BILL ANALYSIS Ó
AB 88
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Date of Hearing: May 27, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
88 (Gomez) - As Amended May 20, 2015
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
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Urgency: Yes State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes, beginning the first day of the first
calendar quarter commencing more than 90 days after the
effective date, and until December 31, 2020, a sales and use tax
exemption for any energy or water efficient refrigerator or
clothes washer purchased by a public utility and provided at no
cost to a participant in a federal, state, or ratepayer-funded
energy efficiency program. The bill requires that any amount
saved by the public utility as a result of not paying the sales
and use tax must be used to purchase additional energy and water
efficient appliances to be provided at no cost to low-income
participants in energy efficient programs.
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FISCAL EFFECT:
1)Minor and absorbable costs to the Board of Equalization (BOE)
to update systems and procedures.
2)Estimated revenue decreases for the state and local
jurisdictions of $4.5 million per year, $2.1 million of which
is from the General Fund.
COMMENTS:
1)Purpose. According to the author, this bill helps further the
state's environmental and energy efficiency goals by reducing
energy and water consumption while reducing costs for a
greater number of low-income customers. Proponents note that
following an audit in 2014, BOE determined there is no
exemption for energy or water efficient appliances purchased
by public utilities and provided, at no cost, to qualified
low-income customers participating in energy efficiency
programs. As a result, BOE established a sales tax for these
appliances. The author believes appliance replacement
programs already serve too few of those who qualify, and an
additional sales tax only weakens the effectiveness of those
programs.
2)County Opposition. The California State Association of
Counties (CSAC) opposes the bill because it exempts the
qualifying purchases from all state and local sales and use
taxes. Total revenue losses are estimated to be $4.5 million
per year, with local governments suffering the majority of
those losses. CSAC argues almost half of county revenue is
derived from sales and use tax, and much of that revenue is
used to provide local public safety services, criminal justice
AB 88
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and rehabilitation services, and child welfare services. CSAC
has requested AB 88 be further narrowed to apply only to the
state portion of the sales tax.
3)The Energy Savings Assistance Program. In general, the
state's Energy Savings Assistance Programs (ESAP) provide
no-cost services to low-income households to improve energy
efficiency, such as weatherization and insulation. Certain
ESAP customers may also be eligible to receive
energy-efficient replacement appliances, for example when
older units are either too old or inefficient to reasonably
repair, or when those units are unsafe. The author notes ESAP
helps reduce energy and water consumption while lowering
utility costs for low-income customers. The program also
fosters safer recycling of older appliances, helping to reduce
illegal dumping and ensuring hazardous components are handled
properly.
According to the California Public Utilities Commission,
preliminary 2014 ESAP expenditures for the four largest
investor-owned utilities was $230 million, reflecting a broad
range of purchased appliances and devices, as well as
installation costs.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081
AB 88
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