BILL ANALYSIS Ó
AB 2678
Page 1
Date of Hearing: April 21, 2016
REVISED ANALYSIS
ASSEMBLY COMMITTEE ON AGRICULTURE
Bill Dodd, Chair
AB 2678
(Gray) - As Amended April 20, 2016
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Revenue and |9-0 |Ridley-Thomas, | |
|Taxation | |Brough, Dababneh, | |
| | |Gipson, Mullin, | |
| | |O'Donnell, Patterson, | |
| | |Quirk, Wagner | |
| | | | |
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SUBJECT: State-designated fairs: funding.
SUMMARY: Requires taxable sales and purchases within the 35th
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District Agricultural Association's (DAA) Merced County Fair and
the Merced County Spring Fair to be segregated on the Sales and
Use Tax (SUT) return and also mandates that 30% of the state's
General Fund (GF) (3.9375%) SUT revenues derived from those
segregated sales and purchases, be deposited into the Fair and
Exposition Fund (Fund), for allocation to these two fairs; and,
repeals these provisions January 1, 2022. Specifically, this
bill:
1)Provides that, for purposes of the SUT Law, the return shall
segregate the seller's gross receipts and the property's sales
price when the place of sale or use in this state is within a
"state designated fair" or any real property of a "state
designated fair" leased to another party.
2)Defines a "state designated fair" to include the 35th DAA's
Merced County Fair and the Merced County Spring Fair.
3)Provides that notwithstanding any provision of the
Bradley-Burns Uniform Local SUT Law or the Transactions and
Use Tax Law, this bill shall not apply to any tax levied by a
county, city, or district pursuant to either of those laws.
4)Provides that, except as otherwise specified, 30% of all SUT
revenues, less refunds and costs of administration, that were
segregated shall be transferred to the Fund in the State
Treasury. Specifically, the moneys shall be deposited into
the separate account in the Fund.
5)Provides that any amounts deposited into the separate account
shall be continuously appropriated and allocated as specified,
except that any amounts transferred to the Fund in excess of
$11 million shall be allocated for capital outlay projects
dealing with public health and safety, major and deferred
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maintenance, and for general operational cost for fairs whose
source of revenue may be limited.
6)Provides a sunset on these provisions of January, 1, 2022.
EXISTING LAW: Establishes the Fund and charges it with, among
other things, allocating money to support CFN; requires certain
license fees from satellite wagering to be deposited into a
separate account in the Fund; these moneys are continuously
appropriated for specified fair-related purposes, including the
payment of expenses incurred in establishing and operating
satellite wagering facilities at fairs; and, defines a state
designated fair as the California Exposition and State Fair in
the City of Sacramento and those fairs designated as district
agricultural associations, county fairs, and citrus fruit fairs,
that may receive financial support or are otherwise governed by
horse racing statutes.
Existing law imposes a sales tax on retailers for the privilege
of selling tangible personal property (TPP), absent a specific
exemption; the tax is based upon the retailer's gross receipts
from TPP sales in this state; imposes a complimentary use tax on
the storage, use, or other consumption of TPP purchased
out-of-state and brought into California; and, the use tax is
imposed on the purchaser, and unless the purchaser pays the use
tax to an out-of-state retailer registered to collect
California's use tax, the purchaser remains liable for the tax.
The use tax is set at the same rate as the state's sales tax and
must generally be remitted to the BOE.
FISCAL EFFECT: Unknown.
COMMENTS: Over the past 75 years, there has been a designated
funding source for fairs from which the state has made
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significant investments in promoting the business operations and
improving the infrastructure of California's fairs. Without a
stable source of state funding, these properties will continue
to deteriorate and in their demise create public safety issues.
The reality is that, through sales tax, the California Fairs
Network is currently a huge revenue generator for the state of
California. Without funding to maintain the infrastructure,
what were once valuable state assets may become state
liabilities.
Prior to 2009, license fees imposed on horse racing wagers were
deposited into the Fund which, in addition to supporting the
annual budget of the California Horse Racing Board, also
supplemented the income of CFN. SB 16 X2 (Ashburn), Chapter 12,
Statutes of 2009, in turn, shifted the horse racing industry's
obligation to fund fairs through license fees imposed on wagers
to the GF. Specifically, SB 16 X2 provided an annual continuous
appropriation of $32 million from the GF to support CFN. This
change was done as part of a package of measures designed to
provide economic stimulus for the horse racing industry.
In fiscal year 2011-12, fair funding at the state level was
eliminated as part of a package of budget cuts designed to
address the state's ongoing financial crisis. However, the
2016-17 budget currently contains a $3 million appropriation to
support CFN and a $4 million allocation for infrastructure needs
at fairgrounds.
According to the author, AB 2678 was intended to provide a
stable and reliable source of funding for all California's fairs
and to offer much needed help for fair projects involving public
health and safety, and for projects involving major and deferred
maintenance on small and medium-sized fairgrounds throughout the
state. The latest amendments changed that intent by narrowing
the bill's impact to only two fairs, and little anticipated SUT
revenues.
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The author is expected to offer amendments to strike the latest
amendments and recast the bill to its April 12, 2016 version,
with the added amendment of excluding fairs within Los Angeles
County from the "state-designated fair" definition, for purposes
of this measure. This would eliminate that fair from
contributing to or receiving funds from this proposed new fair
funding source.
Legislative history : AB 700 (Krekorian), of the 2009-10 Regular
Session, would have required 20% of the state's GF SUT revenues,
remitted by specified taxpayers, be deposited into a newly
established Creative Industries and Community Economic
Revitalization Fund for specified purposes. AB 700 died in the
Assembly Appropriations Committee.
AB 1365 (Karnette), of the 2007-08 Regular Session, would have
required all SUT revenues derived from the sale of art be
allocated to the California Arts Council. AB 1365 was held in
the Assembly Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
(Due to significant amendments of April 20, 2016, it is unknown
if the support received for the previous version remains in
support.)
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Opposition
None on file
Analysis Prepared by:Jim Collin / AGRI. / (916) 319-2084