Amended in Senate September 3, 2015

California Legislature—2015–16 First Extraordinary Session

Senate Bill No. 7

Introduced by Senator Allen

July 16, 2015

An act to begin delete amend, repeal, and add Sections 6051.8 and 6201.8 of end delete begin insert amend Section 99312.1 of the Public Utilities Code, and to amend Sections 6051.8, 6201.8, and 60050 of end insert the Revenue and Taxation Code, relating to taxation, and making an appropriation begin delete therefor, to take effect immediately, tax levy. end delete begin insert therefor. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 7, as amended, Allen. Diesel sales and use tax.

Existing law, beyond the sales and use tax rate generally applicable, imposes an additional sales and use tax on diesel fuel at the rate of 1.75%, subject to certain exemptions, and provides for the net revenues collected from the additional tax to transferred to the Public Transportation Account. Existing law continuously appropriates these revenues to the Controller, for allocation by formula to transportation agencies for public transit purposes.

This bill, as of July 1, 2016, would increase the additional sales and use tax rate on diesel fuel to 5.25%. By increasing the revenues deposited in a continuously appropriated fund, the bill would thereby make an appropriation. begin insert The bill would restrict expenditures of revenues from the July 1, 2016, increase in the sales and use tax on diesel fuel to transit capital purposes and certain transit services. The bill would require an existing required audit of transit operator finances to verify that these new revenues have been expended in conformance with these specific restrictions and all other generally applicable requirements. end insert

begin insert

Existing law requires the State Board of Equalization to annually modify the diesel excise tax rate on a going-forward basis to account for increases in the sales and use tax on diesel and maintain revenue neutrality, as specified.

end insert begin insert

This bill would provide that the increase in the additional sales and use tax on diesel fuel imposed by the bill shall not be considered by the board in its annual modification of the diesel excise tax rate.

end insert

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2⁄3 of the membership of each house of the Legislature.

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This bill would take effect immediately as a tax levy.

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Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 99312.1 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

99312.1.  

begin insert (a) end insert begin insert   end insert Revenues transferred to the Public Transportation
Account pursuant to Sections 6051.8 and 6201.8 of the Revenue
and Taxation Code are hereby continuously appropriated to the
Controller for allocation as follows:

begin delete

(a)

end delete

begin insert (1) end insert  Fifty percent for allocation to transportation planning
agencies, county transportation commissions, and the San Diego
Metropolitan Transit Development Board pursuant to Section
99314.

begin delete

(b)

end delete

begin insert (2) end insert  Fifty percent for allocation to transportation agencies, county
transportation commissions, and the San Diego Metropolitan
Transit Development Board for purposes of Section 99313.

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For

end delete

begin insert (b) end insert begin insert   end insert begin insert For end insert purposes of this chapter, the revenues allocated pursuant
to this section shall be subject to the same requirements as revenues
allocated pursuant to subdivisions (b) and (c), as applicable, of
Section 99312.

begin insert

(c) The revenues transferred to the Public Transportation
Account that are attributable to the increase in the sales and use
tax on diesel fuel pursuant to subdivision (b) of Section 6051.8 of
the Revenue and Taxation Code and subdivision (b) of Section
6201.8 of the Revenue and Taxation Code, upon allocation
pursuant to Sections 99313 and 99314, shall only be expended on
transit capital projects, or on services to maintain or repair a
transit operator’s existing transit vehicle fleet or existing transit
facilities, including rehabilitation or modernization of existing
vehicles or facilities, or for the design, acquisition, and
construction of new vehicles or facilities that improve existing
transit services or enable the implementation of future planned
transit services, or on services that complement local efforts for
repair and improvement of local transportation infrastructure.
The audit of transit operator finances required pursuant to Section
99245 shall verify that these revenues have been expended in
conformance with these specific requirements and all other
generally applicable requirements.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 6051.8 of the Revenue and Taxation Code is
amended to read:

6051.8.  

(a) Except as provided by Section 6357.3, in addition
to the taxes imposed by this part, for the privilege of selling
tangible personal property at retail a tax is hereby imposed upon
all retailers at the rate of 1.75 percent of the gross receipts of any
retailer from the sale of all diesel fuel, as defined in Section 60022,
sold at retail in this begin delete state on and after the operative date of this
subdivision. end delete begin insert state. end insert

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(b) Notwithstanding subdivision (a), for the 2011-12 fiscal year
only, the rate referenced in subdivision (a) shall be 1.87 percent.

(c) Notwithstanding subdivision (a), for the 2012-13 fiscal year
only, the rate referenced in subdivision (a) shall be 2.17 percent.

(d) Notwithstanding subdivision (a), for the 2013-14 fiscal year
only, the rate referenced in subdivision (a) shall be 1.94 percent.

end delete begin insert

(b) Notwithstanding subdivision (a), commencing July 1, 2016,
the rate referenced in subdivision (a) shall be increased to 5.25
percent.

end insert begin delete

(e)

end delete

begin insert (c) end insert  Notwithstanding subdivision (b) of Section 7102, all of the
revenues, less refunds, collected pursuant to this section shall be
estimated by the State Board of Equalization, with the concurrence
of the Department of Finance, and transferred quarterly to the
Public Transportation Account in the State Transportation Fund
for allocation pursuant to Section 99312.1 of the Public Utilities
Code.

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(f) This section shall become inoperative on July 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.

end delete

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SEC. 2.  

Section 6051.8 is added to the Revenue and Taxation
Code, to read:

6051.8.  

(a) Except as provided by Section 6357.3, in addition
to the taxes imposed by this part, for the privilege of selling
tangible personal property at retail a tax is hereby imposed upon
all retailers at the rate of 5.25 percent of the gross receipts of any
retailer from the sale of all diesel fuel, as defined in Section 60022,
sold at retail in this state.

(b) Notwithstanding subdivision (b) of Section 7102, all of the
revenues, less refunds, collected pursuant to this section shall be
estimated by the State Board of Equalization, with the concurrence
of the Department of Finance, and transferred quarterly to the
Public Transportation Account in the State Transportation Fund
for allocation pursuant to Section 99312.1 of the Public Utilities
Code.

(c) This section shall become operative on July 1, 2016.

end delete

SEC. 3.  

Section 6201.8 of the Revenue and Taxation Code is
amended to read:

6201.8.  

(a) Except as provided by Section 6357.3, in addition
to the taxes imposed by this part, an excise tax is hereby imposed
on the storage, use, or other consumption in this state of diesel
fuel, as defined in Section 60022, at the rate of 1.75 percent of the
sales price of the diesel begin delete fuel on and after the operative date of this
subdivision. end delete begin insert fuel. end insert

begin delete

(b) Notwithstanding subdivision (a), for the 2011-12 fiscal year
only, the rate referenced in subdivision (a) shall be 1.87 percent.

end delete begin delete

(c) Notwithstanding subdivision (a), for the 2012-13 fiscal year
only, the rate referenced in subdivision (a) shall be 2.17 percent.

end delete begin delete

(d) Notwithstanding subdivision (a), for the 2013-14 fiscal year
only, the rate referenced in subdivision (a) shall be 1.94 percent.

end delete begin insert

(b) Notwithstanding subdivision (a), commencing July 1, 2016,
the rate referenced in subdivision (a) shall be increased to 5.25
percent.

end insert begin delete

(e)

end delete

begin insert (c) end insert  Notwithstanding subdivision (b) of Section 7102, all of the
revenues, less refunds, collected pursuant to this section shall be
estimated by the State Board of Equalization, with the concurrence
of the Department of Finance, and transferred quarterly to the
Public Transportation Account in the State Transportation Fund
for allocation pursuant to Section 99312.1 of the Public Utilities
Code.

begin delete

(f) This section shall become inoperative on July 1, 2016, and,
as of January 1, 2017, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2017, deletes or
extends the dates on which it becomes inoperative and is repealed.

end delete

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SEC. 4.  

Section 6201.8 is added to the Revenue and Taxation
Code, to read:

6201.8.  

(a) Except as provided by Section 6357.3, in addition
to the taxes imposed by this part, an excise tax is hereby imposed
on the storage, use, or other consumption in this state of diesel
fuel, as defined in Section 60022, at the rate of 5.25 percent of the
sales price of the diesel fuel.

(b) Notwithstanding subdivision (b) of Section 7102, all of the
revenues, less refunds, collected pursuant to this section shall be
estimated by the State Board of Equalization, with the concurrence
of the Department of Finance, and transferred quarterly to the
Public Transportation Account in the State Transportation Fund
for allocation pursuant to Section 99312.1 of the Public Utilities
Code.

(c) This section shall become operative on July 1, 2016.

SEC. 5.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end delete

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 60050 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

60050.  

(a) (1) A tax of eighteen cents ($0.18) is hereby
imposed upon each gallon of diesel fuel subject to the tax in
Sections 60051, 60052, and 60058.

(2) If the federal fuel tax is reduced below the rate of fifteen
cents ($0.15) per gallon and federal financial allocations to this
state for highway and exclusive public mass transit guideway
purposes are reduced or eliminated correspondingly, the tax rate
imposed by paragraph (1), including any reduction or adjustment
pursuant to subdivision (b), on and after the date of the reduction,
shall be increased by an amount so that the combined state rate
under paragraph (1) and the federal tax rate per gallon equal what
it would have been in the absence of the federal reduction.

(3) If any person or entity is exempt or partially exempt from
the federal fuel tax at the time of a reduction, the person or entity
shall continue to be exempt under this section.

(b) (1) On July 1, 2011, the tax rate specified in paragraph (1)
of subdivision (a) shall be reduced to thirteen cents ($0.13) and
every July 1 thereafter shall be adjusted pursuant to paragraphs
(2) and (3).

(2) For the 2012-13 fiscal year and each fiscal year thereafter,
the board shall, on or before March 1 of the fiscal year immediately
preceding the applicable fiscal year, adjust the rate reduction in
paragraph (1) in that manner as to result in a revenue loss
attributable to paragraph (1) that will equal the amount of revenue
gain attributable to Sections 6051.8 and 6201.8, based on estimates
made by the board, and that rate shall be effective during the state’s
next fiscal year.

(3) In order to maintain revenue neutrality for each year,
beginning with the rate adjustment on or before March 1, 2013,
the adjustment under paragraph (2) shall take into account the
extent to which the actual amount of revenues derived pursuant to
Sections 6051.8 and 6201.8 and the revenue loss attributable to
this subdivision resulted in a net revenue gain or loss for the fiscal
year ending prior to the rate adjustment date on or before March
1.

(4) The intent of paragraphs (2) and (3) is to ensure that the act
adding this subdivision and Sections 6051.8 and 6201.8 does not
produce a net revenue gain in state taxes.

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(5) Notwithstanding any other provision of this subdivision, the
board shall not make any adjustments to the excise tax rate as a
result of the increase in the sales and use tax on diesel fuel
pursuant to subdivision (b) of Section 6051.8 and subdivision (b)
of Section 6201.8.

end insert