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California Groups Call on Governor to Retain Property Tax Deadline

Dated Feb. 1, 2021

SUMMARY BY TAX ANALYSTS

Several California groups wrote a letter to Gov. Gavin Newsom (D) requesting that he reject a COVID-19-related request to extend the April 10 property tax payment deadline, arguing that counties, cities, schools, and special districts rely on property tax revenue to cover expenditures, which coincide with efforts to maintain essential services and infrastructure.

January 22, 2021

The Honorable Gavin Newsom
Governor, State of California
State Capitol
Sacramento, CA 95814

The Honorable Toni Atkins
President Pro Tem, California State Senate
State Capitol, Room 205
Sacramento, CA 95814

The Honorable Anthony Rendon
Speaker, California State Assembly
State Capitol, Room 219
Sacramento, CA 95814

Honorable Members, California State Legislature
State Capitol
Sacramento, CA 95814

RE: Retaining the April 10, 2021 Property Tax Deadline

Dear Governor Newsom, President Pro Tem Atkins, Speaker Rendon, and Members of the Legislature:

California's local agencies are working diligently to maintain essential services and infrastructure during this ongoing and unprecedented public health emergency. Our organizations, representing all levels of local government in the State, are once again urging you to retain the April 10, 2021 deadline for property tax payments.

You are in receipt of a letter from California business interests that includes several requests for economic relief; a request to move the April 10, 2021 payment deadline is included in that letter to you. We urge you to reject that request, for a second time. In Executive Order N-61-20, you have provided counties with the authority needed to forgive any penalties and interest associated with a taxpayer's hardship to pay timely, and that includes small businesses who need extra time to pay without being penalized. That executive order is being implemented smoothly and is working as intended. There is simply no reason to move the deadline for all taxpayers, as requested by many in the business community.

Counties, cities, schools, and special districts rely on the cash flow from property taxes in April to meet all their expenditure needs up until the December installment. Summer months are times where local agencies require liquidity for capital projects, bond payments, etc. Disruptions to that liquidity have immediate and dire consequences.

When EO N-61-20 was issued, it was clear that the Governor and Legislators understood completely how critical upholding the payment deadline was for the continuity of local governments. After 10 months of navigating this pandemic and managing budgets to ensure reimbursable expenditures could be paid timely, even if reimbursement could be weeks or months away, it is truly unfathomable to contemplate such a massive disruption in local funding. Further, bonded indebtedness secured by real property relies on the payment dates identified in statute. If those funds are not collected timely, a technical default could occur, jeopardizing future bond structures and potentially triggering demand notices on the debt holders.

While we certainly appreciate and sympathize with the many businesses struggling to stay viable in this crisis, local agencies cannot simply close their doors and cease offering their services. Schools must continue to function, even in distance learning; counties must continue to provide for public health and safety, cities and special districts must continue to deliver services. We cannot simply close up, and we cannot skip payroll or debt obligations. Your partnership in upholding the deadline, while providing authority for targeted and individual relief, has been effective in getting help to those who need it but keeps government functioning and solvent. For these reasons, we ask for your continued partnership regarding property tax payment deadlines.

Thank you.

Respectfully,

Darby Kernan
Deputy Executive Director
California State Association of Counties
916-327-7500

Carolyn M. Coleman
Executive Director
League of California Cities
916-658-8200

Carlos Machado
Legislative Advocate
California School Boards Association
916-669-2552

Neil McCormick
Chief Executive Officer
California Special Districts Association
916-442-7887

Dan Mierzwa
Treasurer & Tax Collector, Yuba County
Legislative Chair, California Association of County Treasurers and Tax Collectors
530-749-7840

Jean Kinney Hurst
Legislative Advocate
Urban Counties of California
916-327-7531

Paul A. Smith
Senior Vice President, Governmental Affairs
Rural County Representatives of California
916-447-4806

Sara C. Bachez
Chief Governmental Relations Officer
California Association of School Business Officials
916-447-3783

Iván Carrillo, Legislative Advocate
Association of California School Administrators
916-329-3855

Cc:
The Honorable Betty Yee, State Controller
The Honorable Toni Atkins, Senate President pro Tempore
The Honorable Anthony Rendon, Assembly Speaker
The Honorable Holly Mitchell, Chair, Senate Committee on Budget and Fiscal Review
The Honorable Phil Ting, Chair, Assembly Committee on the Budget
The Honorable Antonio Vazquez, Chair, Board of Equalization
The Honorable Mike Schaefer, Vice-Chair, Board of Equalization
The Honorable Malia M. Cohen, Board of Equalization
The Honorable Ted Gaines, Board of Equalization
Keely Bosler, Director, Department of Finance
Nicolas Maduros, Director, Department of Tax and Fee Administration

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