BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2770 (Nazarian) - Cigarette and tobacco product licensing:
fees and funding
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|Version: June 16, 2016 |Policy Vote: B., P. & E.D. 8 - |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 11, 2016 |Consultant: Brendan McCarthy |
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*********** ANALYSIS ADDENDUM - SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on August 11, 2016
Bill
Summary: AB 2770 would prohibit tobacco tax revenues from being
appropriated to the State Board of Equalization to support the
Cigarette and Tobacco Products Licensing Program.
Fiscal
Impact:
Unknown cost pressure to provide General Fund monies to
support the Cigarette and Tobacco Products Licensing Program
(General Fund). In recent years, the Licensing Program has
been funded with a combination of licensing fees paid by
AB 2770 (Nazarian) Page 1 of
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tobacco retailers and distributors and revenues derived from
taxes imposed on tobacco products. Recently, the licensing
fees assessed on tobacco retailers and distributors were
increased, with the intention of fully funding the Licensing
Program with licensee fees. Those fee increases go into effect
on January 1, 2017. The current year budget still provides
some funding from tobacco tax revenues to support the
Licensing Program, because the increased license fee revenues
will only be in place for one-half of the current year. Under
the bill, if projected fee revenues are not sufficient to
fully fund the Licensing Program, there would be pressure to
either augment the fee revenues with General Fund revenue or
reduce program expenditures. Until full-year fee revenues have
been collected, there is uncertainty about whether the fee
revenues will be sufficient to fully fund the Licensing
program.
In addition, the licensing fee levels are set in statute. As
the costs to implement the licensing program grow over time
due to cost inflation, the Board of Equalization will not be
able to raise the licensing fees to offset those cost
increases. Under this bill, there would be cost pressure on
the General Fund to offset cost increases or to raise
licensing fees.
Author
Amendments: Delay the probation on using tobacco tax revenues
for the licensing program until July 1, 2019 and make technical
changes.
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