Senate Bill No. 172

Introduced by Senator Beall

February 5, 2013

An act to amend Section 6151 of the Revenue and Taxation Code, and to amend Section 12306.6 of the Welfare and Institutions Code, relating to public social services, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 172, as introduced, Beall. In-home supportive services: sales tax.

Existing law, the Sales and Use Tax Law, imposes a sales tax on retailers for the privilege of selling tangible personal property at retail, measured by the gross receipts from the sale of tangible personal property sold at retail in this state. A violation of specified provisions of this law is a crime. Existing law similarly imposes a sales tax on providers of support services, for the privilege of selling support services at retail, measured by the gross receipts from the sale of those services in this state at a specified rate of those gross receipts.

Existing law creates the Personal Care IHSS Quality Assurance Revenue Fund in the State Treasury, and requires the revenue from the tax, less refunds, to be deposited in the fund. The fund is continuously appropriated to the State Department of Social Services for purposes of providing specified supplementary payments to providers of in-home supportive services. Existing law requires the IHSS provider tax and related supplementary payments to be implemented no earlier than January 1, 2012 and further provides for these provisions to become operative only if a specified federal approval is granted.

This bill would make a technical, nonsubstantive change by extending the earliest implementation date for the provider tax and supplementary payment provisions from January 1, 2012, to July 1, 2012.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 6151 of the Revenue and Taxation Code
is amended to read:

6151.  

(a) Beginning on the date for which the federal Centers
for Medicare and Medicaid Services approves implementation of
the state plan amendment described in subdivision (c) of Section
12306.6 of the Welfare and Institutions Code, but no earlier than
begin delete January end delete begin insert July end insert 1, 2012, for the privilege of selling support services
at retail, the sales tax is hereby extended to all providers at the
rate, as described in subdivision (b), of the gross receipts of any
provider from the sale of all support services sold at retail in this
state.

(b) The rate extended by subdivision (a) is the rate, as may be
amended from time to time, imposed by Article 1 (commencing
with Section 6051) plus the rate imposed by Section 35 of Article
XIII of the California Constitution for the privilege of selling
tangible personal property at retail in this state.

(c) Notwithstanding the implementation date of this article as
provided for in subdivision (a), no tax shall be collected pursuant
to this article prior to the receipt of approval by the federal Centers
for Medicare and Medicaid Services of the implementation of
Section 12306.6 of the Welfare and Institutions Code.

SEC. 2.  

Section 12306.6 of the Welfare and Institutions Code,
as amended by Section 36 of Chapter 47 of the Statutes of 2012,
is amended to read:

12306.6.  

(a) (1) Notwithstanding any other begin delete provision of end delete law,
beginning on the date for which the federal Centers for Medicare
and Medicaid Services authorizes commencement of the
implementation of this section, but no earlier than begin delete January end delete begin insert July end insert 1,
2012, and concurrent with the collection of the sales tax extended
to support services pursuant to Article 4 (commencing with Section
6150) of Chapter 2 of Part 1 of Division 2 of the Revenue and
Taxation Code, a provider of in-home supportive services shall
receive a supplementary payment under this article equal to a
percentage, as set forth in paragraph (2), of the gross receipts, as
defined in subdivision (b) of Section 6150 of the Revenue and
Taxation Code, of the provider for the sale of in-home supportive
services, plus an amount described in paragraph (3) if applicable.
If the underlying payment for in-home supportive services that is
being supplemented is a Medi-Cal payment, then the supplementary
payment shall also be a Medi-Cal payment. Supplementary
payments shall be made only to those providers from whom the
tax imposed pursuant to Section 6151 of the Revenue and Taxation
Code has been collected.

(2) The percentage applicable to the supplementary payment
required by paragraph (1) shall equal the rate described in
subdivision (b) of Section 6151 of the Revenue and Taxation Code
and shall only be applied to services provided under this article,
including personal care option services reimbursable under the
Medi-Cal program.

(3) The supplementary payment of an individual provider whose
payroll withholding required for federal income tax purposes and
for purposes of taxation for the Social Security and Medicare
programs is increased due to the supplementary payment, in
comparison to the amounts for those purposes that would be
withheld without the supplementary payment, shall be increased
by an additional amount that is equal to the amount of this
additional federal withholding.

(b) (1) All revenues deposited in the Personal Care IHSS
Quality Assurance Revenue Fund established pursuant to Section
6168 of the Revenue and Taxation Code shall be used solely for
purposes of the In-Home Supportive Services program, including,
but not limited to, those services provided under the Medi-Cal
program. All supplementary payments required by this section
shall be paid from the Personal Care IHSS Quality Assurance
Revenue Fund.

(2) The Director of Finance shall determine the sum required
to be deposited in the Personal Care IHSS Quality Assurance
Revenue Fund to fund the initial supplementary payments from
the fund. As soon thereafter as reasonably possible, this sum shall
be transferred, in the form of a loan, from the General Fund to the
Personal Care IHSS Quality Assurance Revenue Fund. At the time
sufficient revenues have been deposited in the Personal Care IHSS
Quality Assurance Revenue Fund pursuant to Section 6168 of the
Revenue and Taxation Code to sustain the continued operation of
the fund for that portion of the supplementary payment described
in paragraph (2) of subdivision (a) plus an additional amount equal
to the General Fund loan made pursuant to this paragraph, plus
interest, the sum transferred from the General Fund, including
interest, shall be repaid to the General Fund. Subsequent
supplementary payments pursuant to this section shall be made
from revenue deposited in the Personal Care IHSS Quality
Assurance Revenue Fund pursuant to Section 6168 of the Revenue
and Taxation Code.

(3) The Department of Finance, on an ongoing basis, shall
determine the amount necessary to implement paragraph (3) of
subdivision (a), and subdivision (c) of Section 12302.2, and
immediately transfer this amount from the General Fund to the
Personal Care IHSS Quality Assurance Revenue Fund.

(c) (1) The Director of Health Care Services shall seek all
federal Medicaid approvals necessary to implement this section,
including using the revenues obtained pursuant to Article 4
(commencing with Section 6150) of Chapter 2 of Part 1 of Division
2 of the Revenue and Taxation Code as the nonfederal share for
supplementary payments. As part of that request for approval, the
director shall seek to make the supplementary payments effective
as of begin delete January end delete begin insert July end insert 1, 2012.

(2) This section shall become operative only if the federal
Centers for Medicare and Medicaid Services grants Medicaid
approvals sought pursuant to paragraph (1).

(3) If Medicaid approval is granted pursuant to paragraph (2),
within 10 days of that approval the Director of Health Care
Services shall notify the State Board of Equalization and the
appropriate fiscal and policy committees of the Legislature of the
approval.

(d) If Article 4 (commencing with Section 6150) of Chapter 2
of Part 1 of Division 2 of the Revenue and Taxation Code becomes
inoperative pursuant to subdivision (b) of Section 6170 of the
Revenue and Taxation Code, supplementary payments shall cease
to be made pursuant to subdivision (a) when all moneys in the
fund have been expended.

(e) (1) Notwithstanding the rulemaking provisions of the
Administrative Procedure Act, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, the department and the State Department of Health Care
Services may implement and administer this section through
all-county letters or similar instruction from the department and
the State Department of Health Care Services until regulations are
adopted. The department and the State Department of Health Care
Services shall adopt emergency regulations implementing this
section no later than 12 months following the initial effective date
of the supplementary payments. The department and the State
Department of Health Care Services may readopt any emergency
regulation authorized by this section that is the same as or
substantially equivalent to an emergency regulation previously
adopted under this section.

(2) The initial adoption of emergency regulations implementing
this section and the one readoption of emergency regulations
authorized by this subdivision shall be deemed an emergency and
necessary for the immediate preservation of the public peace,
health, safety, or general welfare. Initial emergency regulations
and the one readoption of emergency regulations authorized by
this section shall be exempt from review and approval by the Office
of Administrative Law. The initial emergency regulations and the
one readoption of emergency regulations authorized by this section
shall be submitted to the Office of Administrative Law for filing
with the Secretary of State and each shall remain in effect for no
more than 180 days, by which time final regulations may be
adopted.

(f) This section shall remain in effect only until the January 1
following the date supplementary payments cease to be made
pursuant to subdivision (d), and as of that date is repealed.

SEC. 3.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to improve public health by maximizing federal funding
for the Medi-Cal program at the earliest time possible, it is
necessary for this act to take effect immediately.