially folks 26 that are pushing ACA 2. 27 MS. COHEN: I'm definitely open to welcoming 28 Assemblyman Nazarian into our house. And he and his 11 1 band of merry persons. 2 MR. VAZQUEZ: Because, I mean, if it's a 3 good policy move, I'm open to it. But I haven't been 4 able to figure out how this is actually improving the 5 situation. I think it makes it worse. But I could 6 be wrong. 7 MS. COHEN: Well, I appreciate that. We 8 will then reach out -- we will reach out and send 9 invitations to -- particularly to Assemblyman 10 Nazarian to come join us at perhaps the next Board 11 Meeting to explain -- or not explain, but to share 12 with us the policy arguments that he sees are most 13 prominent in the ACA 2. 14 Mr. Schaefer. 15 MR. SCHAEFER: I think we are the prime 16 defender of Prop 13. And if John Capal would want to 17 speak to us, he's welcome. 18 MS. COHEN: I believe that there is a matter 19 that's qualified for the ballot that will talk about 20 the split roll. And we will have a series of 21 hearings on that particular matter. 22 Most important, paying attention to the 23 feedback of our assessors. I think they have a very 24 unique perspective that we do need to check with them 25 on. So we will -- we will be doing that. 26 Mr. Gaines. 27 MR. GAINES: Yeah, just one more comment. 28 I wanted to thank Mr. Durham for bringing 12 1 this forward, our latest report. 2 I know you're giving us updates on a weekly 3 basis. And I appreciate that. But I think, just as 4 something that would help me, and I think the other 5 Board Members, is that if we could have an outline of 6 items that would be discussed in our agenda, that 7 would be helpful. 8 I know we have it for some items. Other 9 items, we don't. And so just as a matter of routine, 10 would be helpful if we could just have an outline. 11 And we're looking at a lot of stuff throughout the 12 week. And so the reminder on dates for movement of 13 legislation, I think, is a -- 14 MS. COHEN: Helpful. 15 MR. GAINES: -- is a great point that we'd 16 have that. Even if it's kind of a summary of what 17 you've already given us in weeks' past, it would be 18 good to have that in our agenda. 19 MS. FLEMING: Duly noted. We will make sure 20 to help you with that very thing. 21 MR. GAINES: And that goes to everybody -- 22 MS. FLEMING: For all of them. 23 MR. GAINES: -- that's speaking before us. 24 MS. FLEMING: Duly noted. We'll take that 25 assignment. 26 MS. COHEN: All right. Thank you very much. 27 Any other business, questions or statements? 28 All right. Seeing none. 13 1 Thank you, Mr. Durham. We appreciate your 2 contribution to the discussion. 3 ---oOo--- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization, certify 9 that on March 27, 2019 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 14 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: May, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 15