BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 223
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: leno
VERSION: 2/9/11
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: March 29, 2011
SUBJECT:
Vehicle license fee: local assessment
DESCRIPTION:
This bill authorizes a county to place on the ballot a measure
to impose an additional assessment on vehicles owned by
residents of that county.
ANALYSIS:
Existing state law imposes a vehicle license fee (VLF), which is
in lieu of a personal property tax on California motor vehicles,
at a rate based on the taxable 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. Historically, the VLF rate was two percent of value.
Since May 19, 2009, the VLF tax rate has been 1.15 percent of
the value of a vehicle. AB 3XXX (Evans), Chapter 18, Statutes
of 2009-10 Third Extraordinary Session, temporarily increased
the VLF rate from 0.65% to the 1.15% rate and dedicated revenue
from the portion of the increase from 0.65 percent to one
percent to the state General Fund and revenue from the
additional increase of 0.15 percent to specific local public
safety programs. AB 3XXX's VLF rate increase expires on June 30
of this year.
For the taxpayer, VLF is deductible on both state and federal
income taxes.
This bill :
1.Authorizes the board of supervisors of any county, by a
two-thirds vote, to adopt an ordinance to place before the
voters in that county a measure to levy a local assessment for
general revenue purposes. The local assessment would be
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placed on residents of the county for the privilege of
operating a vehicle or trailer coach subject to the state VLF
upon the public streets and highways of the county.
2.Specifies that the assessment rate shall be equal to the
difference between the historical two percent state VLF rate
and the current state VLF rate. In 2012, when this bill takes
effect, this could allow imposition of a local assessment rate
of 1.35 percent on the depreciated value of a county's
residents' vehicles (2% minus the state VLF of 0.65%). The
resulting total VLF imposed on residents of counties adopting
the assessment would be two percent (0.65 percent to the
state, plus 1.35 percent to the county). The bill provides
for the local assessment to adjust so that county residents
would always pay two percent, even if the state were to adjust
its rate.
3.Requires that the ordinance proposing the assessment be
submitted to the electorate of the county and approved by a
majority of those voting.
4.Permits a board of supervisors to adopt the ordinance and the
voters to vote on a local assessment prior to this bill taking
effect, provided that the assessment is not levied until 90
days after the effective date of the bill and the board
ratifies its adoption of the ordinance after the bill takes
effect, but prior to the first levy of the assessment.
5.Requires any county imposing an assessment to contract with
the Department of Motor Vehicles (DMV) to collect and
administer the fee and to pay DMV for its initial setup and
programming costs.
6.Requires DMV to do all of the following:
i) Collect the local assessment pursuant to a contract with
the county;
ii) Deduct its costs from the assessments collected;
iii) Report to the Franchise Tax Board (FTB) data so
that FTB in turn can report to DMV state revenue losses
resulting from taxpayers deducting the local VLF
assessments authorized by this bill from their personal
income tax and their bank and corporation taxes. DMV shall
remit that amount to the State Controller for deposit in
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the state General Fund, ensuring that the implementation of
this bill results in no loss of state revenue; and
iv) Transmit the collected revenues minus these
deductions to the counties imposing the assessments as
promptly as feasible.
7.Provides that the revenue generated by a local assessment
imposed in a county shall not supplant any moneys that the
state apportions to the county.
COMMENTS:
1.Purpose . The author notes that the VLF is one of the largest
sources of general-purpose tax revenues for California's
counties. These revenues fund vital programs, including
public safety, public health, social services, fire
protection, public works, and cultural activities. Much of
this revenue was lost when Governor Schwarzenegger signed an
executive order in 2003 reducing the VLF to the 0.65 percent
rate.
Key public services are under constant budget pressures from
both increasing costs such as labor, fuel, and medical
expenses, as well as from expanding need for public services
resulting from homelessness, HIV/AIDS, and reduced state and
federal funding due to current economic conditions. By
granting the people of each county the right of voter
determination to levy a fee upon themselves to fund vital
services, this bill gives county voters a viable alternative
to cutting services.
2.Previous legislation . Last session, the author carried SB 10
(Leno), which was nearly identical to this bill, and which
ultimately died on the Assembly floor. In two previous
sessions, the author carried two similar bills while he was
serving in the Assembly. They were AB 799 (Leno) of 2005 and
AB 1590 (Leno) of 2007. Both of these applied only to the
City and County of San Francisco rather than to counties
throughout the state. AB 1590 was never taken up in a Senate
policy committee, and Governor Schwarzenegger vetoed AB 799.
3.Constitutionality . The California Constitution prohibits any
local government from imposing, extending, or increasing any
"general tax" unless and until that tax is submitted to the
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electorate and approved by a majority vote. A special tax, in
turn, may only be imposed if that tax is approved by a
two-thirds vote of the local electorate. The California
Constitution defines a general tax as any tax imposed for
general governmental purposes, while the term "special tax" is
defined as a tax imposed for specific purposes. This bill
authorizes a county board of supervisors, by a two-thirds
vote, to place before the voters of the county, an ordinance
to levy a local assessment for general revenue purposes. As
such, the ordinance only needs to be approved by a majority of
voters and does not require the supermajority vote required
for special taxes.
4.Opposition . The California New Car Dealers Association
opposes this bill because it asserts that California motorists
are already overburdened with hidden vehicle fees and because
it could result in 58 (one for each county) different VLF
rates. With a large number of VLF rates, the association
expresses concern that effective compliance would be virtually
impossible for dealers to achieve, as varying VLF rates would
add to the complexity of purchasing a new car.
5.Double referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the
Governance and Finance Committee. Therefore, should this bill
pass this committee, it will be referred to the Senate
Governance and Finance Committee.
RELATED LEGISLATION
SB 929 (Evans) also authorizes a county to enact a local VLF.
In Senate Transportation and Housing Committee. Not set for
hearing.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
March 23, 2011)
SUPPORT: None received.
OPPOSED: Automobile Club of Southern California
California New Car Dealers Association
California State Automobile Association
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