|Budget Issue:||Williamson Act subvention funding|
|Program:||Department of Conservation|
|Finding or Recommendation:||Approve Governor's January budget proposal to eliminate the one-time, current-year appropriation of $10 million from the General Fund for Williamson Act subvention payments to local governments that was made in 2010 policy legislation.|
Background. The Williamson Act Subvention Program was designed to help reduce development on agricultural and open-space lands by offering property tax relief to landowners who contractually agree to restrict the use of their property. The Williamson Act provides for subvention payments to local governments in order to offset loss of property tax revenue due to these lower assessments. The amount of the state subvention to localities is based on the amount and type of land under contract, but has always been less than the actual reduction in local property tax revenues. The Department of Conservation, which administers the program, estimates that individual landowners have saved anywhere from 20 percent to 75 percent in reduced property taxes each year, depending upon their circumstances.
Subvention Funding. Up until 2008-09, the state annually appropriated around $35 million to $40 million from the General Fund to local governments to partially offset the property tax loss to local governments from entering into Williamson Act contracts. Funding for subventions was suspended in the 2009 Budget Act. While the 2010 Budget Act also did not include funding for subventions, a one-time appropriation of $10 million from the General Fund for 2010-11 was made for this purpose in 2010 policy legislation (Chapter 722, Statutes of 2010 [SB 863, Committee on Budget and Fiscal Review]). The Governor’s 2011-12 budget proposes to amend statute to eliminate the current-year appropriation as a means to create $10 million in General Fund savings. The Governor's budget also proposes to essentially eliminate subvention funding in future years as well.
LAO Recommendation. In a prior-year budget analysis, we have questioned the cost-effectiveness of the subvention program. That analysis can be found here. Based on this analysis, we find that the Governor’s proposal to eliminate the current-year appropriation warrants legislative approval.