BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 724 |Hearing |6/15/16 |
| | |Date: | |
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|Author: |Dodd |Tax Levy: |Yes |
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|Version: |4/14/16 |Fiscal: |Yes |
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|Consultant|Bouaziz |
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Sales and use taxes: exemption: museum displays: Jimmy
Doolittle Air and Space Museum Education Foundation
Provides a sales and use tax exemption for the purchase of
museum display items and sprung instant structures purchased by
the Jimmy Doolittle Air and Space Museum Education Foundation.
Background
State law imposes a sales and use tax (SUT) on the sale,
storage, or use of tangible personal property unless exempted by
state law. The current state SUT rate is 7.5%, but beginning
January 1, 2017, the state SUT rate on tangible personal
property will be 7.25%. Cities and Counties may increase the
SUT rate up to 2% as a transactions and use tax for either
specific or general purposes with voter approval as required by
the California Constitution.
State law provides several sales and use tax exemptions related
to museums, as follows:
Original works of art when they are, among other things,
purchased by a California state or local entity, or by
certain nonprofit organizations under contract with
governmental entities, by certain nonprofit organizations
for public exhibit, or by persons for donation directly to
any governmental or nonprofit organization.
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Museum pieces purchased to replace destroyed property
used exclusively for display purposes when purchased within
three years from the date the property was destroyed by (1)
the state or a local government entity as part of a public
art collection, (2) a nonprofit museum regularly open to
the public and operated by a local or state government
entity, or (3) operated by certain nonprofit organizations.
Purchases of museum display items and sprung instant
structures (structures that serve as temporary buildings to
house exhibits) purchased by the San Diego Air and Space
Museum's and the California Science Center's.
Proposed Law
Assembly Bill 724 provides a sales and use tax exemption for the
purchase of museum display items and sprung instant structures
used as temporary exhibit housing purchased by the Jimmy
Doolittle Air and Space Museum Education Foundation.
AB 724 makes legislative findings and declarations as to the
necessity of a special statute for the Jimmy Doolittle Air and
Space Museum Education Foundation.
State Revenue Impact
According to the Board of Equalization (BOE), this bill would
result in a one-time state and local revenue loss of $39,000.
Comments
1. Purpose of the bill. According to the author, "AB 724 would
provide the Jimmy Doolittle Air and Space Museum Education
Foundation the rare opportunity to purchase the fully restored
"Shell Lockheed Vega" piloted by General Doolittle himself.
This largely volunteer supported nonprofit museum received a
generous private donation covering 50% of the cost of purchasing
the Vega. Because of limited funding sources, an exemption from
paying sales and use tax on this purchase would allow the museum
to more easily fundraise the remaining cost of this historic
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aircraft. Such an exemption is not precedent setting; two
similar exemptions have been approved for museums seeking
educational displays for public benefit."
2. History lesson. In 1986, the sales and use tax exemption
for the San Diego Air and Space Museum's purchase of museum
display items was enacted. In 1988, the exemption was extended
to the California Science Center. In 1992, the Legislature
again expanded the exemption to include sprung instant
structures purchased by these entities for use as temporary
exhibit housing. Other measures have been considered in the
past to further expand this exemption to include purchases by
the Museum of Flying, the March Field Museum Foundation, and the
Air Force Flight Test Center Museum, but all of them ultimately
failed.
3. What about me? Currently, only the San Diego Air and Space
Museum and the California Science Center are exempted from sales
and use tax for purchases of museum display items and sprung
instant structures used as temporary exhibit housing. Ensuring
that the public is able to learn about various subjects and view
displays by visiting museums is a laudable goal and should be a
policy priority. However, why should a couple of museums
benefit from a sales and use tax exemption, while others do not?
The Committee may wish to consider what policy rationale to
apply when distinguishing between museums with sales and use tax
exemptions from museums subject to sales and use tax.
Assembly Actions
Not relevant to this version of the bill.
Support and
Opposition (6/9/16)
Support : City of Vacaville; Fiona Ma, Board of Equalization
Member; George Runner, Board of Equalization Member; Jimmy
Doolittle Air and Space Museum Education Foundation; Solano
County - Nut Tree Airport.
Opposition : Unknown.
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