BILL ANALYSIS Ó
AB 2678
Page 1
Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2678 (Gray) - As Amended April 26, 2016
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
|Committee: | | | |
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| |Agriculture | |7 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill modifies the Sales and Use Tax (SUT) to require a
portion of sales tax revenue from most state-designated fairs to
be deposited into the Fair and Exposition Fund. Specifically,
this bill:
1)Requires that tax returns segregate the gross receipts of the
seller and the sales price of the property when the place of
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sale or use is on or within real property of a
state-designated fair or any real property of a
state-designated fair, as defined, but excludes any fair
located in the County of Los Angeles.
2)Requires that 30% of the state's General Fund (3.9375%)
revenues, less refunds and BOE's administrative costs, derived
from those segregated SUT revenues be deposited into the Fair
and Exposition Fund, and be continuously appropriated for
fair-related purposes.
3)Specifies that any revenues deposited into the Fair and
Exposition Fund from this modified SUT shall not be allocated
to Los Angeles County.
4)Creates a sunset date for this program of January 1, 2022.
FISCAL EFFECT:
1)BOE will incur minor administrative costs to notify affected
retailers, modify tax returns, prepare special forms, prepare
a special publication, and answer inquiries from taxpayers and
the general public.
2)Ongoing annual GF revenue loss in the range of $17 million.
COMMENTS:
1)Purpose. According to the author, AB 2678 provides a stable
source of funding for California's fairs and offers
much-needed support for specific fair-related purposes and
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projects on fairgrounds.
2)Background. California fairs have been in existence since 1854
and have since grown to encompass 78 fairs statewide. This
network of California fairs is composed of 52 district
agricultural associations (DAA), 23 county fairs, 2 citrus
fruit fairs, and The California Exposition and State Fair (Cal
Expo). DAAs are state government entities that are governed by
nine-member gubernatorial appointed boards of directors. In
contrast, county fairs are county government or not-for-profit
organizations; citrus fruit fairs are not-for-profit
organizations; and Cal Expo is a state agency.
The Division of Fairs and Expositions within the California
Department of Food and Agriculture (CDFA) provides fiscal and
policy oversight for the network of California fairs, and the
Department of General Services (DGS) provides oversight for
use of state property, procurement, and services contracts
The source of state funding for these fairs has historically
been dependent on horse racing license fees, which in recent
years have significantly declined. In 2009, the Legislature
recognized the need for a new source of funding for the
continuation of fairs and, thus, continuously appropriated $32
million from the state's General Fund to be paid into the
Fairs and Exposition (F&E) Fund. However, the 2011-12 state
budget eliminated General Fund contributions to the F&E Fund,
requiring DAAs to be self-sufficient as of January 1, 2012.
The proposed FY 2016-17 Governor's budget appropriates $3
million to support the fairs and an additional $4 million for
infrastructure needs.
AB 2678
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Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081