BILL ANALYSIS Ó
AB 2321
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2321 (Rodriguez) - As Amended April 20, 2016
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|Policy |Transportation |Vote:|16 - 0 |
|Committee: | | | |
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| |Revenue and Taxation | |9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill:
1)Requires the DMV, in collecting use taxes, to code
transactions to specific addresses when vehicles or vessels
involved in private party transactions are registered in order
to ensure that remittance of tax revenue by the State Board of
Equalization (BOE) is made to the specific city or county in
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which the purchaser resides.
2)Requires the BOE to reimburse the DMV for costs associated
with this bill.
FISCAL EFFECT:
One-time costs of around $225,000 for the DMV to reprogram its
collection of the use tax for private party transfers of
ownership. These costs will be reimbursed by the BOE pursuant to
an interagency agreement with the DMV. The BOE's costs are in
turn borne by local governments, which contract with the BOE to
administer local Sales and Use Tax (SUT) revenues. The BOE will
also incur minor absorbable administrative costs.
As discussed below, this bill will result in some minor
reallocation among cities and counties of about $70 million in
SUT revenues.
COMMENTS:
1)Background. Currently, the BOE collects the SUT on a 7.5%
statewide base rate, composed of a state portion and a local
portion for cities and counties. The local portion is
referred to as the Bradley-Burns Local SUT (Bradley-Burns) and
is fixed at 1.25% of the sales price of tangible personal
property.
The use tax is imposed in lieu of the sales tax for the
privilege of the property's storage, use, or other consumption
in California. The use tax is generally imposed on
out-of-state purchases brought into California, but also
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applies in private party transactions of vehicles and vessels.
For use tax transactions that cannot be easily identified to a
specific location, the BOE generally distributes the local
portion through countywide pools. Under this process, local
use tax revenues are prorated into pools for each city in the
county and the unincorporated area of the county, at a ratio
based upon each jurisdiction's total share of local SUT
revenues generated in the county.
Current law requires the purchaser of a vehicle or vessel in a
private party transaction to pay use tax, including both
Bradley-Burns and applicable district-specific taxes to the
DMV during registration of the vehicle or vessel. (As of April
1, 2016, 31 California counties, 132 cities, and 7 towns
impose SUT higher than the base rate due to voter approval of
additional district taxes.) The DMV then transmits all use
tax collections to the BOE.
For the purposes of allocating Bradley-Burns, the DMV codes
taxes collected from the applicant to the county in which the
vehicle is being registered. The BOE then remits the taxes to
the county of jurisdiction for distribution through the
countywide pool. The DMV collects approximately $70 million
annually in Bradley-Burns revenue on behalf of the BOE.
For purposes of allocating district-specific taxes, the DMV
codes taxes collected from the applicant to the specific city
or county jurisdiction in which the vehicle is being
registered.
2)Purpose. This bill proposes that the DMV code, and the BOE
remit, Bradley-Burns revenues in a process similar to that
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established for district taxes, so that the 1.25% of
Bradley-Burns revenues can be directly allocated to fund
general purposes in the specific city or county where it is
paid. This bill is supported by the California State
Association of Counties and the League of California Cities.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081