A bill from Assemblyman Luis Alejo and State Sen. Anthony Cannella to relieve San Benito County of $3.5 million in debt unanimously passed through an Assembly committee Wednesday, according to Alejo’s office.
Assembly Bill 440 is the latest attempt to have the county’s debt relieved for lacking contributions to the Educational Revenue Augmentation Fund from 1993 to 2001. After its passage Wednesday, the bill will head to another Assembly committee for further consideration.
Alejo, D-Salinas, attributed the debt to a computing error and pointed out that other counties have been forgiven for the same type of ERAF debt. San Benito is the last remaining county with such a debt for the ERAF program, which shifts local money into a state fund for education.
According to Alejo’s statement:
Assembly Bill 440, authored by Assemblymember Luis Alejo (D-Salinas), passed out of the Assembly Committee on Local Government with a unanimous bipartisan vote of 9 to 0. Assembly Bill 440, a bipartisan effort co-authored by Senator Anthony Cannella (R-Ceres), corrects an accidental longstanding property tax allocation error that has cast a shadow over San Benito County for almost two decades. In effect, the bill will alleviate San Benito County from reimbursing the state $3.5 million.
“San Benito County moved one step closer today toward achieving financial debt relief to the tune of $3.5 million,” states Alejo. “Yesterday, California also moved one step closer toward applying the same standard of financial fairness to the last county in the state to be burdened with ERAF debt.”
The State Controller’s audits conducted in 2005 and 2009 indicated that San Benito County underfunded the Educational Revenue Augmentation Fund (ERAF) for the fiscal years between 1993 and 2001. The county disagreed with the finding, but agreed to move forward using the methodology recommended by the State Controller’s Office.
While trying to address the audit’s findings, a subsequent error was made due to the use of an incorrect base year. This new error, which unknowingly occurred in 1997, was not detected until a subsequent audit was completed in 2005. Unfortunately, the small error that began in 1997 grew to an unmanageable burden by the time it was discovered in 2005.
San Benito County was not alone in making this type of error. In fact, two legislative efforts occurred between 2001 and 2004 to address these types of ERAF errors for other counties, but the timing of the clean-up legislation and the discovery of the error disqualified the county from any of the relief. San Benito County is currently the only remaining county with an outstanding ERAF issue.
“This debt forgiveness for San Benito County is long overdue,” states Alejo.
“San Benito County has been forced to accept a $3.5 million common mistake made unbeknownst to them — a mistake other counties have made and have been granted relief. And while we continue to recover from a devastating recession, we must provide the means and relief necessary to ensure our communities remain strong and continue their path to economic recovery,” said Cannella. “AB 440 corrects this unfortunate mistake, allowing San Benito County to move beyond and focus resources on vital public services.”
AB 440 will be heard next in the California State Assembly Committee on Appropriations.
