BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   AB 289|
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                                 THIRD READING


          Bill No:  AB 289
          Author:   Cedillo (D)
          Amended:  5/24/11 in Assembly
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE :  9-0, 6/29/11
          AYES:  Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez, 
            Kehoe, 
          La Malfa, Liu
           
          SENATE APPROPRIATIONS COMMITTEE  :  9-0, 8/25/11
          AYES:  Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley, 
            Price, Runner, Steinberg
           
          ASSEMBLY FLOOR  :  79-0, 5/31/11 - See last page for vote


           SUBJECT  :    Sales and use taxes:  exemption:  charitable 
          thrift stores

           SOURCE  :     State Board of Equalization


           DIGEST :    This bill extends the sunset date until January 
          1, 2019 for the current sales and use tax exemption for 
          retail items sold by thrift stores operated by nonprofit 
          organizations to assist individuals with human 
          immunodeficiency virus or acquired immune deficiency 
          syndrome.

           ANALYSIS  :    Existing law imposes a sales tax on retailers 
          for the privilege of selling tangible personal property.  
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                                                                AB 289
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          The tax is based upon the retailer's gross receipts from 
          sales in this state.  Existing law imposes a complementary 
          use tax on the storage, use, or other consumption in this 
          state of tangible personal property purchased from any 
          retailer.  The use tax is imposed on the purchaser, and 
          unless the purchaser pays the use tax to a retailer 
          registered to collect the California use tax, the purchaser 
          remains liable for the tax, unless the use is exempted.  
          The use tax is set at the same rate as the state's sales 
          tax and must be remitted to the State Board of Equalization 
          (BOE).  

          State law provides a sales and use tax exemption for used 
          pieces of clothing, household items, or other retail items 
          sold by specified thrift stores operated by a "nonprofit 
          organization."  To qualify for the exemption, the thrift 
          store's purpose must be to generate revenue for the funding 
          of medical, hospice, or social services for chronically ill 
          individuals, and at least 75 percent of the thrift store's 
          net income must be so used.  Existing law defines a 
          "nonprofit organization," for purposes of the exemption, as 
          a nonprofit organization that provides medical, hospice, or 
          social services to individuals with a chronic, 
          life-threatening illness, including human immunodeficiency 
          virus (HIV) disease or acquired immune deficiency syndrome 
          (AIDS).  

          This bill repeals the current January 1, 2012 sunset date 
          for the current sales and use tax exemption for retail 
          items sold by thrift stores operated by nonprofit 
          organizations to assist individuals with HIV or AIDS and 
          extends it to January 1, 2019.   

          This bill provides that the state shall not reimburse any 
          local agency for lost sales and use tax revenues.

           Comments
           
          The author introduced this bill because the sales and use 
          tax exemption will expire on January 1, 2012 and this bill 
          extends that sunset to January 1, 2019 so that services may 
          still be provided to chronically ill patients regardless of 
          their ability to pay. 


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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  Yes

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions              2011-12      2012-13     
           2013-14   Fund  

          SUT revenue loss            $246                  $492    
                           $492                  General
                                                 $16        $31     
                           $31                   Special*
                                                 $192       $383    
                           $383                  Local**
                                      $54                   $108    
                           $108                  District
          * State Fiscal Recovery Fund
          ** Includes 2011-12 Budget Act shift of 1.0625% from 
          General Fund portion to the Local Revenue Fund of 2011 
          for public safety realignment purposes.

           SUPPORT  :   (Verified  8/26/11)

          State Board of Equalization (source)
          AIDS Healthcare Foundation
          California Communities Untied Institute
          California Hospice and Palliative Care Association
          California Catholic Conference
          Goodwill Industries

           OPPOSITION  :    (Verified  8/26/11)

          Department of Finance


           ASSEMBLY FLOOR  :  79-0, 5/31/11
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, 

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                                                                AB 289
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            Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, 
            Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, 
            Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, 
            Portantino, Silva, Skinner, Smyth, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, 
            John A. Pérez
          NO VOTE RECORDED:  Gorell


          AGB:kc  8/26/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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