BILL ANALYSIS Ó
SB 1257
Page 1
Date of Hearing: June 20, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 1257 (Hernandez) - As Amended: June 11, 2012
SENATE VOTE : 38-0
SUBJECT : Utility user tax: exemption: public transit vehicles.
SUMMARY : Prohibits a local jurisdiction, as defined, from
levying a utility user tax (UUT) on the consumption of
electricity or on the consumption of compressed natural gas, as
specified. Specifically, this bill :
1)Exempts from any UUT, imposed by any local jurisdiction, a
local agency's or public transit operator's consumption of
compressed natural gas dispensed by a gas compressor, within a
local jurisdiction, that is separately metered and is
dedicated to providing compressed natural gas as a motor
vehicle fuel for use by the local agency or public transit
operator.
2)Exempts from any UUT on the consumption of electricity,
imposed by any local jurisdiction, a local agency's or public
transit operator's consumption of electricity used to charge
electric bus propulsion batteries, within a local
jurisdiction, that is separately metered and is dedicated to
providing electricity as a motor vehicle fuel for use by an
electric public transit bus.
3)Defines "local jurisdiction" to mean "any city, county, city
and county, including any chartered city, county, or city and
county, district, or public or municipal corporation."
4)Defines "public transit operator" to mean "a local or regional
transit agency or a joint powers agency operating bus
transportation service."
5)Finds and declares that exempting the consumption of natural
gas, electricity, or both, by a local agency or public transit
operator from local UUTs will ensure statewide uniformity and
fairness in the overall cost of providing vital public
transportation services to transit dependent citizens in
California.
SB 1257
Page 2
6)Declares that this matter is of statewide concern and
therefore not a municipal affair.
7)States that it is the intent of the Legislature to recognize
that public transit operators are moving toward the use of
electricity as a primary fuel source to meet air quality
objectives at the state and regional levels, as well as to
provide vital public transportation services to
transit-dependent citizens in California.
8)Provides that enactment of the bill's provisions will clarify
that the consumption of electricity as a motor vehicle fuel
for use by an electric public transit bus shall be exempt from
any taxes imposed upon the consumption of electricity.
EXISTING LAW :
1)Prohibits, pursuant to the Mills-Hayes Act, a tax imposed upon
fuel used by any transit district, transit authority, or city
owning and operating a local transit system.
2)Provides that the consumption of compressed natural gas
dispensed by a gas compressor, within a local jurisdiction,
that is separately metered and provides compressed natural gas
a motor vehicle fuel for use by a local agency or public
transit operator is not to be construed as the consumption of
gas for the purposes of a county-imposed UUT.
FISCAL EFFECT : None
COMMENTS :
1)A city may impose a UUT on the consumption of utility
services, including, but not limited to, electricity, gas,
water, sewer, telephone, sanitation and cable television. The
city determines the rate of the tax and the use of its
proceeds. UUTs can be imposed as a special tax and are
therefore dedicated for a specific purpose, or a general tax
to be used for whatever purpose the city council decides.
UUTs are levied by the city, collected by the utility as part
of its regular billing, and then remitted to the city.
SB 1257
Page 3
A county may levy a UUT on the consumption of electricity,
gas, water, sewer, telephone, telegraph and cable television
services in the unincorporated area.
In most jurisdictions, UUTs provide vital funding for
municipal or county services. Reduced funding by the state
and other sources of funding for local governments over the
last several decades have increased the popularity of UUTs,
which are most commonly used to fund police, fire, parks, and
libraries.
2)The Mills-Hayes Act prohibits a tax imposed upon fuel used by
any transit district, transit authority, or city owning and
operating a local transit system.
3)AB 2009 (Hernandez), Chapter 221, Statutes of 2008, exempted
compressed natural gas used as a motor vehicle fuel by a local
agency or public transit operator for the purposes of a
county-imposed UUT.
4)This bill takes the exemption from the UUT a few steps further
than AB 2009. First, it expands the authority put into place
by AB 2009 to exempt compressed natural gas for purposes of a
county-imposed UUT to additionally include any UUT imposed by
any "local jurisdiction." The bill defines "local
jurisdiction" to mean "any city, county, city and county,
including any chartered city, county, or city and county,
district, or public or municipal corporation."
Second, the bill extends the exemption to the consumption of
electricity, imposed by any "local jurisdiction," as
specified.
5)The bill is sponsored by Foothill Transit, a joint powers
authority of 22 member cities in the San Gabriel and Pomona
Valleys, in eastern Los Angeles County. Foothill Transit was
created in 1988 after the former Southern California Rapid
Transit District announced service cuts and fare increases
that would negatively impact the San Gabriel Valley. In 2011,
Foothill Transit implemented the first-of-its-kind all
electric Ecoliner - transit buses that utilize in-route fast
charging capability, which enables the buses to remain in
service throughout the day without having to leave the route
to be charged before returning to service. The author notes
that Foothill Transit is the only transit agency in the state
SB 1257
Page 4
using this type of fast-charging electric bus. Because of the
new technology, Foothill Transit wants to apply the same
exemption from the UUT that applies to compressed natural gas
additionally to buses that use electric propulsion batteries.
6)The Committee may wish to consider whether the definition of
"local jurisdiction" contained in the bill is too broad. The
definition includes the word "district," meaning a special
district or other districts like transit districts. There is
some question as to whether special districts have the
authority to impose UUTs.
7)Support arguments: According to the California Transit
Association, by ensuring that electric buses qualify for the
same fuel tax relief that state law applies to buses powered
by fossil fuels, this bill will help alleviate cost pressures
for transit agencies running electric buses.
Opposition arguments : None on file.
8)This bill is double-referred to the Assembly Revenue and
Taxation Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Foothill Transit ÝSPONSOR]
California Transit Association
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958