BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 289| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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. CONTINUED AB 289 Page 2 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. CONTINUED AB 289 Page 3 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, CONTINUED AB 289 Page 4 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 **** END **** CONTINUED