SB 14, as introduced, Hernandez. Tobacco: electronic cigarettes: taxes: managed care organization provider tax: in-home supportive services.
(1) The Cigarette and Tobacco Products Licensing Act of 2003 requires the State Board of Equalization to administer a statewide program to license manufacturers, importers, distributors, wholesalers, and retailers of cigarettes and tobacco products. Under existing law, a violation of this act is a misdemeanor.
This bill would expand the definition of tobacco products for purposes of that act to include electronic cigarettes, as defined, thereby subjecting manufacturers, importers, distributors, wholesalers, and retailers of electronic cigarettes to the same licensing requirements imposed pursuant to that act on manufacturers, importers, distributors, wholesalers, and retailers of tobacco products. By broadening the act to apply to manufacturers, importers, distributors, wholesalers, and retailers of electronic cigarettes, this bill would expand the scope of an existing crime, thereby imposing a state-mandated local program.
The Cigarette and Tobacco Products Tax Law, the violation of which is a crime, imposes a tax on distributors of cigarettes at the rate of $0.87 per package of 20 cigarettes and a tax on distributors of tobacco products, based on wholesale cost, at a rate determined annually that is equivalent to the combined rate of all taxes imposed on cigarettes, and at a rate equivalent to $0.50 per package of 20 cigarettes. Revenues from taxes imposed under this law are deposited in specified accounts. These taxes are inclusive of the taxes imposed under the Tobacco Tax and Health Protection Act of 1988 (Proposition 99) and the California Families and Children Act of 1998 (Proposition 10).
This bill would, on or after the first day of the first calendar quarter commencing more than 90 days on or after the effective date of the bill, impose an additional tax on the distribution of cigarettes at the rate of $0.10 for each cigarette distributed, which would be $2 per pack; would require a dealer and a wholesaler to file a return with the State Board of Equalization showing the number of cigarettes in its possession or under its control on that date, and impose a related floor stock tax; and would require a licensed cigarette distributor to file a return with the board and pay a cigarette indicia adjustment tax at the rate equal to the difference between the existing tax rate and the tax rate imposed by this bill for cigarette tax stamps in its possession or under its control on that date. Because the bill would impose an additional tax on cigarettes under the Cigarette and Tobacco Products Tax Law, it would thereby increase the tax upon the distribution of tobacco products pursuant to Proposition 99, the revenues from which are required to be deposited in the Cigarette and Tobacco Products Surtax Fund.
This bill would additionally, on or after the first day of the first calendar quarter commencing more than 90 days on or after the effective date of the bill, impose a tax on the distribution of electronic cigarettes, as defined, based on the wholesale cost, at a rate determined annually that is equivalent to the cigarette tax rate, which would be $2.87 per package of 20 cigarettes.
This bill would expand the definition of “tobacco products” for purposes of the Cigarette and Tobacco Products Tax Law to include electronic cigarettes, thereby subjecting distributors, wholesalers, and transporters of electronic cigarettes to, among other things, the same licensing, bonding, and registration requirements imposed on distributors, wholesalers, and transporters of tobacco products.
This bill would provide that the revenues collected from the taxes imposed on cigarettes and electronic cigarettes by this bill, less refunds, would not be considered General Fund revenues and would be deposited in the California Health Care, Research, and Prevention Tobacco Tax Act of 2015 Fund created by this bill. The bill would continuously appropriate those amounts without regard to fiscal year to the Controller for allocation in accordance with this bill to be expended for specified purposes, which include, but are not limited to: (1) offsetting any revenue decreases directly resulting from the additional taxes imposed by this bill to the Cigarette and Tobacco Products Surtax Fund, the Breast Cancer Fund, and the California Children and Families Trust Fund; (2) reimbursing the State Board of Equalization and the State Auditor for administrative duties imposed by the bill; (3) providing funding to the University of California for the purpose of increasing the number of physicians trained in California; (4) funding state and local law enforcement efforts and investigative activities to reduce illegal sales of tobacco products; (5) providing funding to the State Department of Health Care Services for existing health care programs and services and to draw down federal funding; (6) funding the California Department of Public Health Tobacco Control Program; and (7) supplementing the Cigarette and Tobacco Products Surtax Medical Research Program administered by the University of California.
Because this bill would impose new requirements under the Cigarette and Tobacco Products Tax Law, the violation of which is a crime, it would impose a state-mandated local program.
(2) Existing law provides for the county-administered In-Home Supportive Services (IHSS) program, under which qualified aged, blind, and disabled persons are provided with services to permit them to remain in their own homes and avoid institutionalization. Existing law provides, as part of the Coordinated Care Initiative, that IHSS is a Medi-Cal benefit available through managed care health plans in specified counties. Existing law provides for a 7% reduction in hours of service to each IHSS recipient of services.
This bill would repeal the 7% reduction in hours of service to each IHSS recipient of services.
(3) Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which health care services are provided to qualified low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Under existing law, one of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed care plans. Existing law also imposes a sales tax on sellers of Medi-Cal managed care plans.
This bill would establish a new managed care organization provider tax, to be administered by the department in consultation with the Department of Managed Health Care. The tax would be assessed by the department on licensed health care service plans and managed care plans contracted with the department to provide Medi-Cal services, except as excluded by the bill. The bill would require the health plans to report to the department specified enrollment information, on a quarterly basis, beginning with the 2016-17 state fiscal year. On December 1, 2016, or the date upon which the department receives approval for federal financial participation, whichever is later, the department would commence notification to the health plans of the assessed tax amount and due date for the first taxable quarter.
This bill would establish applicable taxing tiers and per enrollee amounts for the 2016-17 fiscal year, for Medi-Cal enrollees, and other enrollees, as defined. Commencing with the 2017-18 fiscal year, the bill would require the department and the Department of Managed Health Care to determine tax tiers and per enrollee tax amounts. The bill would require the department to request approval from the federal Centers for Medicare and Medicaid Services, as necessary, to implement the bill. The bill would authorize the department to implement its provisions by means of provider bulletins, all-plan letters, or similar instructions, and to notify the Legislature of this action.
This bill would establish the Health and Human Services Special Fund in the State Treasury, into which all revenues, less refunds, derived from taxes imposed by the bill would be deposited. The bill would require $230,000,000 in the fund to be transferred to the Developmental Disabilities Fund, which the bill would create, to be used upon appropriation to increase funding provided to regional centers, as specified, and increase rates paid to service providers for providing services to persons with disabilities, as specified. The remaining moneys in the fund would be continuously appropriated to the department for the purpose of funding the nonfederal share of Medi-Cal managed care rates, as prescribed, thereby making an appropriation.
(4) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(5) 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.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
The Legislature hereby finds and declares all of
3(a) Tobacco use is the single most preventable cause of death
4and disease in California, claiming the lives of more than 40,000
5people every year. Each year thousands of Californians require
6medical and dental treatment as a result of tobacco use.
7(b) Health care treatment of all types of cancer, cardiovascular
8and lung disease, oral disease, and tobacco-related diseases and
9conditions continues to impose a significant financial burden upon
10California’s overstressed health care system. Tobacco use costs
11Californians more than $13.29 billion in health care expenses every
12year, of which $3.5 billion is paid for by taxpayers through existing
13health care programs and services that provide health care,
14treatment, and services for Californians. The cost of lost
15productivity due to tobacco use adds an additional estimated $10.35
16billion to the annual economic consequences of smoking and
17tobacco use in California.
18(c) An increase in the tobacco tax is an appropriate way to
19decrease tobacco use and mitigate the costs of health care treatment
20and improve existing programs providing quality health care and
21access to health care services for families and children. It will save
22lives and save state and local governments money in the future.
23(d) An increase in funding for existing health care programs
24and services that treat all types of cancer, cardiovascular and lung
25disease, oral disease, and tobacco-related diseases and conditions
26will expand the number of health care providers that treat patients
27with such diseases and conditions. Funds spent for this purpose
28can be used to match federal funds, with the federal government
P6 1putting up as much as nine dollars for every dollar spent from this
3(e) Most electronic cigarettes contain nicotine, which is derived
4from tobacco and is a highly addictive drug. Electronic cigarettes
5are currently not subject to any tobacco taxation, making them
6cheaper and potentially more attractive, especially to young people.
7(f) There are more than 470 electronic cigarette brands for sale
8today offered in over 7,700 flavors including candy-flavors that
9appeal to youth, such as Captain Crunch, gummy bear, cotton
10candy, Atomic Fireball, and fruit loops. The fastest growing age
11range for electronic cigarettes is middle school and high school
12students and according to the Centers for Disease Control,
13electronic cigarette use among this group tripled from 2013 to
15(g) Research into the causes, early detection, and effective
16treatment, care, prevention, and potential cures of all types of
17cancer, cardiovascular and lung disease, oral disease, and
18tobacco-related diseases will ultimately save lives and save state
19and local governments money in the future.
20(h) There is an urgent need for research in California for new
21and effective treatments for all types of cancer, cardiovascular and
22lung disease, oral disease, and tobacco-related diseases. Such
23research transforms scientific discoveries into clinical applications
24that reduce the incidence and mortality of such diseases and
26(i) Funding prevention programs designed to discourage
27individuals, particularly youth, from taking up smoking and the
28use of other tobacco products through health education and health
29promotion programs will save lives and save state and local
30governments money in the future.
31(j) A reinvigorated tobacco control program will allow targeted
32public health efforts to combat the tobacco industry’s predatory
33marketing to ethnic groups, driving down smoking rates and
34ultimately reducing cancer, cardiovascular and lung disease, oral
35disease, and tobacco-related diseases in these California
37(k) Funding implementation and administrative programs to
38support law enforcement efforts to reduce illegal sales of tobacco
39products to minors, cigarette smuggling, and tobacco tax evasion
P7 1will save lives and save state and local governments money in the
3(l) California faces a shortage of physicians and dentists to meet
4the growing health care needs of its residents. As a result, access
5to primary and oral health care, treatment for tobacco-related
6diseases, regular check-ups and other urgent health care needs will
7suffer. California taxpayers support the education of thousands of
8medical and dental students every year, yet because of limits on
9the number of residency programs, many of those physicians and
10dentists are forced out of state to continue their training, leaving
11patients in California without access to care. Funding
12implementation and administrative programs that will help keep
13hundreds more doctors in California every year to improve the
14health of Californians will save lives and save state and local
15governments money in the future.
16(m) Increasing the cost of cigarettes and tobacco products is
17widely recognized as the most effective way to reduce smoking
18across California, especially by young people. The 2000 U.S.
19Surgeon General’s Report, Reducing Tobacco Use, found that
20raising tobacco-product prices decreases the prevalence of tobacco
21use, particularly among kids and young adults, and that tobacco
22tax increases produce “substantial long-term improvements in
23health.” From its review of existing research, the report concluded
24that raising tobacco taxes is one of the most effective tobacco
25prevention and control strategies. Reducing smoking will save
26lives and saves state and local governments money in the future.
27(n) Because increasing the tobacco tax will reduce smoking and
28use of other tobacco products, it is important to protect existing
29tobacco tax-funded programs from a decline in tax revenues.
30(o) California currently taxes cigarettes at only $0.87 per pack,
31and ranks 35th in tobacco tax rates, reflecting one of the lowest
32tobacco tax rates in the United States. The national average is
33$1.60 per pack. Thirty-five states have cigarette tax rates of $1.00
34per pack or higher, and California is well below other western
35states (Washington: $3.025, Oregon: $1.31, Nevada: $1.80, and
36Arizona: $2.00). California last raised its tobacco tax in 1998.
Section 22971.05 is added to the Business and
38Professions Code, to read:
For purposes of this division, beginning on and after
40the first day of the first calendar quarter commencing more than
P8 190 days after the effective date of this section, “tobacco products”
2also includes electronic cigarettes, as that term is defined in
3subdivision (b) of Section 30130.51 of the Revenue and Taxation
Section 30014 of the Revenue and Taxation Code is
6amended to read:
(a) “Transporter” means any person transporting into
8or within this state any of the following:
9(1) Cigarettes not contained in packages to which are affixed
10California cigarette tax stamps or meter impressions.
11(2) Tobacco products upon which the tobacco products surtax
12imposed by Article 2 (commencing with Section 30121) and Article
133 (commencing with Section 30131) of Chapter 2 has not been
17(b) “Transporter” shall not include any of the following:
18(1) A licensed distributor.
19(2) A common carrier.
20(3) A person transporting cigarettes and tobacco products under
21federal internal revenue bond or customs control that are
22non-tax-paid under Chapter 52 of the Internal Revenue Act of 1954
Section 30104 of the Revenue and Taxation Code is
25amended to read:
The taxes imposed by this part shall not apply to the
27sale of cigarettes or tobacco products by a distributor to a common
28carrier engaged in interstate or foreign passenger service or to a
29person authorized to sell cigarettes or tobacco products on the
30facilities of the carrier. Whenever cigarettes or tobacco products
31are sold by distributors to common carriers engaged in interstate
32or foreign passenger service for use or sale on facilities of the
33carriers, or to persons authorized to sell cigarettes or tobacco
34products on those facilities, the tax imposed
begin delete by Sections 30101, shall not be levied with respect
3530123, and 30131.2end delete
36to the sales of the cigarettes or tobacco products by the distributors,
37but a tax is hereby levied upon the carriers or upon the persons
38authorized to sell cigarettes or tobacco products on the facilities
39of the carriers, as the case may be, for the privilege of making sales
40in California at the same rate as set forth
begin delete in Sections 30101, 30123, Those common carriers and
P9 1and 30131.2.end delete
2authorized persons shall pay the tax imposed by this section and
3file reports with the board, as provided in Section 30186.
Section 30108 of the Revenue and Taxation Code is
5amended to read:
(a) Every distributor engaged in business in this state
7and selling or accepting orders for cigarettes or tobacco products
8with respect to the sale of which the tax imposed
begin delete by Sections is inapplicable shall,
930101, 30123, and 30131.2end delete
10at the time of making the sale or accepting the order or, if the
11purchaser is not then obligated to pay the tax with respect to his
12or her distribution of the cigarettes or tobacco products, at the time
13the purchaser becomes so obligated, collect the tax from the
14purchaser, if the purchaser is other than a licensed distributor, and
15shall give to the purchaser a receipt therefor in the manner and
16form prescribed by the board.
17(b) Every person engaged in business in this state and making
18gifts of untaxed cigarettes or tobacco products as samples with
19respect to which the tax imposed
begin delete by Sections 30101, 30123, and is inapplicable shall, at the time of making
21the gift or, if the donee is not then obligated to pay the tax with
22respect to his or her distribution of the cigarettes or tobacco
23products, at the time the donee becomes so obligated, collect the
24tax from the donee, if the donee is other than a licensed distributor,
25and shall give the donee a receipt therefor in the manner and form
26prescribed by the board. This section shall not apply to those
27distributions of cigarettes or tobacco products
begin delete whichend delete are
28exempt from tax under Section 30105.5.
29(c) “Engaged in business in the state” means and includes any
30of the following:
31(1) Maintaining, occupying, or using, permanently or
32temporarily, directly or indirectly, or through a subsidiary, or agent,
33by whatever name called, an office, place of distribution, sales or
34sample room or place, warehouse or storage place, or other place
36(2) Having any representative, agent, salesperson,
begin delete canvasserend delete
37 or solicitor operating in this state under the authority
38of the distributor or its subsidiary for the purpose of selling,
39delivering, or the taking of orders for cigarettes or tobacco
P10 1(d) The taxes required to be collected by this section constitute
2debts owed by the distributor, or other person required to collect
3the taxes, to the state.
Article 2.5 (commencing with Section 30130.51) is
5added to Chapter 2 of Part 13 of Division 2 of the Revenue and
6Taxation Code, to read:
For the purposes of this article:
12(a) “Cigarette” has the same meaning as in Section 30003 as it
13read on January 1, 2015.
14(b) “Electronic cigarettes” means any device that is intended to
15be used to deliver aerosolized or vaporized nicotine to the person
16inhaling from the device, including, but not limited to, an
17e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah. Electronic
18cigarettes include any component, part, or accessory of that a
19device that is used during the operation of the device, whether sold
20separately or as a package with that device, if it is intended to be
21used to deliver aerosolized or vaporized nicotine to the person
22using the device. Electronic cigarettes also include any liquid or
23substance containing nicotine intended to be inhaled during the
24use of the device. Electronic cigarettes do not include any battery,
25battery charger, carrying case, or other accessory not used in the
26operation of the device if sold separately. E-cigarettes shall not
27include any product that has been approved by the United States
28Food and Drug Administration for sale as a tobacco cessation
29product or for other therapeutic purposes where that product is
30marketed and sold solely for such an approved purpose.
31(c) The references to “tobacco products” in this part, except in
32Article 2 (commencing with Section 30121) and Article 3
33(commencing with Section 30131) of Chapter 2 (commencing with
34Section 30101), and Chapter 9 (commencing with Section 30461),
35shall include electronic cigarettes, unless the context otherwise
(a) In addition to any other taxes imposed upon the
38distribution of cigarettes, there shall be imposed an additional tax
39upon every distributor of cigarettes at the rate of one hundred mills
40($0.10) for each cigarette distributed on or after the first day of
P11 1the first calendar quarter commencing more than 90 days after the
2effective date of this article.
3(b) (1) There shall be imposed upon every distributor a tax
4upon the distribution of electronic cigarettes, based on the
5wholesale cost of these products, at a tax rate, as determined
6annually by the State Board of Equalization, that is equivalent to
7the total rate of tax imposed on cigarettes by this part, on or after
8the first day of the first calendar quarter commencing more than
990 days after the effective date of this article.
10(2) The board may adopt any regulations necessary to enforce
11and administer the tax imposed in paragraph (1), as provided for
12in subdivision (c) of Section 30130.51, including, but not limited
13to, regulations that address the following:
14(A) The imposition of tax on the distribution of any liquid or
15substance containing nicotine, any device intended to be used to
16deliver aerosolized or vaporized nicotine to the person inhaling
17from the device, and any component, part, or accessory of such a
18device that is intended to be used to deliver aerosolized or
19vaporized nicotine to the person inhaling from the device.
20(B) Describing who is a distributor of electronic cigarettes,
21which is consistent with the definition of the term “distributor” in
23(c) The wholesale cost used to calculate the amount of tax due
24under subdivision (b) does not include the wholesale cost of
25electronic cigarettes that were returned by a customer during the
26same reporting period in which the electronic cigarettes were
27distributed, when the distributor refunds the entire amount the
28customer paid for the tobacco products either in cash or credit. For
29purposes of this subdivision, refund or credit of the entire amount
30shall be deemed to be given when the purchase price less
31rehandling and restocking costs is refunded or credited to the
32customer. The amount withheld for rehandling and restocking
33costs may be a percentage of the sales price determined by the
34average cost of rehandling and restocking returned merchandise
35during the previous accounting cycle.
(a) (1) Every dealer and wholesaler, for the
37privilege of holding or storing cigarettes for sale, use, or
38consumption, shall pay a floor stock tax for each cigarette in its
39possession or under its control in this state at 12:01 a.m. on the
40first day of the first calendar quarter commencing more than 90
P12 1days after the effective date of this article at the rate of one hundred
2mills ($0.10) for each cigarette.
3(2) Every dealer and wholesaler shall file a return with the State
4Board of Equalization on or before the first day of the first calendar
5quarter commencing more than 180 days after the effective date
6of this act on a form prescribed by the State Board of Equalization,
7showing the number of cigarettes in its possession or under its
8control in this state at 12:01 a.m. on the first day of the first
9calendar quarter commencing more than 90 days after the effective
10date of this article. The amount of tax shall be computed and shown
11on the return.
12(b) (1) Every licensed cigarette distributor, for the privilege of
13distributing cigarettes and for holding or storing cigarettes for sale,
14use, or consumption, shall pay a cigarette indicia adjustment tax
15for each California cigarette tax stamp that is affixed to any
16package of cigarettes and for each unaffixed California cigarette
17tax stamp in its possession or under its control at 12:01 a.m. on
18the first day of the first calendar quarter commencing more than
1990 days after the effective date of this article at the following rates:
20(A) Two dollars and fifty cents ($2.50) for each stamp bearing
21the designation “25.”
22(B) Two dollars ($2.00) for each stamp bearing the designation
24(C) One dollar ($1.00) for each stamp bearing the designation
26(2) Every licensed cigarette distributor shall file a return with
27the board on or before the first day of the first calendar quarter
28commencing 180 days after the effective date of this act on a form
29prescribed by the board, showing the number of stamps described
30in subparagraphs (A), (B), and (C) of paragraph (1). The amount
31of tax shall be computed and shown on the return.
32(c) The taxes required to be paid by this section are due and
33payable on or before the first day of the first calendar quarter
34commencing 180 days after the effective date of this act. Payments
35shall be made by remittances payable to the board and the payments
36shall accompany the return and forms required to be filed by this
38(d) Any amount required to be paid by this section that is not
39timely paid shall bear interest at the rate and by the method
40established pursuant to Section 30202 from the first day of the first
P13 1calendar quarter commencing 180 days after the effective date of
2this article until paid, shall be subject to determination,
3redetermination, and any penalties provided with respect to
4determinations and redeterminations.
(a) The California Health Care, Research, and
6Prevention Tobacco Tax Act of 2015 Fund is hereby established
7in the State Treasury for the purposes set forth in this article.
8Notwithstanding Section 30461, all revenues, less refunds, derived
9from the taxes imposed by this article on cigarettes and electronic
10cigarettes shall be deposited in the California Health Care,
11Research, and Prevention Tobacco Tax Act of 2015 Fund.
12(b) Notwithstanding any other law, the California Health Care,
13Research, and Prevention Tobacco Tax Act of 2015 Fund is a trust
14fund established solely to carry out the purposes set forth in this
15article, and all revenues deposited into the California Health Care,
16Research, and Prevention Tobacco Tax Act of 2015 Fund, together
17with interest earned by the fund, are hereby continuously
18appropriated without regard to fiscal year to the Controller for
19allocation in accordance with this article, and to be expended only
20in accordance with this article and its purposes.
21(c) Notwithstanding any other law, the taxes imposed by this
22article and the revenue derived therefrom, including investment
23interest, shall not be considered to be part of the General Fund, as
24that term is used in Chapter 1 (commencing with Section 16300)
25of Part 2 of Division 4 of Title 2 of the Government Code, and
26shall not be considered General Fund revenue for purposes of
27Section 8 of Article XVI of the California Constitution, and its
29(d) Notwithstanding any other law, revenues deposited into the
30California Health Care, Research, and Prevention Tobacco Tax
31Act of 2015 Fund, and any interest earned by the fund, shall only
32be used for the specific purposes set forth in this article. Revenues
33deposited into the California Health Care, Research, and Prevention
34Tobacco Tax Act of 2015 Fund shall not be subject to
35appropriation, reversion, or transfer by the Legislature, the
36Governor, the Director of Finance, or the Controller for any other
37purpose, nor shall the funds be loaned to the General Fund or any
38other fund of the state or any local government fund.
(a) The State Board of Equalization shall determine
40within one year of the effective date of this act, and annually
P14 1thereafter, the effect that the additional taxes imposed on cigarettes
2by this article, and the resulting increase in the tax on tobacco
3products required by subdivision (b) of Section 30123, have on
4the consumption of cigarettes and tobacco products in this state.
5To the extent that a decrease in consumption is determined by the
6State Board of Equalization to be a direct result of the additional
7tax imposed by this article, or the resulting increase in the tax on
8tobacco products required by subdivision (b) of Section 30123,
9the State Board of Equalization shall determine the fiscal effect
10the decrease in consumption has on the Cigarette and Tobacco
11Products Surtax Fund created by Section 30122 (Proposition 99
12as approved by the voters at the November 8, 1988, statewide
13general election), the Breast Cancer Fund created by Section
1430461.6, and the California Children and Families Trust Fund
15created by Section 30131 (Proposition 10 as approved by the voters
16at the November 3, 1998, statewide general election).
17(b) Funds shall be transferred from the California Health Care,
18Research, and Prevention Tobacco Tax Act of 2015 Fund to the
19Cigarette and Tobacco Products Surtax Fund, the Breast Cancer
20Fund, and the California Children and Families Trust Fund, to
21offset the revenue decrease directly resulting from the imposition
22of additional taxes by this article.
23(c) Transfers under this section shall be made by the Controller
24at times as the Controller determines necessary to further the intent
25of this section.
26(d) For purposes of this section, “tobacco products” shall not
27include electronic cigarettes.
(a) Moneys from the California Health Care,
29Research, and Prevention Tobacco Tax Act of 2015 Fund shall be
30used to reimburse the board for expenses incurred in the
31administration, calculation, and collection of the tax imposed by
32this article and for expenses incurred in the calculation and
33distribution of moneys and in the promulgation of regulations as
34required by this article, provided, however, that after deducting
35the necessary amounts pursuant to subdivision (b) of Section
3630130.55, not more than 1 percent annually of the moneys
37remaining in the California Health Care, Research, and Prevention
38Tobacco Tax Act of 2015 Fund shall be used for those
P15 1(b) Moneys from the California Health Care, Research, and
2Prevention Tobacco Tax Act of 2015 Fund shall be used to
3reimburse the California State Auditor up to four hundred thousand
4dollars ($400,000) annually for actual costs incurred to conduct
5each of the audits required by Section 30130.58 for the purpose
6of providing public transparency and ensuring that the revenues
7generated by this article are used for health care, tobacco use
8prevention, and research.
9(c) Moneys from the California Healthcare, Research, and
10Prevention Tobacco Tax Act of 2015 Fund in the amount of forty
11million dollars ($40,000,000) annually shall be used to provide
12funding to the University of California for the purpose and goal
13of increasing the number of physicians trained in California. This
14goal shall be achieved by providing this funding to the University
15of California to sustain, retain, and expand graduate medical
16education programs in the State of California based on
17demonstrated workforce needs and priorities.
18(d) Moneys from the California Health Care, Research, and
19Prevention Tobacco Tax Act of 2015 Fund in the amount of
20forty-eight million dollars ($48,000,000) annually shall be used
21for the purpose of funding law enforcement efforts and
22investigative activities to reduce illegal sales of tobacco products,
23including illegal sales to minors; to reduce cigarette smuggling,
24tobacco tax evasion, and counterfeit tobacco products; to enforce
25licensing requirements; to enforce tobacco-related laws, court
26judgments, and legal settlements; and to conduct law enforcement
27training and technical assistance activities for tobacco-related
28statutes, provided that these moneys are not to be used to supplant
29existing state or local funds for these same purposes. These moneys
30shall be apportioned in the following manner:
31(1) Thirty million dollars ($30,000,000) annually to the
32Department of Justice to be distributed to local law enforcement
33agencies to support and hire front-line law enforcement peace
34officers for programs, including, but not limited to, enforcement
35of state and local laws related to the illegal sales and marketing of
36tobacco to minors, and increasing investigative activities and
37compliance checks to reduce illegal sales of tobacco products to
38minors and youth tobacco use.
39(2) Six million dollars ($6,000,000) annually to the board to be
40used to enforce laws that regulate the distribution and retail sale
P16 1of cigarettes and other tobacco products, such as laws that prohibit
2cigarette and tobacco product smuggling, counterfeiting, selling
3untaxed cigarettes and other tobacco products, and selling cigarettes
4and other tobacco products without a proper license.
5(3) Six million dollars ($6,000,000) annually to the California
6Department of Public Health to be used to support programs,
7including, but not limited to, providing grants and contracts to
8local law enforcement agencies to provide training and funding
9for the enforcement of state and local laws related to the illegal
10sales of tobacco to minors, increasing investigative activities and
11compliance checks, and other appropriate activities to reduce illegal
12sales of tobacco products to minors including, but not limited to,
13the Stop Tobacco Access to Kids Enforcement (STAKE) Act
14(Division 8.5 (commencing with Section 22950) of the Business
15and Professions Code), pursuant to Section 22952 of the Business
16and Professions Code.
17(4) Six million dollars ($6,000,000) annually to the California
18Attorney General to be used for activities including, but not limited
19to, enforcing laws that regulate the distribution and sale of
20cigarettes and other tobacco products, such as laws that prohibit
21cigarette smuggling, counterfeiting, selling untaxed tobacco, selling
22 tobacco without a proper license and selling tobacco to minors,
23and enforcing tobacco-related laws, court judgments, and
25(e) Not more than 1 percent of the amounts received pursuant
26to subdivision (a) of Section 30130.57 or subdivision (d) of this
27section shall be used by any state or local agency or department
28receiving such amounts for administrative costs.
29(f) Not more than 5 percent of the amounts received pursuant
30to subdivisions (b) and (c) of Section 30130.57 shall be used by
31any state agency or department receiving such amounts for
33(g) The California State Auditor shall promulgate regulations
34pursuant to the rulemaking provisions of the Administrative
35Procedure Act (Chapter 3.5 (commencing with Section 11340) of
36Part 1 of Division 3 of Title 2 of the Government Code) to define
37administrative costs for purposes of this article.
38(h) The board shall determine beginning two years following
39the effective date of this article, and annually thereafter, any
40reduction in revenues, following the first year after the effective
P17 1date of this article, resulting from a reduction in the consumption
2of cigarettes and tobacco products due to the additional taxes
3imposed on cigarettes by this article, and the increase in the tax
4on tobacco products required by subdivision (b) of Section 30123.
5If the board determines there has been a reduction in revenues, the
6amount of moneys allocated pursuant to subdivisions (c) and (d)
7shall be reduced proportionately.
Moneys in the California Health Care, Research,
9and Prevention Tobacco Tax Act of 2015 Fund, less moneys
10transferred pursuant to Section 30130.55 and subdivisions (a), (b),
11(c), and (d) of Section 30130.56, shall be allocated by the
12Controller as follows:
13(a) Eighty-two percent shall be transferred to the Health Care
14Treatment Fund, which is hereby created, and, upon appropriation
15by the Legislature, shall be used by the State Department of Health
16Care Services to increase funding for the existing health care
17programs and services described in Chapter 7 (commencing with
18Section 14000) to Chapter 8.9 (commencing with Section 14700),
19inclusive, of Part 3 of Division 9 of the Welfare and Institutions
20Code, including those that provide health care, treatment, and
21 services for Californians with tobacco-related diseases and
22conditions, by providing improved payments, including funding
23support to designated public hospitals, as defined in subdivision
24(d) of Section 14166.1 of the Welfare and Institutions Code, and
25the governmental entities with which those designated public
26hospitals are affiliated for the nonfederal share of payments, for
27all health care, treatment, and services described in Chapter 7
28(commencing with Section 14000) to Chapter 8.9 (commencing
29with Section 14700), inclusive, of Part 3 of Division 9 of the
30Welfare and Institutions Code. To the extent possible given the
31limits of funding under this article, payments and support for the
32nonfederal share of payments for health care, services, and
33treatment shall be increased based on criteria developed, and
34periodically updated, as needed, by the department, in consultation
35with the Legislature as part of the annual state budget process,
36provided that these funds are not to be used to supplant existing
37 state general funds for these same purposes. This criteria shall
38include, but not be limited to, ensuring timely access, specific
39geographic shortages of services, or ensuring quality care.
40Consistent with federal law, the funding shall be used to draw
P18 1down federal funds. The funding shall be used to the greatest extent
2feasible only for care provided by health care professionals who
3are enrolled with the Medi-Cal program, health facilities
4contracting with the State Department of Health Care Services
5under, or enrolled with, the Medi-Cal program, and health plans
6contracting with the State Department of Health Care Services
7under the Medi-Cal program to provide health benefits to Medi-Cal
8beneficiaries. The department shall, if required, submit a request
9for an amendment to California’s State Plan to the federal Centers
10for Medicare and Medicaid Services.
11(b) Thirteen percent shall be used for the purpose of funding
12comprehensive tobacco prevention and control programs, provided
13that these funds are not used to supplant existing state or local
14funds for these same purposes. These funds shall be apportioned
15in the following manner:
16(1) Eighty-five percent to the California Department of Public
17Health Tobacco Control Program to be used for the tobacco control
18programs described in Article 1 (commencing with Section 104350)
19of Chapter 1 of Part 3 of Division 103 of the Health and Safety
20Code. The State Department of Public Health shall award funds
21to state and local governmental agencies, tribes, universities and
22colleges, community-based organizations, and other qualified
23agencies for the implementation, evaluation, and dissemination of
24evidence-based health promotion and health communication
25activities in order to monitor, evaluate, and reduce tobacco use,
26tobacco-related disease rates, and tobacco-related health disparities,
27and develop a stronger evidence base of effective prevention
28programming with not less than 15 percent of health promotion,
29health communication activities, and evaluation and tobacco use
30surveillance funds being awarded to accelerate and monitor the
31rate of decline in tobacco-related disparities with the goal of
32eliminating tobacco-related disparities.
33(2) Fifteen percent to the State Department of Education to be
34used for school programs to prevent and reduce the use of tobacco
35and nicotine products by young people as described in Section
36104420 of the Health and Safety Code, with not less than 15
37percent of these funds being awarded to accelerate and monitor
38the rate of decline in tobacco-related disparities for the purpose of
39eliminating tobacco-related disparities.
P19 1(c) Five percent to the University of California Tobacco-Related
2Disease Research Program pursuant to Article 2 (commencing
3with Section 104500) of Chapter 1 of Part 3 of Division 103 of
4the Health and Safety Code to supplement the Cigarette and
5Tobacco Products Surtax Medical Research Program, provided
6that these funds be used under the following conditions:
7(1) The funds shall be used for grants and contracts for basic,
8applied, and translational medical research in California into the
9prevention of, early detection of, treatments for, complementary
10treatments for, and potential cures for all types of cancer,
11cardiovascular and lung disease, oral disease, and tobacco-related
12diseases. Notwithstanding any other law, the Tobacco-Related
13Disease Research Program shall have authority to expend funds
14received under this article for the purposes set forth in this
16(2) Any grants and contracts awarded shall be awarded using
17existing medical research program infrastructure and on the basis
18of scientific merit as determined by an open, competitive peer
19review process that assures objectivity, consistency, and high
21(3) Individuals or entities that receive the grants and contracts
22shall reside or be located entirely in California.
23(4) The research shall be performed entirely in California.
24(5) The funds shall not be used to supplant existing state or local
25funds for these same purposes.
To provide full public accountability concerning the
27uses to which moneys from the California Health Care, Research,
28and Prevention Tobacco Tax Act of 2015 Fund are put, and to
29ensure full compliance with this article, all of the following shall
31(a) The California State Auditor shall conduct at least biennially
32an independent financial audit of the state and local agencies
33receiving moneys pursuant to this article. An audit conducted
34pursuant to this section shall include, but not be limited to, a review
35of the administrative costs expended by the state agencies that
36administer the fund.
37(b) Based on the independent audit, the California State Auditor
38shall prepare a report detailing its review and include any
39recommendations for improvements. The report shall be made
40available to the public.
P20 1(c) Each state agency and department receiving funds pursuant
2to this article shall, on an annual basis, publish on its respective
3Internet Web site an accounting of how much money was received
4from the California Health Care, Research, and Prevention Tobacco
5Tax Act of 2015 Fund and how that money was spent. The annual
6accounting shall also be posted on any social media outlets the
7state agency or department deems appropriate.
8(d) The use of the funds received by the State Department of
9Health Care Services pursuant to subdivision (a) of Section
1030130.57 shall be subject to the same restrictions, including, but
11not limited, to audits and prevention of fraud, imposed by existing
13(e) The use of the funds
received by the State Department of
14Public Health, the State Department of Education, and the
15University of California pursuant to subdivisions (b) and (c) of
16Section 30130.57 shall be subject to oversight by the Tobacco
17Education and Research Oversight Committee pursuant to Sections
18104365 and 104370 of the Health and Safety Code.
Section 30166 of the Revenue and Taxation Code is
20amended to read:
Stamps and meter register settings shall be sold at their
22denominated values less 0.85
begin delete percent to licensed Payment for stamps or meter
25register settings shall be made at the time of purchase, provided
26that a licensed distributor, subject to the conditions and provisions
27of this article, may be permitted to defer payments therefor.
Section 30181 of the Revenue and Taxation Code is
29amended to read:
begin delete Whenend delete any tax imposed upon cigarettes under
begin delete Article 1 (commencing with Section 30101), Article 2 is not paid through the
32(commencing with Section 30121), and Article 3 (commencing
33with Section 30131) of Chapter 2end delete
34use of stamps or meter impressions, the tax shall be due and
35payable monthly on or before the 25th day of the month following
36the calendar month in which a distribution of cigarettes occurs, or
37in the case of a sale of cigarettes on the facilities of a common
38carrier for which the tax is imposed pursuant to Section 30104,
39the tax shall be due and payable monthly on or before the 25th day
P21 1of the month following the calendar month in which a sale of
2cigarettes on the facilities of the carrier occurs.
3(b) Each distributor of tobacco products shall file a return in the
4form, as prescribed by the board,
begin delete whichend delete may include, but not
5be limited to, electronic media respecting the distributions of
6tobacco products and their wholesale cost during the preceding
7month, and any other information as the board may require to carry
8out this part. The return shall be filed with the board on or before
9the 25th day of the calendar month following the close of the
10monthly period for which it relates, together with a remittance
11payable to the board, of the amount of tax, if any, due under Article
122 (commencing with Section 30121) or Article 3 (commencing
13with Section 30131) of Chapter 2 for that period.
14(c) To facilitate the administration of this part, the board may
15require the filing of the returns for longer than monthly periods.
16(d) Returns shall be authenticated in a form or pursuant to
17methods as may be prescribed by the board.
18(e) This section shall become operative on January 1, 2007.end delete
Section 12301.02 of the Welfare and Institutions Code
20 is repealed.
(a) (1) Notwithstanding any other law, except as
22provided in subdivision (c), the department shall implement a 7
23percent reduction in hours of service to each recipient of services
24under this article, which shall be applied to the recipient’s hours
25as authorized pursuant to the most recent assessment. This
26reduction shall become effective 12 months after the
27implementation of the reduction set forth in Section 12301.01. The
28reduction required by this section shall not preclude any
29reassessment to which a recipient would otherwise be entitled.
30However, hours authorized pursuant to a reassessment shall be
31subject to the 7 percent reduction required by this section.
32(2) A request for reassessment based only on the reduction
33required in paragraph (1) may be administratively denied by the
35(3) A recipient of services under this article may direct the
36manner in which the reduction of hours is applied to the recipient’s
37previously authorized services.
38(4) For those individuals who have a documented unmet need,
39excluding protective supervision because of the limitations on
P22 1authorized hours under Section 12303.4, the reduction shall be
2taken first from the documented unmet need.
3(b) The notice
of action informing the recipient of the reduction
4pursuant to subdivision (a) shall be mailed at least 20 days prior
5to the reduction going into effect. The notice of action shall be
6understandable to the recipient and translated into all languages
7spoken by a substantial number of the public served by the
8In-Home Supportive Services program, in accordance with Section
97295.2 of the Government Code. The notice shall not contain any
10recipient financial or confidential identifying information other
11than the recipient’s name, address, and Case Management
12Information and Payroll System (CMIPS) client identification
13number, and shall include, but not be limited to, all of the following
15(1) The aggregate number of authorized hours before the
16reduction pursuant to subdivision (a) and the aggregate number of
17authorized hours after the reduction.
18(2) That the recipient may
direct the manner in which the
19reduction of authorized hours is applied to the recipient’s
20previously authorized services.
21(3) A county shall assess a recipient’s need for supportive
22services any time that the recipient notifies the county of a need
23to adjust the supportive services hours authorized, or when there
24are other indications or expectations of a change in circumstances
25affecting the recipient’s need for supportive services. Counties
26shall not require recipients to submit a medical certification form
27or a doctor’s note to show evidence of a change in the recipient’s
29(c) A recipient shall have all appeal rights otherwise provided
30for under Chapter 7 (commencing with Section 10950) of Part 2.
31(d) The reduction specified in paragraph (1) of subdivision (a)
32shall be ongoing and may be adjusted pursuant to Section 12301.03.
Section 12301.03 of the Welfare and Institutions
34Code is repealed.
(a) It is the intent of this section to offset the
36reductions described in Section 12301.02 to the extent that an
37assessment as described in Section 12301.05 provides General
38Fund savings. This section shall become operative only upon
39certification by the State Department of Health Care Services that
40any necessary federal approvals to implement the assessment
P23 1referenced in Section 12301.05 have been obtained. This
2certification shall be provided promptly to the Joint Legislative
3Budget Committee and the Department of Finance.
4(b) Within 30 days after receipt of the certification described
5in subdivision (a), the Director of Finance shall perform the
6obligations described in this subdivision for the fiscal year in which
7the certification is received and for the following fiscal year.
8Specifically, the Director of Finance shall do the following:
9(1) Estimate the total amount of additional funding, less refunds,
10that will be derived from the assessment for the next fiscal year.
11(2) Estimate the amount of the total revenues, if any, that are
12attributable to any permitted retroactive implementation of the
14(3) Estimate the amount of the total General Fund savings
15generated by the assessment revenues that remain after taking into
16account reductions such as the revenues attributable to any
17retroactive application of the assessment that will be allocated
18pursuant to Section 12301.04, and any General Fund costs
19associated with establishment and administration of the assessment.
20The General Fund costs shall be estimated following consultation
21with the appropriate budget subcommittees of the Legislature.
22(4) Calculate, as a percentage, the amount by which the
23reduction described in Section 12301.02 is offset by General Fund
24savings. In making this calculation, the Director of Finance shall
25estimate the amount of the reduction that may be partially or
26completely offset. If the estimated General Fund savings from the
27assessment are less than the amount required to fully offset the
28reduction pursuant to Section 12301.02, then the percentage offset
29shall be proportionate to the level of General Fund savings. At no
30point may the reduction pursuant to Section 12301.02 become
31negative or go below zero.
32(5) Notify the Joint Legislative Budget Committee of the
33determinations made in paragraphs (1) to (4), inclusive.
34(c) On or before May 14, prior to the third fiscal year after the
35certification described in subdivision (a) is received, the Director
36of Finance shall perform the activities described in paragraphs (1)
37to (5), inclusive, of subdivision (b).
38(d) Within 10 days of the effective date of any federal change
39or action that prevents or reduces the amount of General Fund
40savings received from the assessment, the Director of Health Care
P24 1Services shall provide a notification to the Joint Legislative Budget
2Committee and the Director of Finance of that change. Within 30
3days of the receipt of this notification, the Director of Finance shall
4perform the activities described in paragraphs (1) to (5), inclusive,
5of subdivision (b).
6(e) Notwithstanding any provision of Section 12301.02, the
7reduction of services required by Section 12301.02 shall be
8mitigated by the percentage offset determined by the Director of
9Finance in paragraph (4) of subdivision (b).
10(f) (1) Any change in the percentage reduction of services as
11provided in Section 12301.02 shall occur on the first day of the
12first full month occurring 30 days after the determination provided
13for in subdivision (b) is made by the Director of Finance.
14(2) Any change in the percentage reduction of services as
15provided in Section 12301.02 due to a determination of the Director
16of Finance required by subdivision (c) shall occur on July 1 of the
17fiscal year immediately following the determination.
18(3) If a change in the percentage reduction of services as
19provided in Section 12301.02 is triggered based on a determination
20of the Director of Finance required by subdivision (d), that change
21in hours of service shall occur on July 1 after the notification
22referenced in subdivision (d) from the Director of Health Care
23Services is received, if the notification is received between the
24preceding September 30 and January 2. If the notification is
25received on any other date, then a change in hours shall occur on
26the first of the month that is nine months after the notification is
28(g) In preparation of every Governor’s Budget and for every
29May Revision, the Director of Finance shall perform the obligation
30described in paragraphs (1) to (3), inclusive, of subdivision (b).
Article 6.7 (commencing with Section 14199.50) is
32added to Chapter 7 of Part 3 of Division 9 of the Welfare and
33Institutions Code, to read:
It is the intent of the Legislature that the department
38implement a managed care organization provider tax effective July
391, 2016, to provide ongoing funding for the Medi-Cal program,
P25 1minimize to the extent possible any need for new reductions to the
2program, and meet all of the following goals:
3(a) Generate an amount of nonfederal funds for the Medi-Cal
4program equivalent to the funds generated by the tax imposed
5pursuant to Article 5 (commencing with Section 6174) of Chapter
62 of Part 1 of Division 2 of the Revenue and Taxation Code.
7(b) In addition to the amount in subdivision (a), generate an
8additional two hundred thirty million dollars ($230,000,000) to
9increase the funding provided to regional centers and
10developmental disabilities service providers.
11(c) Comply with federal Medicaid requirements applicable to
12permissible health care-related taxes.
13(d) Structure the tax, to the extent possible, to have the lowest
14aggregate net financial impact on the health plans subject to the
15tax imposed pursuant to this article.
The following definitions shall apply for the purposes
17of this article:
18(a) “Countable enrollee” means an individual enrolled in a health
19plan, as defined in subdivision (e), each month of a taxable quarter.
20“Countable enrollee” does not include an individual enrolled in a
21Medicare plan, or a plan-to-plan enrollee, as defined in subdivision
23(b) “Department” means the State Department of Health Care
25(c) “Director” means the Director of Health Care Services.
26(d) “Excluded plan” means a health plan licensed pursuant to
27Section 1351.2 of the Health and Safety Code.
28(e) “Health care service plan” or “health plan” means a
29full-service health care service plan licensed by the Department
30of Managed Health Care under the Knox-Keene Health Care
31Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
321340) of Division 2 of the Health and Safety Code) or a managed
33care plan contracted with the State Department of Health Care
34Services to provide Medi-Cal services.
35(f) “Medi-Cal enrollee” means an individual enrolled in a health
36plan, as defined in subdivision (e), who is a Medi-Cal beneficiary
37and who is not concurrently enrolled in an additional health plan
38during a taxable quarter.
P26 1(g) “Medi-Cal per enrollee tax amount” means the amount of
2tax assessed per countable Medi-Cal enrollee within a Medi-Cal
4(h) “Medi-Cal taxing tier” means a range of cumulative
5enrollment of countable Medi-Cal enrollees for a taxable quarter.
6(i) “Other enrollee” means an individual enrolled in a health
7plan, as defined in subdivision (e), who is not a Medi-Cal
9(j) “Other per enrollee tax amount” means the amount of tax
10assessed per countable other enrollee within another taxing tier.
11(k) “Other taxing tier” means a range of cumulative enrollment
12of countable other enrollees for a taxable quarter.
13(l) “Plan-to-plan enrollee” means an individual who receives
14his or her health care services through a full-service health plan
15pursuant to a subcontract from another full-service health plan.
16(m) “Taxable quarter” means a calendar quarter of the state
(a) The Health and Human Services Special Fund
19is hereby created in the State Treasury.
20(b) All revenues, less refunds, derived from the taxes provided
21for in this article shall be deposited in the State Treasury to the
22credit of the fund.
23(c) Notwithstanding Section 16305.7 of the Government Code,
24any interest and dividends earned on moneys in this fund shall be
25retained in the fund for purposes specified in subdivisions (d) and
27(d) The sum of two hundred thirty million dollars
28($230,000,000) shall be transferred annually to the Developmental
29Disabilities Fund, which is hereby created, and shall be used, upon
30appropriation by the Legislature, to do both of the following:
31(1) Increase the funding provided to a regional center for the
32regional center’s operating budget by up to 10 percent above the
33levels in effect on the effective date of the act that added this
35(2) Notwithstanding any other law, increase all rates paid to
36service providers for providing services under Division 4.5
37(commencing with Section 4500) of the Welfare and Institutions
38Code by up to 10 percent above the levels in effect on the effective
39date of the act that added this section.
P27 1(e) After meeting the funding obligations pursuant to subdivision
2(d), and notwithstanding Section 13340 of the Government Code,
3the remaining funds deposited in the Health and Human Services
4Special Fund pursuant to this article shall be continuously
5 appropriated, without regard to fiscal years, to the State Department
6of Health Care Services for purposes of funding the nonfederal
7share of Medi-Cal managed care rates for health care services
8furnished to children, adults, seniors and persons with disabilities,
9and persons dually eligible for Medi-Cal and Medicare.
(a) Beginning with the 2016-17 state fiscal year,
11within 45 days after the end of each state fiscal quarter, each health
12plan shall submit reports to the department for the state fiscal
13quarter that includes all of the following:
14(1) Total cumulative enrollment for the quarter.
15(2) Total Medicare cumulative enrollment for the quarter.
16(3) Total Medi-Cal cumulative enrollment for the quarter.
17(4) Total plan-to-plan cumulative enrollment for the quarter.
18(5) Total other cumulative
enrollment for the quarter that is not
19otherwise counted in paragraphs (2) through (4), inclusive.
20(b) The department, in consultation with the Department of
21Managed Health Care, shall develop the methodologies used to
22determine the enrollments required to be reported by health plans
23and the format of those submissions.
24(c) A report submitted under this section shall be accompanied
25by a certification by the health plan attesting to the accuracy of
27(d) For the efficient operation of this section, the director, in
28consultation with the Director of the Department of Managed
29Health Care, may delegate the development of the format of the
30reports or the collection of the reports, or both, to the Department
31of Managed Health Care.
(a) A managed care organization provider tax shall
33be imposed on each health plan that is not an excluded plan.
34(b) The department shall compute the quarterly tax for each
35health plan subject to the tax during the state fiscal year pursuant
36to Section 14199.55.
37(c) On December 1, 2016, or the date the department receives
38federal approval necessary for receipt of federal financial
39participation in conjunction with the tax assessed pursuant to this
40article, whichever is later, the following activities shall commence:
P28 1(1) The director shall certify in writing that federal approval
2has been received, and within five business days shall post the
3certification on its Internet Web site and send a copy of the
4certification to the Secretary of State, the Secretary of the Senate,
5the Chief Clerk of the Assembly, and the Legislative Counsel.
6(2) Within 10 business days following receipt of the notice of
7federal approval, the department shall send a notice to each health
8plan subject to the tax, which shall contain the following
10(A) The quarterly tax due for the first taxable quarter, and any
11subsequent taxable quarters for which data has been submitted and
12a tax has been calculated.
13(B) The date on which the tax payments are due.
14(3) A health plan shall pay the quarterly tax, based on a schedule
15developed by the department. The department shall establish the
16 date that each tax payment is due, provided that the first tax
17payment shall be due no earlier than 20 days following the date
18the department sends the notice pursuant to paragraph (2), and the
19tax payments shall be paid at least one month apart, but no more
20than one quarter apart.
21(4) A health plan shall pay the quarterly taxes that are due, if
22any, in the amounts and at the times set forth in the notice unless
23superseded by a subsequent notice issued by the department.
24(d) The managed care organization provider tax, as assessed
25pursuant to this article, shall be paid by each health plan subject
26to the tax to the department for deposit in the Health and Human
27Services Special Fund created pursuant to Section 14199.52.
28(e) (1) Interest shall be assessed on managed care organization
29provider taxes that are not paid on the date due at a rate of 10
30percent per annum. Interest shall begin to accrue the day after the
31date the tax payment was due, and shall be deposited in the Health
32and Human Services Special Fund created pursuant to Section
34(2) If a tax payment is more than 60 days overdue, a penalty
35equal to the interest charge described in paragraph (1) shall be
36assessed and due for each month for which the tax payment is not
37received after 60 days.
38(f) (1) Subject to paragraph (2), the director may waive a portion
39or all of either the interest or penalties, or both, assessed under this
40article in the event that the director determines, in his or her sole
P29 1discretion, that the health plan has demonstrated that imposition
2of the full amount of the managed care organization provider tax
3pursuant to the timelines applicable under this article has a high
4likelihood of creating an undue financial hardship for the health
5plan, or creates a significant financial difficulty in providing needed
6services to Medi-Cal beneficiaries.
7(2) Waiver of some or all of the interest or penalties pursuant
8to this subdivision shall be conditioned on the health plan’s
9agreement to make tax payments on an alternative schedule
10developed by the department that takes into account the financial
11situation of the health plan and the potential impact on services.
12(g) For the efficient operation of this section, the director, in
13consultation with the Director of Managed Health Care, may
14delegate the collection of the taxes under this article to the
15Department of Managed Health Care.
(a) Prior to each fiscal year, beginning with the
172017-18 fiscal year and each fiscal year thereafter, the department,
18in consultation with the Department of Managed Health Care, shall
19determine the Medi-Cal taxing tiers, the other taxing tiers, the
20Medi-Cal per enrollee tax amounts for each Medi-Cal taxing tier,
21and the other per enrollee tax amounts for each other taxing tier,
22for the fiscal year, in order to achieve the goals specified in Section
24(b) For each fiscal year, beginning with the 2017-18 fiscal year,
25the department shall include in the Medi-Cal Local Assistance
26Estimate, released each January and May of the preceding fiscal
27year, the Medi-Cal taxing tiers, the other taxing tiers, the Medi-Cal
28per enrollee tax amounts for each Medi-Cal taxing tier and the
29other per enrollee tax amounts for each other taxing tier, determined
30pursuant to subdivision (a) and attributable to the applicable fiscal
32(c) For the 2016-17 fiscal year, the Medi-Cal taxing tiers for
33each fiscal quarter shall be as follows:
34(1) Medi-Cal taxing tier I shall consist of all countable Medi-Cal
35enrollees in a health plan for the fiscal quarter from 0 through
37(2) Medi-Cal taxing tier II shall consist of all countable
38Medi-Cal enrollees in a health plan for the fiscal quarter from
39500,001 through 1,250,000, inclusive.
P30 1(3) Medi-Cal taxing tier III shall consist of all countable
2Medi-Cal enrollees in a health plan for the fiscal quarter from
31,250,001 through 2,500,000, inclusive.
4(4) Medi-Cal taxing tier IV shall consist of all countable
5Medi-Cal enrollees in a health plan for the fiscal quarter greater
7(d) For the 2016-17 fiscal year, the Medi-Cal per enrollee tax
8amount for each Medi-Cal taxing tier for each fiscal quarter shall
9be as follows:
10(1) The Medi-Cal per enrollee tax for Medi-Cal taxing tier I
11shall be twenty-seven dollars and fifty cents ($27.50).
12(2) The Medi-Cal per enrollee tax for Medi-Cal taxing tier II
13shall be ten dollars and twenty-five cents ($10.25).
14(3) The Medi-Cal per enrollee tax for Medi-Cal taxing tier III
15shall be five dollars ($5.00).
Medi-Cal per enrollee tax for Medi-Cal taxing tier IV
17shall be one dollar ($1.00).
18(e) For the 2016-17 fiscal year, the other taxing tiers for each
19fiscal quarter shall be as follows:
20(1) Other taxing tier I shall consist of all countable other
21enrollees in a health plan for the fiscal quarter from 0 through
23(2) Other taxing tier II shall consist of all countable other
24enrollees in a health plan for the fiscal quarter from 125,001
25through 1,250,000, inclusive.
26(3) Other taxing tier III shall consist of all countable other
27enrollees in a health plan for the fiscal quarter greater than
29(f) For the 2016-17 fiscal year, the other per enrollee tax amount
30for each other taxing tier for each fiscal quarter shall be as follows:
31(1) The other per enrollee tax for the other taxing tier I shall be
32five dollars and eighty cents ($5.80).
33(2) The other per enrollee tax for the other taxing tier II shall
34be three dollars ($3.00).
35(3) The other per enrollee tax for the other taxing tier III shall
36be seventy-five cents ($0.75).
37(g) The department may modify any methodology or other
38provision specified in this article to the extent necessary to meet
39the requirements of federal law or regulations, obtain federal
40approval, or ensure federal financial participation is available,
P31 1provided the modifications do not otherwise conflict with the
2purposes of this article.
3(h) The department shall make adjustments, as necessary, to the
4tax amounts specified in this section in order to ensure compliance
5with the federal requirements set forth in Section 433.68 of Title
642 of the Code of Federal Regulations, or elsewhere in federal law
8(i) The department shall request approval from the federal
9Centers for Medicare and Medicaid Services as is necessary to
10implement this article. In making such request, the department
11may seek, as it deems necessary, a request for waiver of the
12broad-based requirement, waiver of the uniformity requirement,
13or both, pursuant to paragraphs (1) and (2) of subsection (e) of
14Section 433.68 of Title 42 of the Code of Federal Regulations, or
15a request for waiver of any other provision of federal law or
16regulation necessary to implement this article.
17(j) Notwithstanding Chapter 3.5 (commencing with
1811340) of Part 1 of Division 3 of Title 2 of the Government Code,
19the department may implement this article by means of provider
20bulletins, all-plan letters, or other similar instruction, without taking
21regulatory action. The department shall provide notification to the
22Joint Legislative Budget Committee and to the Senate Committees
23on Appropriations, Budget and Fiscal Review, and Health, and the
24Assembly Committees on Appropriations, Budget, and Health
25within 10 business days after the above-described action is taken
26to inform the Legislature that the action is being implemented.
No reimbursement is required by this act pursuant
28to Section 6 of Article XIII B of the California Constitution because
29the only costs that may be incurred by a local agency or school
30district will be incurred because this act creates a new crime or
31infraction, eliminates a crime or infraction, or changes the penalty
32for a crime or infraction, within the meaning of Section 17556 of
33the Government Code, or changes the definition of a crime within
34the meaning of Section 6 of Article XIII B of the California