BILL ANALYSIS Ó
AB 2678
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ASSEMBLY THIRD READING
AB
2678 (Gray)
As Amended , 2016
2/3 vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Revenue & |9-0 |Ridley-Thomas, | |
|Taxation | |Brough, Dababneh, | |
| | |Gipson, Mullin, | |
| | |O'Donnell, Patterson, | |
| | |Quirk, Wagner | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Agriculture |7-0 |Dodd, Gallagher, | |
| | |Gray, Irwin, | |
| | |Jones-Sawyer, Quirk, | |
| | |Salas | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-0 |Gonzalez, Bloom, | |
| | |Bonilla, Bonta, | |
| | |Calderon, Daly, | |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
AB 2678
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| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires taxable sales and purchases within a
"state-designated fair" to be segregated on the Sales and Use
Tax (SUT) return and also mandates that 30% of the state's
General Fund SUT revenues derived from those segregated sales
and purchases be deposited in the Fair and Exposition Fund
(Fund). 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" by reference to Business and
Professions Code (B&PC) Sections 19418, 19418.1, 19418.2, and
19418.3, excluding any fair located in the County of Los
Angeles.
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 continuously
appropriated and allocated as provided in B&PC Section
19620.2.
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5)Provides that any revenues deposited into the Fund under this
bill shall not be allocated to any fair located in the County
of Los Angeles.
6)Provides that any revenues deposited into the Fund under this
bill shall only be allocated to a state-designated fair if
nonmanagement employees at that fair, or nonmanagement
employees at any real property of that fair that is leased to
another party, are provided the following working conditions:
a) The employee receives a meal period of at least 30
minutes for a work period of more than five hours per day,
unless the work period per day of the employee is less than
six hours and the meal period is waived by mutual consent
of both the employer and the employee;
b) The employee receives a second meal period of at least
30 minutes for a work period of more than 10 hours per day,
unless the work period per day of the employee is less than
12 hours, the second meal period is waived by mutual
consent, and the first meal period was not waived;
c) Any work in excess of eight hours in one workday, any
work in excess of 40 hours in any one workweek, and the
first eight hours worked on the seventh day of work in any
one workweek is compensated at the rate of at least one and
one-half times the regular rate of pay for an employee;
d) Any work in excess of 12 hours in one day is compensated
at the rate of at least twice the regular rate of pay for
an employee; and,
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e) Any work in excess of eight hours on any seventh day of
a workweek is compensated at the rate of at least twice the
regular rate of pay for an employee.
7)Provides for the automatic sunset of this bill's provisions on
January 1, 2022.
EXISTING LAW:
1)Establishes the Fund. The Fund is charged with, among other
things, allocating money to support the network of California
fairs.
2)Defines a state-designated fair as the California Exposition
and State Fair in the City of Sacramento and those fairs
specified in B&PC Sections 19418.1 (district agricultural
associations), 19418.2 (county fairs), and 19418.3 (citrus
fruit fairs) that may receive financial support or are
otherwise governed by B&PC Section 19400 et seq. (governing
horse racing). These fairs are also collectively referred to
as the "network of California fairs."
3)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.
4)Imposes a complimentary use tax on the storage, use, or other
consumption of TPP purchased out-of-state and brought into
California. 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
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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 State Board of Equalization (BOE).
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
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 General Fund revenue loss in the range of $17
million.
COMMENTS:
1)The author has provided the following statement in support of
this bill:
AB 2678 will provide a stable and reliable source of
funding for California's fairs and offer much needed help
for specific fair-related purposes and projects on
fairgrounds.
Over the past 75 years, there has been a designated funding
source for fairs from which the state has made significant
investments in promoting the business operations and
improving the infrastructure of California's fairs.
Without state funding, these properties will continue to
deteriorate and in their demise create public safety
issues. The reality is that, through sales tax, the
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network of California fairs 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.
2)Committee Staff Comments
a) General background information: The author notes that,
before 2009, license fees imposed on horse racing wagers
were deposited in the Fund which, in addition to supporting
the annual budget of the California Horse Racing Board,
also supplemented the income of the network of California
fairs. 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
General Fund. Specifically, SB 16 X2 provided an annual
continuous appropriation of $32 million from the General
Fund to support the network of California fairs. This
change was done as part of a package of measures designed
to provide economic stimulus for the horse racing industry.
The author's office notes that, 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. The author notes, however, that
the 2016-17 budget "currently contains a $3 million
appropriation to support the network of California fairs
and a $4 million allocation for infrastructure needs at
fairgrounds."
b) What would this bill do? This bill requires taxable
sales and purchases within a state-designated fair to be
segregated on the SUT return and also mandates that 30% of
the state's General Fund SUT revenues derived from these
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segregated sales and purchases be deposited in the Fund.
Amounts deposited shall be continuously appropriated and
allocated as provided in B&PC Section 19620.2. Section
19620.2, in turn, provides for the allocation of moneys for
capital outlay to California fairs for fair projects:
i) Involving public health and safety;
ii) Involving major and deferred maintenance;
iii) Necessary due to any emergency;
iv) Required by physical changes to the fair site; and,
v) Required to protect the fair property or
installation, such as fencing and flood protection.
The money may also be used for the acquisition or
improvement of any property or facility that will serve to
enhance the operation of the fair.
Analysis Prepared by:
M. David Ruff / REV. & TAX. / (916) 319-2098
FN: 0003335
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