BILL ANALYSIS
SB 10
Page 1
SENATE THIRD READING
SB 10 (Leno)
As Amended July 8, 2009
Majority vote
SENATE VOTE :21-16
TRANSPORTATION 9-5 REVENUE & TAXATION 6-2
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|Ayes:|Eng, Blumenfield, |Ayes:|Charles Calderon, Beall, |
| |Buchanan, Brownley, | |Coto, Ma, Portantino, |
| |Galgiani, | |Saldana |
| |Bonnie Lowenthal, John A. | | |
| |Perez, Solorio, Torlakson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Jeffries, Conway, |Nays:|Harkey, Hagman |
| |Garrick, Miller, Niello | | |
| | | | |
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SUMMARY : Enacts the Local Assessment Act. Specifically, this
bill :
1)Authorizes county boards of supervisors, by ordinance, to
impose a voter-approved local assessment (VALA) for general
fund purposes, under the following conditions:
a) The ordinance is approved by a two-thirds vote of the
board of supervisors;
b) The ordinance complies with requirements of existing law
pertaining to vote thresholds that must be attained before
a local government or district can impose either special or
general taxes; and,
c) The ordinance proposing the VALA is approved by a
majority vote of the voters voting on the ordinance.
2)Requires any ordinance imposing a VALA to include the
following specific provisions:
a) The VALA is to be imposed on residents of the county, or
city and county, for the privilege of operating a vehicle
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or trailer coach on public highways in the county or city
and county;
b) The amount of the VALA is to be set at the difference
between 2% of the market value of a vehicle or trailer and
the current vehicle license fee and cannot exceed 2% of a
vehicle's market value;
c) Any adjustment to the rate cannot take effect until the
first day of the fiscal year following the one in which the
change became operative; and,
d) The county or city and county contracts with the
California Department of Motor Vehicles (DMV) to administer
and collect the VALA.
3)Provides that a voter-approved ordinance imposing a VALA, if
consistent with conditions set forth in this bill, that was
approved by the board of supervisors and the voters prior to
this bill becoming effective is enforceable if both of the
following apply:
a) The assessment is not imposed until at least 90 days
after the effective date of this bill; and,
b) The board of supervisors ratifies adoption of the
ordinance after the effective date of this bill and prior
to the VALA being levied.
4)Authorizes a county, or city and county, to impose VALA at a
lower rate than otherwise provided for in this bill for
low-emission vehicles.
5)Prescribes responsibilities for DMV in administering a VALA.
6)Provides that if a county, or city and county, imposes a VALA
and, as a result, experiences a reduction in revenue, the
state is not liable for making the county, or city and county,
whole.
7)Requires the Franchise Tax Board to report to DMV an estimate
of the total amount of revenue lost to the state in the prior
year resulting from deductions taken under the Personal Income
Tax Law for taxes paid as a result of the a VALA having been
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imposed.
8)Requires DMV to withhold from VALA revenues an amount equal to
revenues lost to the state in the prior year because of
Personal Income Tax Law deductions, as reported by the
Franchise Tax Board, and to deposit that amount in the General
Fund.
EXISTING LAW :
9)Imposes a vehicle license fee (VLF), in lieu of a personal
property tax, on all California motor vehicles based on the
market value of the vehicle. The taxable value of a vehicle
is established by the purchase price of the vehicle,
depreciated annually according to a statutory schedule. For
the taxpayer, VLF is deductible on both state and federal
income taxes. Revenue from VLF is dedicated to local
governments.
Until May 19, 2009, the VLF rate had been .65% of a vehicle's
market value. ABX3 3 (Evans, Chapter 18, Statutes of 2009-10
Third Extraordinary Session) increased that rate, until July
1, 2013, to 1.15%. Revenue derived from the increase is
dedicated to the General Fund and to local public safety
programs.
10)No local government or district may impose any special tax
unless and until the special tax is submitted to the local
government or district electorate and approved by a two-thirds
vote of the voters voting in an election on the issue.
11)No local government or district may impose any general tax
unless and until such general tax is submitted to the local
government or district electorate and approved by a majority
vote of the voters voting in an election on the issue.
FISCAL EFFECT : The Senate Appropriations Committee noted that
actual revenues would depend upon the number of counties
approving an assessment and the number of vehicles registered
in those counties. For example, if only San Francisco (with
423,110 fee-paid vehicle registrations) approved an assessment
of 2% and the current VLF is 1.15%, annual local revenues
would be $43,147,220 and the estimated annual tax revenue loss
in the first year would be approximately $1.5 million.
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Estimated state revenue losses from the prior year will be
deducted by DMV from the amount collected and deposited in the
General Fund.
COMMENTS : According to the author, the VLF is one of the
largest sources of general-purpose tax revenues for California's
counties. Revenues derived from the VLF fund vital programs,
including public safety, public health, social services, fire
protection, public works, and cultural activities. Much of this
revenue was lost when the Governor signed an executive order in
2003 reducing the VLF. The author asserts that this bill gives
county voters a viable alternative to cutting services.
Further, this bill encourages acquisition of low- and
zero-emission vehicles because it authorizes counties to impose
a lower VALA for these vehicles.
Writing in opposition to this bill, DMV argues that recent
increases to the registration and vehicle license fees have
raised the average cost to register an automobile in California
to $194 and adding yet another local fee to the vehicle
registration process would be excessive and hard on the troubled
auto industry. DMV is further concerned that the option for
counties to impose a lower assessment for low-emission vehicles
would be extremely complicated and difficult for it to
implement.
Concern for the impact of vehicle sales is echoed by the
Alliance of Automobile Manufacturers. According to the
Alliance, the automobile industry is "extraordinarily
beleaguered" and sales are at historic lows. The Alliance
argues that adding another tax or fee increase will be
unsustainable. The Alliance also takes issue with the fact that
revenues raised as a result of this bill would not benefit
transportation directly.
Previous legislation: AB 799 (Leno) of 2005 and AB 1590 (Leno)
of 2007, were both very similar to this bill, except they
applied only to the City and County of San Francisco. AB 1590
was never taken up in a Senate policy committee, and the
Governor vetoed AB 799.
In his veto message, the Governor stated that he was not opposed
to modest increases in fees if such increases are approved by
the impacted voters and not addressed in a piecemeal fashion.
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In addition, he argued that, because the revenues generated by
this bill would not be directed to projects related to vehicles
but used to bolster the San Francisco's general fund, the bill
was an unfair burden to place solely on the shoulders of
motorists. The Governor further wrote, "Throughout the year, my
administration worked with members of the Legislature on a
proposal that would have given all counties the authority to
adopt, with voter approval, modest license fee add-ons to fund
environmental and traffic mitigation programs. Unfortunately,
those efforts were ultimately rejected. I encourage the
Legislature to reconsider this decision when they return next
year."
According to this author, SB 10 has been crafted to apply to all
counties, in response to the Governor's previous direction.
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093
FN: 0003653