BILL ANALYSIS �
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THIRD READING
Bill No: AB 22X1
Author: Blumenfield (D)
Amended: 6/14/11 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2011: Vehicle Fees
SOURCE : Author
DIGEST : This bill provides the necessary statutory
changes in the area of vehicles fee and tax collection in
order to enact revisions to the 2011 Budget Act.
ANALYSIS : This bill recalculates the cost shares for
Department of Motor Vehicles (DMV) administration funded
from different fees and taxes collected on vehicles. The
administrative costs paid by Vehicle License Fee (VLF) tax
would be reduced, and the administrative costs paid from
vehicle registration fees would be increased. As a result,
the amount of VLF directed to local governments would
increase by $300 million to support public safety
realignment. Vehicle registration fees would be increased
by $12 per vehicle to cover the new cost share from
registration fees.
Existing Law
1. Assigns cost shares for DMV's administrative costs based
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on the proportional amount of revenue collected from
different fees and taxes. However, the cost share for
the VLF is set in statute at what the tax revenue would
otherwise be if the rate was still set at two percent of
a vehicle's value. Instead, the permanent base rate for
the VLF is now set at 0.65 percent.
2. The Constitution specifies the allocation of the first
0.65 percent of VLF revenue. Specifically, Section 15
of Article XI requires that revenues collected over and
above the costs of collection and any refunds, be
allocated to local governments. Of approximately $1.8
billion collected at the 0.65 rate, about $330 million
of the VLF is directed to state administration (about
$325 million to DMV and about $5 million to the
Franchise Tax Board), resulting in about $1.5 billion
flowing to local governments.
3. The base rate for the vehicle registration fee is $31
annually per vehicle. The rate has not been increased
since 2004. Other fees are applied on top of the base
rate, for the Department of the California Highway
Patrol and other purposes.
4. The Constitution specifies in Section 3 of Article XIIIA
that a charge imposed for the reasonable regulatory
costs to the state incident to issuing licenses and
permits and the administrative enforcement and
adjudication thereof are defined as fees and not taxes.
This bill:
1. Sets the cost share of the VLF for DMV administration at
$25 million in 2011-12 and grows it annually thereafter
at the rate of the California Consumer Price Index. If
the Department of Finance finds in the future that the
amount provided from the VLF is not sufficient to cover
the DMV's costs of collecting the VLF, it shall notify
the Legislature and propose the necessary budget
adjustments. By reducing the share of administrative
costs paid out of the VLF, this bill will result in an
additional $300 million in VLF revenue to allocate to
cities and counties. This bill directs this $300
million into the Local Revenue Fund 2011 to be used for
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Public Safety Realignment.
2. Increases the base motor vehicle registration fee by $12
per year. This fee increase will result in new annual
fee revenue of about $300 million to cover the
administration cost of the DMV that this bill is
shifting to registration fees.
Comments
By setting the administrative costs for DMV of collecting
the VLF at $25 million, the costs or collection as a share
of total VLF tax collected is approximately one percent.
This is proportionally similar to the cost of collection
for the Franchise Tax Board for the personal income tax and
the corporate tax, and similar to the cost of collection
for the Board of Equalization for the sales tax.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
JJA:mw 6/15/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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