BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 1492
Author: Leno (D)
Amended: 4/9/12
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 4/18/12
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SUBJECT : Voter-approved local assessment: vehicles
SOURCE : San Francisco Chamber of Commerce
DIGEST : This bill authorizes the City and County of San
Francisco to impose a vehicle license fee (VLF). The fee
must first be authorized by the Board of Supervisors and
then be placed before the voters of that county for a vote.
ANALYSIS : Existing state law imposes a VLF, 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.
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The VLF tax rate is currently 1.15% of the value of a
vehicle, but historically the rate has been 2% of value.
Until May 19, 2009, the rate was 0.65%, after the passage
of AB 3X3 (Evans), Chapter 18, Statutes of 2009-10, Third
Extraordinary Session, temporarily increased the VLF rate
to 1.15% and dedicated revenue from the portion of the
increase from 0.65% to 1% to the state General Fund and
revenue from the additional increase of 0.15% to specific
local public safety programs. The bill VLF rate increase
became effective for vehicle registrations on May 19, 2009
and expired on June 30, 2011.
This bill authorizes the City and County of San Francisco
to impose a VLF. The fee must first be authorized by the
Board of Supervisors and then be placed before the voters
of that county for a vote.
This bill specifies that the assessment rate shall be equal
to the difference between the historical 2% state VLF rate
and the current state VLF rate. For example, in January,
2013, when this bill takes effect, assuming the taxes have
not been extended, this would allow a county to impose a
local assessment rate of 1.35% 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 2% (0.65% to the
state, plus 1.35% to the county). This bill provides for
the local assessment to adjust so that county residents
would never pay more than a maximum 2% rate.
This bill specifies that any revenue generated by the local
VLF shall not supplant any moneys that the state
appropriates or apportions to the county.
Comments
AB 925 (Burton), Chapter 966, Statutes of 1993, authorized
the City and County of San Francisco to levy a surcharge on
the 2% VLF for purposes of public transit financing so long
as transit fares are not increased. The fee would have
required a two-third vote of the electorate. It has never
been enacted by the City and County. At the time of its
enactment in the Legislature, it was estimated that the
surcharge could have yielded over $300 million for the City
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and County. However, the potential fee has effectively
been voided due to a recent increase in transit fares.
Prior Legislation
This bill is almost identical to SB 223 (Leno, 2011) which
was vetoed by Governor Brown; the veto message stated:
"Before we embark on a piecemeal approach for one city, we
should try to fashion a broader revenue solution to our
state's fiscal crisis."
SB 10 (Leno, 2010) was similar to SB 223 (Leno, 2011) and
was held in the Assembly.
AB 799 (Leno, 2005) and AB 1590 (Leno, 2007) were both very
similar to this bill. AB 1590 was never taken up in a
Senate policy committee and Governor Schwarzenegger vetoed
AB 799. His veto message read in part:
Within hours of taking office in 2003, I signed an
Executive Order to reverse the car tax increase. That
action returned $4 billion to the people of California.
Putting that money back into the hands of hard working
Californians is one of the ways we have helped our
economy grow over the last three years.
This measure would, in effect, reinstate the car tax for
the people of San Francisco. In fact, if the vehicle
license fee increase proposed by this bill were enacted,
the people of San Francisco could pay more than twice the
amount to register their vehicles than anyone else in the
state.
As noted in my veto messages of prior years, I am not
opposed to modest increases in fees if such increases are
approved by the impacted voters and not addressed in a
piecemeal fashion. Although this bill requires voter
approval, it impacts only one county.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
One-time Department of Motor Vehicles (DMV) programming
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costs of $115,000, paid in advance by San Francisco.
Ongoing DMV administrative costs of $112,000 would be
deducted from assessments collected.
Income tax revenue losses of $2.7 million in 2014-15,
$1.6 million in 2015-16, and $200,000 in 2016-17. These
losses are a result of taxpayers deducting the increased
VLF amounts on income tax returns. Ongoing income tax
losses are reimbursed from fees collected, but there
would be a one-year delay between the tax year in which
the VLF deduction is claimed and reimbursement to the
General Fund from fee revenues, as provided in this
bill.
Potential annual revenue gains of up to $128 million
for the City and County of San Francisco, assuming the
maximum local rate of 1.35% is imposed.
SUPPORT : (Verified 5/25/12)
San Francisco Chamber of Commerce (source)
City and County of San Francisco
OPPOSITION : (Verified 5/25/12)
California New Car Dealers Association
California Taxpayer's Association
ARGUMENTS IN SUPPORT : According to the author, "This
bill would give the City and County of San Francisco the
authority to implement a voter approved local assessment, a
fee on the value of motor vehicles registered in the
county, only after the Board of Supervisors has agreed by a
two-thirds vote to allow voters to consider it on a
countywide ballot."
ARGUMENTS IN OPPOSITION : According to the opposition,
"?with the current poor economic climate in our state-high
unemployment, gasoline prices exceeding $4/gallon, weak
income and sales tax revenue and new vehicle sales down at
least 33% from those in the last decade-we believe there
continues to be no reason to further increase the cost of
vehicle ownership in California."
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AGB:kc 5/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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