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SB-448 Local government: organization: districts.(2017-2018)

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Date Published: 04/18/2017 09:00 PM
SB448:v97#DOCUMENT

Amended  IN  Senate  April 18, 2017
Amended  IN  Senate  April 04, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 448


Introduced by Senator Wieckowski

February 15, 2017


An act to amend Section 26909 of, to add Sections 56040.5 12463.4, 56040.5, and 56042 to, and to add Article 9.5 (commencing with Section 53898) to Chapter 4 of Part 1 of Division 2 of, and to add Article 6 (commencing with Section 56879) to Chapter 5 of Part 3 of Division 3 of, Title 5 of of, the Government Code, and to amend Section 2611.6 of the Revenue and Taxation Code, relating to local government.


LEGISLATIVE COUNSEL'S DIGEST


SB 448, as amended, Wieckowski. Local government: organization: districts.
(1) Existing law requires the officer of each local agency, as defined, who has charge of the financial records of the local agency, to furnish to the Controller a report of all the financial transactions of the local agency during the next preceding fiscal year within 90 days of the close of each fiscal year, or within 110 days if the report is furnished in an electronic format. Existing law also requires a report of an audit of a special district’s accounts and records made by a certified public accountant or public accountant to be filed with the Controller and the county auditor of the county in which the special district is located within 12 months of the end of the fiscal year or years under examination.
This bill would require each special district, on or before September 1, 2018, and every 2 years thereafter, to submit an audit covering the previous 2 fiscal years to the Controller, as specified. that those audit reports also be filed with the local agency formation commission of either the county in which the special district is located or, if the special district is located in 2 or more counties, the county containing the greatest percentage of the assessed value of taxable property of the district. This bill would require the Controller, on or before October 1, 2018, and every year thereafter, to create a list of idle districts, as defined, and notify each special district that has been identified as an idle district, on or before November 1, 2018, and every 2 years thereafter. This bill would require a each special district that has received notice that the Controller has identified the special district as an idle district to submit, within 180 days, with every audit or other specified documents filed with the Controller and the local agency formation commission, a statement of purpose, as specified. The bill would require the Controller to post each statement of purpose it receives on its Internet Web site. The bill would also require the Controller to publish on the Controller’s Internet Web site a comprehensive list of special districts on or before July 1, 2019, and to annually update that list.
(2) The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 provides the exclusive authority and procedure for the initiation, conduct, and completion of changes of organization and reorganization for cities and districts, as specified.
This bill would require a local agency formation commission to dissolve any special district that is an inactive district. The bill would additionally require a local agency formation commission to initiate proceedings for the dissolution of idle districts, as specified. This bill would define the terms “inactive district” and “idle district” for these purposes. By increasing the duties of local officials, this bill would impose a state-mandated local program.
(3) Existing property tax law requires that each county tax bill, or a statement accompanying that bill, include specified information.
This bill would additionally require that each county tax bill, or a statement accompanying that bill, to include a list of all services provided by a city, county, special district, or school district that are funded by the general ad valorem property tax and any special taxes or special assessments levied. By increasing the duties of local officials, this bill would impose a state-mandated local program.
(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 12463.4 is added to the Government Code, to read:

12463.4.
 On or before July 1, 2019, the Controller shall publish on the Controller’s Internet Web site a comprehensive list of special districts. The Controller shall update the list every year thereafter.

SEC. 2.

 Section 26909 of the Government Code, as amended by Section 1 of Chapter 164 of the Statutes of 2016, is amended to read:

26909.
 (a) (1) The county auditor shall either make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of every special district within the county for which an audit by a certified public accountant or public accountant is not otherwise provided. In each case, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards.
(2) If an audit of a special district’s accounts and records is made by a certified public accountant or public accountant, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards, and a report thereof shall be filed with the Controller and Controller, with the county auditor of the county in which the special district is located. located, and with the local agency formation commission of the county in which the special district is located, unless the special district is located in two or more counties, then the county containing the greatest percentage of the assessed value of taxable property of the district. The report shall be filed within 12 months of the end of the fiscal year or years under examination.
(3) Any costs incurred by the county auditor, including contracts with, or employment of, certified public accountants or public accountants, in making an audit of every special district pursuant to this section shall be borne by the special district and shall be a charge against any unencumbered funds of the district available for the purpose.
(4) For a special district that is located in two or more counties, this subdivision shall apply to the auditor of the county in which the treasury is located.
(5) The county controller, or ex officio county controller, shall effect this section in those counties having a county controller or ex officio county controller.
(b) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with one of the following, performed in accordance with professional standards, as determined by the county auditor:
(1) A biennial audit covering a two-year period.
(2) An audit covering a five-year period if the special district’s annual revenues do not exceed an amount specified by the board of supervisors.
(3) An audit conducted at specific intervals, as recommended by the county auditor, that shall be completed at least once every five years.
(c) (1) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with a financial review, or an agreed-upon procedures engagement, in accordance with the appropriate professional standards, as determined by the county auditor, if the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed one hundred fifty thousand dollars ($150,000).
(C) The special district shall pay for any costs incurred by the county auditor in performing an agreed-upon procedures engagement. Those costs shall be charged against any unencumbered funds of the district available for that purpose.
(2) If the board of supervisors is the governing board of the special district, it may, upon unanimous approval, replace the annual audit of the special district required by this section with a financial review, or an agreed-upon procedures engagement, in accordance with the appropriate professional standards, as determined by the county auditor, if the special district satisfies the requirements of subparagraphs (A) and (B) of paragraph (1).
(d) (1) A special district may, by annual unanimous request of the governing board of the special district and with annual unanimous approval of the board of supervisors, replace the annual audit required by this section with an annual financial compilation of the special district to be performed by the county auditor in accordance with professional standards, if all of the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed one hundred fifty thousand dollars ($150,000).
(C) The special district shall pay for any costs incurred by the county auditor in performing a financial compilation. Those costs shall be a charge against any unencumbered funds of the district available for that purpose.
(2) A special district shall not replace an annual audit required by this section with an annual financial compilation of the special district pursuant to paragraph (1) for more than five consecutive years, after which a special district shall comply with subdivision (a).
(e) Notwithstanding this section, a special district shall be exempt from the requirement of an annual audit if the financial statements are audited by the Controller to satisfy federal audit requirements.
(f) Upon receipt of the financial review, agreed-upon procedures engagement, or financial compilation, the county auditor shall have the right to appoint, pursuant to subdivision (a), a certified public accountant or a public accountant to conduct an audit of the special district, with proper notice to the governing board of the special district and board of supervisors.
(g) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.

SEC. 3.

 Section 26909 of the Government Code, as added by Section 2 of Chapter 164 of the Statutes of 2016, is amended to read:

26909.
 (a) (1) The county auditor shall either make or contract with a certified public accountant or public accountant to make an annual audit of the accounts and records of every special district within the county for which an audit by a certified public accountant or public accountant is not otherwise provided. In each case, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards.
(2) If an audit of a special district’s accounts and records is made by a certified public accountant or public accountant, the minimum requirements of the audit shall be prescribed by the Controller and shall conform to generally accepted auditing standards, and a report thereof shall be filed with the Controller and Controller, with the county auditor of the county in which the special district is located. located, and with the local agency formation commission of the county in which the special district is located unless the special district is located in two or more counties, then the county containing the greatest percentage of the assessed value of taxable property of the district. The report shall be filed within 12 months of the end of the fiscal year or years under examination.
(3) Any costs incurred by the county auditor, including contracts with, or employment of, certified public accountants or public accountants, in making an audit of every special district pursuant to this section shall be borne by the special district and shall be a charge against any unencumbered funds of the district available for the purpose.
(4) For a special district that is located in two or more counties, this subdivision shall apply to the auditor of the county in which the treasury is located.
(5) The county controller, or ex officio county controller, shall effect this section in those counties having a county controller or ex officio county controller.
(b) A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with one of the following, performed in accordance with professional standards, as determined by the county auditor:
(1) A biennial audit covering a two-year period.
(2) An audit covering a five-year period if the special district’s annual revenues do not exceed an amount specified by the board of supervisors.
(3) An audit conducted at specific intervals, as recommended by the county auditor, that shall be completed at least once every five years.
(c) (1)   A special district may, by unanimous request of the governing board of the special district and with unanimous approval of the board of supervisors, replace the annual audit required by this section with a financial review, in accordance with the appropriate professional standards, as determined by the county auditor, if the following conditions are met:
(A) All of the special district’s revenues and expenditures are transacted through the county’s financial system.
(B) The special district’s annual revenues do not exceed one hundred fifty thousand dollars ($150,000).
(2) If the board of supervisors is the governing board of the special district, it may, upon unanimous approval, replace the annual audit of the special district required by this section with a financial review in accordance with the appropriate professional standards, as determined by the county auditor, if the special district satisfies the requirements of subparagraphs (A) and (B) of paragraph (1).
(d) Notwithstanding this section, a special district shall be exempt from the requirement of an annual audit if the financial statements are audited by the Controller to satisfy federal audit requirements.
(e) The section shall become operative on January 1, 2027.

SECTION 1.SEC. 4.

 Article 9.5 (commencing with Section 53898) is added to Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code, to read:
Article  9.5. Idle Districts
53898.

(a)On or before September 1, 2018, and every two years thereafter, each special district shall submit an audit to the controller covering the previous two fiscal years.

(b)A special district may elect to submit a statement of purpose and financial review pursuant to paragraph (2) of subdivision (b) of Section 53898.5 to the controller no more than once every five years.

53898.5. 53898.
 (a) On or before October 1, 2018, and every two years thereafter, the Controller shall create a list of special districts that are idle, based upon the audits received pursuant to Section 53898. idle. A special district shall be included on that list and considered idle if either of the following apply: the special district has not submitted financial materials to the Controller pursuant to Section 26909 by two years from the date the financial materials were due.

(1)Both of the following apply:

(A)The special district has had no financial transactions within the audited time period.

(B)The special district has had no revenue within the audited time period.

(2)The special district has failed to submit an audit pursuant to Section 53898.

(b) (1) On or before November 1, 2018, and every two years thereafter, the Controller shall notify a special district if the Controller has added the special district to the list pursuant to subdivision (a).

(2)(A)Upon notification pursuant to paragraph (1), a special district shall, within 180 days, submit a statement of purpose to the Controller. The

(2) (A) A special district shall submit a statement of purpose with every audit, financial review, agreed-upon procedures engagement, or financial compilation the special district submits to the Controller and the local agency formation commission. The statement of purpose shall include all of the following:
(i) A list of any previous efforts made by the special district, the local agency formation commission, or the county toward dissolution, reorganization, or consolidation of the special district.
(ii) The date that the special district last performed a service.
(iii) Any planned date that the special district expects to perform a service.
(iv) An explanation for why services provided by the special district cannot be provided by the county or city in which the special district is located.
(v) A list of services provided by the special district that are also provided by the county, county or city, if any.
(B) The Controller shall publish each statement of purpose received pursuant to this subdivision on its the Controller’s Internet Web site.

SEC. 2.SEC. 5.

 Section 56040.5 is added to the Government Code, to read:

56040.5.
 “Idle district” means a district included on the list created by the Controller pursuant to Section 53898.5. 53898.

SEC. 3.SEC. 6.

 Section 56042 is added to the Government Code, to read:

56042.
 “Inactive district” means a special district that meets all of the following:
(a) The special district has had no financial transactions in the previous fiscal year.
(b) The special district has no assets.
(c) The special district has no fund equity.
(d) The special district has no outstanding debts, judgments, litigation, contracts, liens, claims, or postemployment liabilities.

SEC. 4.SEC. 7.

 Article 6 (commencing with Section 58879) 56879) is added to Chapter 5 of Part 3 of Division 3 of Title 5 of the Government Code, to read:
Article  6. Idle and Inactive Special Districts

56879.
 (a) The commission shall dissolve inactive districts. The commission shall hold one public hearing on the dissolution of an inactive district pursuant to this section. The dissolution of an inactive district shall not be subject to either any of the following:
(1) Protest proceedings, as defined in Section 56069.5.
(2) A report pursuant to Section 56665.
(3) Determinations pursuant to subdivision (b) of Section 56881.
(4) Requirements for commission-initiated changes of organization described in paragraph (3) of subdivision (a) of Section 56375.
(b) An inactive district may not object to a proceeding pursuant to this section.

56879.5.
 (a) The commission shall initiate proceedings to dissolve an idle district identified by the Controller pursuant to Section 53898.5 53898 if the special district remains on that list after two audits are submitted pursuant to that section. for two years.

(b)The commission shall initiate proceedings to dissolve an idle district that has not submitted a statement of purpose within 180 days pursuant to paragraph (2) of subdivision (b) of Section 53898.5.

(c)

(b) If the commission determines that, based upon the information contained in a statement of purpose submitted pursuant to paragraph (2) of subdivision (b) of Section 53898.5, 53898, there is sufficient grounds to initiate a dissolution, reorganization, or consolidation, the commission may utilize the statement of purpose to initiate the process. Failure to submit a statement of purpose shall be sufficient grounds to initiate a dissolution, reorganization, or consolidation.

(d)

(c) An idle district may not object to dissolution pursuant to this section.

SEC. 5.SEC. 8.

 Section 2611.6 of the Revenue and Taxation Code is amended to read:

2611.6.
 The following information shall be included in each county tax bill, whether mailed or electronically transmitted, or in a separate statement accompanying the bill:
(a) The full value of locally assessed property, including assessments made for irrigation district purposes in accordance with Section 26625.1 of the Water Code.
(b) The tax rate required by Article XIII A of the California Constitution.
(c) The rate or dollar amount of taxes levied in excess of the 1-percent limitation to pay for voter-approved indebtedness incurred before July 1, 1978, or bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the voters on or after June 4, 1986.
(d) The amount of any special taxes and special assessments levied.
(e) The amount of any tax rate reduction pursuant to Section 96.8, with the notation: “Tax reduction by (name of jurisdiction).”
(f) The amount of any exemptions. Exemptions reimbursable by the state shall be shown separately.
(g) The total taxes due and payable on the property covered by the bill.
(h) Instructions on tendering payment, including the name and mailing address of the tax collector.
(i) The billing of any special purpose parcel tax as required by paragraph (2) of subdivision (b) of Section 53087.4 of the Government Code, or any successor to that paragraph.
(j) A list of all services provided by a city, county, special district, or school district that are funded by the general ad valorem property tax and any special taxes or special assessments levied.
(k) Information specifying all of the following:
(1) That if the taxpayer disagrees with the assessed value as shown on the tax bill, the taxpayer has the right to an informal assessment review by contacting the assessor’s office.
(2) That if the taxpayer and the assessor are unable to agree on a proper assessed value pursuant to an informal assessment review, the taxpayer has the right to file an application for reduction in assessment for the following year with the county board of equalization or the assessment appeals board, as applicable, and the time period during which the application will be accepted.
(3) The address of the clerk of the county board of equalization or the assessment appeals board, as applicable, at which forms for an application for reduction in assessment may be obtained.
(4) That if an informal or formal assessment review is requested, relief from penalties shall apply only to the difference between the county assessor’s final determination of value and the value on the assessment roll for the fiscal year covered.

SEC. 6.SEC. 9.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution for certain costs that may be incurred by a local agency or school district because, in that regard, this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
However, if the Commission on State Mandates determines that this act contains other costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.