BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 1352 (Logue)
          
          Hearing Date: 08/25/2011        Amended: 07/14/2011
          Consultant: Mark McKenzie       Policy Vote: G&F 9-0
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          BILL SUMMARY: AB 1352 would authorize the Board of Equalization 
          (BOE) to relieve interest imposed as a result of failure to make 
          a timely payment, if the failure was due to extraordinary 
          circumstances, as specified.  The bill would also provide that 
          specified vehicle license fee (VLF) revenues that are deposited 
          into the Local Revenue Fund of 2011 for local law enforcement 
          realignment purposes would not be subject to expenditure 
          requirements of a local ordinance in Nevada County.
          _________________________________________________________________
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           Nevada County VLF      no state costs                   Local
          _________________________________________________________________
          ____

          STAFF COMMENTS:  SUSPENSE FILE.  AS PROPOSED TO BE AMENDED. 
          
          Existing law requires payment of penalties and interest for 
          failure to pay sales and use tax obligations on time.  Simple 
          interest is charged on a monthly basis at a rate of seven 
          percent annually from the date the tax is due to the date of 
          payment.  The BOE currently has the authority to relieve a late 
          payment penalty when there is a finding that the failure to make 
          a timely payment was due to a disaster or reasonable cause and 
          circumstances beyond the person's control, and occurred 
          notwithstanding the exercise of ordinary care and the absence of 
          willful neglect.  The BOE may only relieve interest on a late 
          payment in cases of a disaster or when failure to make a timely 
          payment was due to an unreasonable error or delay by a BOE 
          employee.

          AB 1352 would allow the Members of the BOE, meeting as a public 
          body, to relieve all or part of the interest imposed on late 
          payments, up to $50,000 total in a 12-month period, if the 
          failure to make a timely payment was due to extraordinary 








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          circumstances.  The person seeking relief must have been granted 
          relief from all penalties, paid the tax on which the interest is 
          imposed, requested an oral hearing before the Members, and filed 
          a statement under penalty of perjury that includes facts and 
          information about the claim.  The failure to make a payment must 
          be a result of the following "extraordinary circumstances:" the 
          death or medical incapacity of the person's next of kin; the 
          occurrence of an emergency, as specified in current law (state 
          of war, emergency, or local emergency); or criminal misconduct 
          by a person other than the claimant.

          It is unclear how many taxpayers would seek relief, and how many 
          would be granted relief, as a result of the discretionary 
          authority provided by this bill.  The BOE cites one case in 
          which a taxpayer was victim of embezzlement by a bookkeeper who 
          had falsified the taxpayer's accounting records, resulting in an 
          unpaid tax liability that was subject to penalties and interest. 
           The accumulated interest was $15,662 when that case came before 
          the BOE.  Since the demand for interest relief related to this 
          bill is unknown, the magnitude of any potential interest revenue 
          loss is indeterminable, but the bill limits the aggregate relief 
          in a 12-month period to $50,000.  If demand exceeds this 
          limitation, the bill could create additional General Fund cost 
          pressures.  In addition, since the limit on aggregate relief is 
          based on a 12-month period, the impact in any fiscal year could 
          be greater or less than $50,000.

          Staff notes that the BOE provisions of this bill are 
          substantially similar to AB 2375 (Knight), which failed passage 
          in the Senate Revenue and Taxation Committee last year.

          AB 1352 was recently amended to add a provision to address an 
          issue unrelated to the Sales and Use Tax law.  Specifically, the 
          bill was amended to specify that any VLF revenues that are 
          deposited into the Local Law Enforcement Services Account in the 
          Local Revenue Fund of 2011 and distributed to counties would not 
          be subject to requirements of a local ordinance in Nevada County 
          that otherwise requires that 50% of all VLF revenues received by 
          that county be expended on county roads.

          In March 1996, Nevada County voters approved Measure F, an 
          ordinance which required that all funds received from the State 
          of California from motor vehicle license fee funds, as defined 
          in the State Constitution and in statute, must be segregated 








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          into a separate accounting fund.  The County must spend at least 
          half of those funds in each fiscal year only for public roads, 
          ways, and highways for maintenance, repair, circulation 
          enhancement, general road safety, and fire access.  Following 
          the enactment of a temporary increase to the VLF as part of the 
          February 2009 budget agreement, SB 636 (Ashburn), Chapter 605 of 
          2009, was enacted to ensure that the increased VLF revenues 
          dedicated for local law enforcement purposes would not be 
          subject to the requirements of Measure F.  This bill would enact 
          similar provisions to ensure that VLF revenues dedicated to 
          local law enforcement as part of the realignment package, as 
          specified in SB 89 (Committee on Budget and Fiscal Review), 
          Chapter 35 of 2011, are not subject to the requirements of 
          Nevada County's local ordinance.  There is no state fiscal 
          impact associated with this provision of AB 1352.

          Staff notes that the recent amendments appear to be a violation 
          of Joint Rule 9, which requires that a "substitute or amendment 
          must relate to the same subject of the original bill."  It is 
          unclear, however, whether the bill is a violation of Article IV, 
          Section 9 of the California Constitution, which states in part 
          that "a statute shall embrace but one subject, which shall be 
          expressed in its title."  It should be noted that the courts 
          have construed single subject provisions in a lenient manner so 
          as not to unduly restrict the Legislature's or the people's 
          right to package provisions in a single bill or initiative 
          (Californians for an Open Primary v. McPherson (2006) 38 Cal.4th 
          735).  

          PROPOSED COMMITTEE AMENDMENTS would delete provisions that would 
          authorize BOE to relieve interest imposed as a result of failure 
          to make a timely payment.