BILL NUMBER: SBX2 14 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Hernandez
SEPTEMBER 9, 2015
An act to add Section 22971.05 to the Business and Professions
Code, to amend Sections 30014, 30104, 30108, 30166, and 30181 of, and
to add Article 2.5 (commencing with Section 30130.51) to Chapter 2
of Part 13 of Division 2 of, the Revenue and Taxation Code, and to
add Article 6.7 (commencing with Section 14199.50) to Chapter 7 of
Part 3 of Division 9 of, and to repeal Sections 12301.02 and 12301.03
of, the Welfare and Institutions Code, relating to health services,
and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
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:
SECTION 1. The Legislature hereby finds and declares all of the
following:
(a) Tobacco use is the single most preventable cause of death and
disease in California, claiming the lives of more than 40,000 people
every year. Each year thousands of Californians require medical and
dental treatment as a result of tobacco use.
(b) Health care treatment of all types of cancer, cardiovascular
and lung disease, oral disease, and tobacco-related diseases and
conditions continues to impose a significant financial burden upon
California's overstressed health care system. Tobacco use costs
Californians more than $13.29 billion in health care expenses every
year, of which $3.5 billion is paid for by taxpayers through existing
health care programs and services that provide health care,
treatment, and services for Californians. The cost of lost
productivity due to tobacco use adds an additional estimated $10.35
billion to the annual economic consequences of smoking and tobacco
use in California.
(c) An increase in the tobacco tax is an appropriate way to
decrease tobacco use and mitigate the costs of health care treatment
and improve existing programs providing quality health care and
access to health care services for families and children. It will
save lives and save state and local governments money in the future.
(d) An increase in funding for existing health care programs and
services that treat all types of cancer, cardiovascular and lung
disease, oral disease, and tobacco-related diseases and conditions
will expand the number of health care providers that treat patients
with such diseases and conditions. Funds spent for this purpose can
be used to match federal funds, with the federal government putting
up as much as nine dollars for every dollar spent from this fund.
(e) Most electronic cigarettes contain nicotine, which is derived
from tobacco and is a highly addictive drug. Electronic cigarettes
are currently not subject to any tobacco taxation, making them
cheaper and potentially more attractive, especially to young people.
(f) There are more than 470 electronic cigarette brands for sale
today offered in over 7,700 flavors including candy-flavors that
appeal to youth, such as Captain Crunch, gummy bear, cotton candy,
Atomic Fireball, and fruit loops. The fastest growing age range for
electronic cigarettes is middle school and high school students and
according to the Centers for Disease Control, electronic cigarette
use among this group tripled from 2013 to 2014.
(g) Research into the causes, early detection, and effective
treatment, care, prevention, and potential cures of all types of
cancer, cardiovascular and lung disease, oral disease, and
tobacco-related diseases will ultimately save lives and save state
and local governments money in the future.
(h) There is an urgent need for research in California for new and
effective treatments for all types of cancer, cardiovascular and
lung disease, oral disease, and tobacco-related diseases. Such
research transforms scientific discoveries into clinical applications
that reduce the incidence and mortality of such diseases and
conditions.
(i) Funding prevention programs designed to discourage
individuals, particularly youth, from taking up smoking and the use
of other tobacco products through health education and health
promotion programs will save lives and save state and local
governments money in the future.
(j) A reinvigorated tobacco control program will allow targeted
public health efforts to combat the tobacco industry's predatory
marketing to ethnic groups, driving down smoking rates and ultimately
reducing cancer, cardiovascular and lung disease, oral disease, and
tobacco-related diseases in these California communities.
(k) Funding implementation and administrative programs to support
law enforcement efforts to reduce illegal sales of tobacco products
to minors, cigarette smuggling, and tobacco tax evasion will save
lives and save state and local governments money in the future.
(l) California faces a shortage of physicians and dentists to meet
the growing health care needs of its residents. As a result, access
to primary and oral health care, treatment for tobacco-related
diseases, regular check-ups and other urgent health care needs will
suffer. California taxpayers support the education of thousands of
medical and dental students every year, yet because of limits on the
number of residency programs, many of those physicians and dentists
are forced out of state to continue their training, leaving patients
in California without access to care. Funding implementation and
administrative programs that will help keep hundreds more doctors in
California every year to improve the health of Californians will save
lives and save state and local governments money in the future.
(m) Increasing the cost of cigarettes and tobacco products is
widely recognized as the most effective way to reduce smoking across
California, especially by young people. The 2000 U.S. Surgeon General'
s Report, Reducing Tobacco Use, found that raising tobacco-product
prices decreases the prevalence of tobacco use, particularly among
kids and young adults, and that tobacco tax increases produce
"substantial long-term improvements in health." From its review of
existing research, the report concluded that raising tobacco taxes is
one of the most effective tobacco prevention and control strategies.
Reducing smoking will save lives and saves state and local
governments money in the future.
(n) Because increasing the tobacco tax will reduce smoking and use
of other tobacco products, it is important to protect existing
tobacco tax-funded programs from a decline in tax revenues.
(o) California currently taxes cigarettes at only $0.87 per pack,
and ranks 35th in tobacco tax rates, reflecting one of the lowest
tobacco tax rates in the United States. The national average is $1.60
per pack. Thirty-five states have cigarette tax rates of $1.00 per
pack or higher, and California is well below other western states
(Washington: $3.025, Oregon: $1.31, Nevada: $1.80, and Arizona:
$2.00). California last raised its tobacco tax in 1998.
SEC. 2. Section 22971.05 is added to the Business and Professions
Code, to read:
22971.05. For purposes of this division, beginning on and after
the first day of the first calendar quarter commencing more than 90
days after the effective date of this section, "tobacco products"
also includes electronic cigarettes, as that term is defined in
subdivision (b) of Section 30130.51 of the Revenue and Taxation Code.
SEC. 3. Section 30014 of the Revenue and Taxation Code is amended
to read:
30014. (a) "Transporter" means any person transporting into or
within this state any of the following:
(1) Cigarettes not contained in packages to which are affixed
California cigarette tax stamps or meter impressions.
(2) Tobacco products upon which the tobacco products surtax
imposed by Article 2 (commencing with Section 30121) and Article 3
(commencing with Section 30131) of Chapter 2 has not been paid.
(3) Electronic cigarettes upon which the electronic cigarette tax
imposed by Section 30130.52 has not been paid.
(b) "Transporter" shall not include any of the following:
(1) A licensed distributor.
(2) A common carrier.
(3) A person transporting cigarettes and tobacco products under
federal internal revenue bond or customs control that are
non-tax-paid under Chapter 52 of the Internal Revenue Act of 1954 as
amended.
SEC. 4. Section 30104 of the Revenue and Taxation Code is amended
to read:
30104. The taxes imposed by this part shall not apply to the sale
of cigarettes or tobacco products by a distributor to a common
carrier engaged in interstate or foreign passenger service or to a
person authorized to sell cigarettes or tobacco products on the
facilities of the carrier. Whenever cigarettes or tobacco products
are sold by distributors to common carriers engaged in interstate or
foreign passenger service for use or sale on facilities of the
carriers, or to persons authorized to sell cigarettes or tobacco
products on those facilities, the tax imposed by Sections
30101, 30123, and 30131.2 under this part shall
not be levied with respect to the sales of the cigarettes or tobacco
products by the distributors, but a tax is hereby levied upon the
carriers or upon the persons authorized to sell cigarettes or tobacco
products on the facilities of the carriers, as the case may be, for
the privilege of making sales in California at the same rate as set
forth in Sections 30101, 30123, and 30131.2.
under this part. Those common carriers and authorized persons
shall pay the tax imposed by this section and file reports with the
board, as provided in Section 30186.
SEC. 5. Section 30108 of the Revenue and Taxation Code is amended
to read:
30108. (a) Every distributor engaged in business in this state
and selling or accepting orders for cigarettes or tobacco products
with respect to the sale of which the tax imposed by
Sections 30101, 30123, and 30131.2 under this part
is inapplicable shall, at the time of making the sale or
accepting the order or, if the purchaser is not then obligated to pay
the tax with respect to his or her distribution of the cigarettes or
tobacco products, at the time the purchaser becomes so obligated,
collect the tax from the purchaser, if the purchaser is other than a
licensed distributor, and shall give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
(b) Every person engaged in business in this state and making
gifts of untaxed cigarettes or tobacco products as samples with
respect to which the tax imposed by Sections 30101, 30123,
and 30131.2 under this part is inapplicable
shall, at the time of making the gift or, if the donee is not then
obligated to pay the tax with respect to his or her distribution of
the cigarettes or tobacco products, at the time the donee becomes so
obligated, collect the tax from the donee, if the donee is other than
a licensed distributor, and shall give the donee a receipt therefor
in the manner and form prescribed by the board. This section shall
not apply to those distributions of cigarettes or tobacco products
which that are exempt from tax under
Section 30105.5.
(c) "Engaged in business in the state" means and includes any of
the following:
(1) Maintaining, occupying, or using, permanently or temporarily,
directly or indirectly, or through a subsidiary, or agent, by
whatever name called, an office, place of distribution, sales or
sample room or place, warehouse or storage place, or other place of
business.
(2) Having any representative, agent, salesperson,
canvasser canvasser, or solicitor operating in
this state under the authority of the distributor or its subsidiary
for the purpose of selling, delivering, or the taking of orders for
cigarettes or tobacco products.
(d) The taxes required to be collected by this section constitute
debts owed by the distributor, or other person required to collect
the taxes, to the state.
SEC. 6. Article 2.5 (commencing with Section 30130.51) is added to
Chapter 2 of Part 13 of Division 2 of the Revenue and Taxation Code,
to read:
Article 2.5. The California Health Care, Research, and
Prevention Tobacco Tax Act of 2015
30130.51. For the purposes of this article:
(a) "Cigarette" has the same meaning as in Section 30003 as it
read on January 1, 2015.
(b) "Electronic cigarettes" means any device that is intended to
be used to deliver aerosolized or vaporized nicotine to the person
inhaling from the device, including, but not limited to, an
e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah. Electronic
cigarettes include any component, part, or accessory of that a device
that is used during the operation of the device, whether sold
separately or as a package with that device, if it is intended to be
used to deliver aerosolized or vaporized nicotine to the person using
the device. Electronic cigarettes also include any liquid or
substance containing nicotine intended to be inhaled during the use
of the device. Electronic cigarettes do not include any battery,
battery charger, carrying case, or other accessory not used in the
operation of the device if sold separately. E-cigarettes shall not
include any product that has been approved by the United States Food
and Drug Administration for sale as a tobacco cessation product or
for other therapeutic purposes where that product is marketed and
sold solely for such an approved purpose.
(c) The references to "tobacco products" in this part, except in
Article 2 (commencing with Section 30121) and Article 3 (commencing
with Section 30131) of Chapter 2 (commencing with Section 30101), and
Chapter 9 (commencing with Section 30461), shall include electronic
cigarettes, unless the context otherwise requires.
30130.52. (a) In addition to any other taxes imposed upon the
distribution of cigarettes, there shall be imposed an additional tax
upon every distributor of cigarettes at the rate of one hundred mills
($0.10) for each cigarette distributed on or after the first day of
the first calendar quarter commencing more than 90 days after the
effective date of this article.
(b) (1) There shall be imposed upon every distributor a tax upon
the distribution of electronic cigarettes, based on the wholesale
cost of these products, at a tax rate, as determined annually by the
State Board of Equalization, that is equivalent to the total rate of
tax imposed on cigarettes by this part, on or after the first day of
the first calendar quarter commencing more than 90 days after the
effective date of this article.
(2) The board may adopt any regulations necessary to enforce and
administer the tax imposed in paragraph (1), as provided for in
subdivision (c) of Section 30130.51, including, but not limited to,
regulations that address the following:
(A) The imposition of tax on the distribution of any liquid or
substance containing nicotine, any device intended to be used to
deliver aerosolized or vaporized nicotine to the person inhaling from
the device, and any component, part, or accessory of such a device
that is intended to be used to deliver aerosolized or vaporized
nicotine to the person inhaling from the device.
(B) Describing who is a distributor of electronic cigarettes,
which is consistent with the definition of the term "distributor" in
Section 30111.
(c) The wholesale cost used to calculate the amount of tax due
under subdivision (b) does not include the wholesale cost of
electronic cigarettes that were returned by a customer during the
same reporting period in which the electronic cigarettes were
distributed, when the distributor refunds the entire amount the
customer paid for the tobacco products either in cash or credit. For
purposes of this subdivision, refund or credit of the entire amount
shall be deemed to be given when the purchase price less rehandling
and restocking costs is refunded or credited to the customer. The
amount withheld for rehandling and restocking costs may be a
percentage of the sales price determined by the average cost of
rehandling and restocking returned merchandise during the previous
accounting cycle.
30130.53. (a) (1) Every dealer and wholesaler, for the privilege
of holding or storing cigarettes for sale, use, or consumption, shall
pay a floor stock tax for each cigarette in its possession or under
its control in this state at 12:01 a.m. on the first day of the first
calendar quarter commencing more than 90 days after the effective
date of this article at the rate of one hundred mills ($0.10) for
each cigarette.
(2) Every dealer and wholesaler shall file a return with the State
Board of Equalization on or before the first day of the first
calendar quarter commencing more than 180 days after the effective
date of this act on a form prescribed by the State Board of
Equalization, showing the number of cigarettes in its possession or
under its control in this state at 12:01 a.m. on the first day of the
first calendar quarter commencing more than 90 days after the
effective date of this article. The amount of tax shall be computed
and shown on the return.
(b) (1) Every licensed cigarette distributor, for the privilege of
distributing cigarettes and for holding or storing cigarettes for
sale, use, or consumption, shall pay a cigarette indicia adjustment
tax for each California cigarette tax stamp that is affixed to any
package of cigarettes and for each unaffixed California cigarette tax
stamp in its possession or under its control at 12:01 a.m. on the
first day of the first calendar quarter commencing more than 90 days
after the effective date of this article at the following rates:
(A) Two dollars and fifty cents ($2.50) for each stamp bearing the
designation "25."
(B) Two dollars ($2.00) for each stamp bearing the designation
"20."
(C) One dollar ($1.00) for each stamp bearing the designation "10."
(2) Every licensed cigarette distributor shall file a return with
the board on or before the first day of the first calendar quarter
commencing 180 days after the effective date of this act on a form
prescribed by the board, showing the number of stamps described in
subparagraphs (A), (B), and (C) of paragraph (1). The amount of tax
shall be computed and shown on the return.
(c) The taxes required to be paid by this section are due and
payable on or before the first day of the first calendar quarter
commencing 180 days after the effective date of this act. Payments
shall be made by remittances payable to the board and the payments
shall accompany the return and forms required to be filed by this
section.
(d) Any amount required to be paid by this section that is not
timely paid shall bear interest at the rate and by the method
established pursuant to Section 30202 from the first day of the first
calendar quarter commencing 180 days after the effective date of
this article until paid, shall be subject to determination,
redetermination, and any penalties provided with respect to
determinations and redeterminations.
30130.54. (a) The California Health Care, Research, and
Prevention Tobacco Tax Act of 2015 Fund is hereby established in the
State Treasury for the purposes set forth in this article.
Notwithstanding Section 30461, all revenues, less refunds, derived
from the taxes imposed by this article on cigarettes and electronic
cigarettes shall be deposited in the California Health Care,
Research, and Prevention Tobacco Tax Act of 2015 Fund.
(b) Notwithstanding any other law, the California Health Care,
Research, and Prevention Tobacco Tax Act of 2015 Fund is a trust fund
established solely to carry out the purposes set forth in this
article, and all revenues deposited into the California Health Care,
Research, and Prevention Tobacco Tax Act of 2015 Fund, together with
interest earned by the fund, are hereby continuously appropriated
without regard to fiscal year to the Controller for allocation in
accordance with this article, and to be expended only in accordance
with this article and its purposes.
(c) Notwithstanding any other law, the taxes imposed by this
article and the revenue derived therefrom, including investment
interest, shall not be considered to be part of the General Fund, as
that term is used in Chapter 1 (commencing with Section 16300) of
Part 2 of Division 4 of Title 2 of the Government Code, and shall not
be considered General Fund revenue for purposes of Section 8 of
Article XVI of the California Constitution, and its implementing
statutes.
(d) Notwithstanding any other law, revenues deposited into the
California Health Care, Research, and Prevention Tobacco Tax Act of
2015 Fund, and any interest earned by the fund, shall only be used
for the specific purposes set forth in this article. Revenues
deposited into the California Health Care, Research, and Prevention
Tobacco Tax Act of 2015 Fund shall not be subject to appropriation,
reversion, or transfer by the Legislature, the Governor, the Director
of Finance, or the Controller for any other purpose, nor shall the
funds be loaned to the General Fund or any other fund of the state or
any local government fund.
30130.55. (a) The State Board of Equalization shall determine
within one year of the effective date of this act, and annually
thereafter, the effect that the additional taxes imposed on
cigarettes by this article, and the resulting increase in the tax on
tobacco products required by subdivision (b) of Section 30123, have
on the consumption of cigarettes and tobacco products in this state.
To the extent that a decrease in consumption is determined by the
State Board of Equalization to be a direct result of the additional
tax imposed by this article, or the resulting increase in the tax on
tobacco products required by subdivision (b) of Section 30123, the
State Board of Equalization shall determine the fiscal effect the
decrease in consumption has on the Cigarette and Tobacco Products
Surtax Fund created by Section 30122 (Proposition 99 as approved by
the voters at the November 8, 1988, statewide general election), the
Breast Cancer Fund created by Section 30461.6, and the California
Children and Families Trust Fund created by Section 30131
(Proposition 10 as approved by the voters at the November 3, 1998,
statewide general election).
(b) Funds shall be transferred from the California Health Care,
Research, and Prevention Tobacco Tax Act of 2015 Fund to the
Cigarette and Tobacco Products Surtax Fund, the Breast Cancer Fund,
and the California Children and Families Trust Fund, to offset the
revenue decrease directly resulting from the imposition of additional
taxes by this article.
(c) Transfers under this section shall be made by the Controller
at times as the Controller determines necessary to further the intent
of this section.
(d) For purposes of this section, "tobacco products" shall not
include electronic cigarettes.
30130.56. (a) Moneys from the California Health Care, Research,
and Prevention Tobacco Tax Act of 2015 Fund shall be used to
reimburse the board for expenses incurred in the administration,
calculation, and collection of the tax imposed by this article and
for expenses incurred in the calculation and distribution of moneys
and in the promulgation of regulations as required by this article,
provided, however, that after deducting the necessary amounts
pursuant to subdivision (b) of Section 30130.55, not more than 1
percent annually of the moneys remaining in the California Health
Care, Research, and Prevention Tobacco Tax Act of 2015 Fund shall be
used for those administrative costs.
(b) Moneys from the California Health Care, Research, and
Prevention Tobacco Tax Act of 2015 Fund shall be used to reimburse
the California State Auditor up to four hundred thousand dollars
($400,000) annually for actual costs incurred to conduct each of the
audits required by Section 30130.58 for the purpose of providing
public transparency and ensuring that the revenues generated by this
article are used for health care, tobacco use prevention, and
research.
(c) Moneys from the California Healthcare, Research, and
Prevention Tobacco Tax Act of 2015 Fund in the amount of forty
million dollars ($40,000,000) annually shall be used to provide
funding to the University of California for the purpose and goal of
increasing the number of physicians trained in California. This goal
shall be achieved by providing this funding to the University of
California to sustain, retain, and expand graduate medical education
programs in the State of California based on demonstrated workforce
needs and priorities.
(d) Moneys from the California Health Care, Research, and
Prevention Tobacco Tax Act of 2015 Fund in the amount of forty-eight
million dollars ($48,000,000) annually shall be used for the purpose
of funding law enforcement efforts and investigative activities to
reduce illegal sales of tobacco products, including illegal sales to
minors; to reduce cigarette smuggling, tobacco tax evasion, and
counterfeit tobacco products; to enforce licensing requirements; to
enforce tobacco-related laws, court judgments, and legal settlements;
and to conduct law enforcement training and technical assistance
activities for tobacco-related statutes, provided that these moneys
are not to be used to supplant existing state or local funds for
these same purposes. These moneys shall be apportioned in the
following manner:
(1) Thirty million dollars ($30,000,000) annually to the
Department of Justice to be distributed to local law enforcement
agencies to support and hire front-line law enforcement peace
officers for programs, including, but not limited to, enforcement of
state and local laws related to the illegal sales and marketing of
tobacco to minors, and increasing investigative activities and
compliance checks to reduce illegal sales of tobacco products to
minors and youth tobacco use.
(2) Six million dollars ($6,000,000) annually to the board to be
used to enforce laws that regulate the distribution and retail sale
of cigarettes and other tobacco products, such as laws that prohibit
cigarette and tobacco product smuggling, counterfeiting, selling
untaxed cigarettes and other tobacco products, and selling cigarettes
and other tobacco products without a proper license.
(3) Six million dollars ($6,000,000) annually to the California
Department of Public Health to be used to support programs,
including, but not limited to, providing grants and contracts to
local law enforcement agencies to provide training and funding for
the enforcement of state and local laws related to the illegal sales
of tobacco to minors, increasing investigative activities and
compliance checks, and other appropriate activities to reduce illegal
sales of tobacco products to minors including, but not limited to,
the Stop Tobacco Access to Kids Enforcement (STAKE) Act (Division 8.5
(commencing with Section 22950) of the Business and Professions
Code), pursuant to Section 22952 of the Business and Professions
Code.
(4) Six million dollars ($6,000,000) annually to the California
Attorney General to be used for activities including, but not limited
to, enforcing laws that regulate the distribution and sale of
cigarettes and other tobacco products, such as laws that prohibit
cigarette smuggling, counterfeiting, selling untaxed tobacco, selling
tobacco without a proper license and selling tobacco to minors, and
enforcing tobacco-related laws, court judgments, and settlements.
(e) Not more than 1 percent of the amounts received pursuant to
subdivision (a) of Section 30130.57 or subdivision (d) of this
section shall be used by
any state or local agency or department receiving such amounts for
administrative costs.
(f) Not more than 5 percent of the amounts received pursuant to
subdivisions (b) and (c) of Section 30130.57 shall be used by any
state agency or department receiving such amounts for administrative
costs.
(g) The California State Auditor shall promulgate regulations
pursuant to the rulemaking provisions of the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code) to define
administrative costs for purposes of this article.
(h) The board shall determine beginning two years following the
effective date of this article, and annually thereafter, any
reduction in revenues, following the first year after the effective
date of this article, resulting from a reduction in the consumption
of cigarettes and tobacco products due to the additional taxes
imposed on cigarettes by this article, and the increase in the tax on
tobacco products required by subdivision (b) of Section 30123. If
the board determines there has been a reduction in revenues, the
amount of moneys allocated pursuant to subdivisions (c) and (d) shall
be reduced proportionately.
30130.57. Moneys in the California Health Care, Research, and
Prevention Tobacco Tax Act of 2015 Fund, less moneys transferred
pursuant to Section 30130.55 and subdivisions (a), (b), (c), and (d)
of Section 30130.56, shall be allocated by the Controller as follows:
(a) Eighty-two percent shall be transferred to the Health Care
Treatment Fund, which is hereby created, and, upon appropriation by
the Legislature, shall be used by the State Department of Health Care
Services to increase funding for the existing health care programs
and services described in Chapter 7 (commencing with Section 14000)
to Chapter 8.9 (commencing with Section 14700), inclusive, of Part 3
of Division 9 of the Welfare and Institutions Code, including those
that provide health care, treatment, and services for Californians
with tobacco-related diseases and conditions, by providing improved
payments, including funding support to designated public hospitals,
as defined in subdivision (d) of Section 14166.1 of the Welfare and
Institutions Code, and the governmental entities with which those
designated public hospitals are affiliated for the nonfederal share
of payments, for all health care, treatment, and services described
in Chapter 7 (commencing with Section 14000) to Chapter 8.9
(commencing with Section 14700), inclusive, of Part 3 of Division 9
of the Welfare and Institutions Code. To the extent possible given
the limits of funding under this article, payments and support for
the nonfederal share of payments for health care, services, and
treatment shall be increased based on criteria developed, and
periodically updated, as needed, by the department, in consultation
with the Legislature as part of the annual state budget process,
provided that these funds are not to be used to supplant existing
state general funds for these same purposes. This criteria shall
include, but not be limited to, ensuring timely access, specific
geographic shortages of services, or ensuring quality care.
Consistent with federal law, the funding shall be used to draw down
federal funds. The funding shall be used to the greatest extent
feasible only for care provided by health care professionals who are
enrolled with the Medi-Cal program, health facilities contracting
with the State Department of Health Care Services under, or enrolled
with, the Medi-Cal program, and health plans contracting with the
State Department of Health Care Services under the Medi-Cal program
to provide health benefits to Medi-Cal beneficiaries. The department
shall, if required, submit a request for an amendment to California's
State Plan to the federal Centers for Medicare and Medicaid
Services.
(b) Thirteen percent shall be used for the purpose of funding
comprehensive tobacco prevention and control programs, provided that
these funds are not used to supplant existing state or local funds
for these same purposes. These funds shall be apportioned in the
following manner:
(1) Eighty-five percent to the California Department of Public
Health Tobacco Control Program to be used for the tobacco control
programs described in Article 1 (commencing with Section 104350) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code.
The State Department of Public Health shall award funds to state and
local governmental agencies, tribes, universities and colleges,
community-based organizations, and other qualified agencies for the
implementation, evaluation, and dissemination of evidence-based
health promotion and health communication activities in order to
monitor, evaluate, and reduce tobacco use, tobacco-related disease
rates, and tobacco-related health disparities, and develop a stronger
evidence base of effective prevention programming with not less than
15 percent of health promotion, health communication activities, and
evaluation and tobacco use surveillance funds being awarded to
accelerate and monitor the rate of decline in tobacco-related
disparities with the goal of eliminating tobacco-related disparities.
(2) Fifteen percent to the State Department of Education to be
used for school programs to prevent and reduce the use of tobacco and
nicotine products by young people as described in Section 104420 of
the Health and Safety Code, with not less than 15 percent of these
funds being awarded to accelerate and monitor the rate of decline in
tobacco-related disparities for the purpose of eliminating
tobacco-related disparities.
(c) Five percent to the University of California Tobacco-Related
Disease Research Program pursuant to Article 2 (commencing with
Section 104500) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code to supplement the Cigarette and Tobacco Products
Surtax Medical Research Program, provided that these funds be used
under the following conditions:
(1) The funds shall be used for grants and contracts for basic,
applied, and translational medical research in California into the
prevention of, early detection of, treatments for, complementary
treatments for, and potential cures for all types of cancer,
cardiovascular and lung disease, oral disease, and tobacco-related
diseases. Notwithstanding any other law, the Tobacco-Related Disease
Research Program shall have authority to expend funds received under
this article for the purposes set forth in this subdivision.
(2) Any grants and contracts awarded shall be awarded using
existing medical research program infrastructure and on the basis of
scientific merit as determined by an open, competitive peer review
process that assures objectivity, consistency, and high quality.
(3) Individuals or entities that receive the grants and contracts
shall reside or be located entirely in California.
(4) The research shall be performed entirely in California.
(5) The funds shall not be used to supplant existing state or
local funds for these same purposes.
30130.58. To provide full public accountability concerning the
uses to which moneys from the California Health Care, Research, and
Prevention Tobacco Tax Act of 2015 Fund are put, and to ensure full
compliance with this article, all of the following shall occur:
(a) The California State Auditor shall conduct at least biennially
an independent financial audit of the state and local agencies
receiving moneys pursuant to this article. An audit conducted
pursuant to this section shall include, but not be limited to, a
review of the administrative costs expended by the state agencies
that administer the fund.
(b) Based on the independent audit, the California State Auditor
shall prepare a report detailing its review and include any
recommendations for improvements. The report shall be made available
to the public.
(c) Each state agency and department receiving funds pursuant to
this article shall, on an annual basis, publish on its respective
Internet Web site an accounting of how much money was received from
the California Health Care, Research, and Prevention Tobacco Tax Act
of 2015 Fund and how that money was spent. The annual accounting
shall also be posted on any social media outlets the state agency or
department deems appropriate.
(d) The use of the funds received by the State Department of
Health Care Services pursuant to subdivision (a) of Section 30130.57
shall be subject to the same restrictions, including, but not
limited, to audits and prevention of fraud, imposed by existing law.
(e) The use of the funds received by the State Department of
Public Health, the State Department of Education, and the University
of California pursuant to subdivisions (b) and (c) of Section
30130.57 shall be subject to oversight by the Tobacco Education and
Research Oversight Committee pursuant to Sections 104365 and 104370
of the Health and Safety Code.
SEC. 7. Section 30166 of the Revenue and Taxation Code is amended
to read:
30166. Stamps and meter register settings shall be sold at their
denominated values less a discount of 0.85
percent to licensed distributors. percent, which shall
be calculated on the first one dollar ($1.00) in denomination value.
Payment for stamps or meter register settings shall be made at
the time of purchase, provided that a licensed distributor, subject
to the conditions and provisions of this article, may be permitted to
defer payments therefor.
SEC. 8. Section 30181 of the Revenue and Taxation Code is amended
to read:
30181. (a) When If any tax imposed
upon cigarettes under Article 1 (commencing with Section
30101), Article 2 (commencing with Section 30121), and Article 3
(commencing with Section 30131) of Chapter 2 this part
is not paid through the use of stamps or meter impressions,
the tax shall be due and payable monthly on or before the 25th day of
the month following the calendar month in which a distribution of
cigarettes occurs, or in the case of a sale of cigarettes on the
facilities of a common carrier for which the tax is imposed pursuant
to Section 30104, the tax shall be due and payable monthly on or
before the 25th day of the month following the calendar month in
which a sale of cigarettes on the facilities of the carrier occurs.
(b) Each distributor of tobacco products shall file a return in
the form, as prescribed by the board, which
that may include, but not be limited to, electronic media
respecting the distributions of tobacco products and their wholesale
cost during the preceding month, and any other information as the
board may require to carry out this part. The return shall be filed
with the board on or before the 25th day of the calendar month
following the close of the monthly period for which it relates,
together with a remittance payable to the board, of the amount of
tax, if any, due under Article 2 (commencing with Section 30121) or
Article 3 (commencing with Section 30131) of Chapter 2 for that
period.
(c) To facilitate the administration of this part, the board may
require the filing of the returns for longer than monthly periods.
(d) Returns shall be authenticated in a form or pursuant to
methods as may be prescribed by the board.
(e) This section shall become operative on January 1, 2007.
SEC. 9. Section 12301.02 of the Welfare and Institutions Code is
repealed.
12301.02. (a) (1) Notwithstanding any other law, except as
provided in subdivision (c), the department shall implement a 7
percent reduction in hours of service to each recipient of services
under this article, which shall be applied to the recipient's hours
as authorized pursuant to the most recent assessment. This reduction
shall become effective 12 months after the implementation of the
reduction set forth in Section 12301.01. The reduction required by
this section shall not preclude any reassessment to which a recipient
would otherwise be entitled. However, hours authorized pursuant to a
reassessment shall be subject to the 7 percent reduction required by
this section.
(2) A request for reassessment based only on the reduction
required in paragraph (1) may be administratively denied by the
county.
(3) A recipient of services under this article may direct the
manner in which the reduction of hours is applied to the recipient's
previously authorized services.
(4) For those individuals who have a documented unmet need,
excluding protective supervision because of the limitations on
authorized hours under Section 12303.4, the reduction shall be taken
first from the documented unmet need.
(b) The notice of action informing the recipient of the reduction
pursuant to subdivision (a) shall be mailed at least 20 days prior to
the reduction going into effect. The notice of action shall be
understandable to the recipient and translated into all languages
spoken by a substantial number of the public served by the In-Home
Supportive Services program, in accordance with Section 7295.2 of the
Government Code. The notice shall not contain any recipient
financial or confidential identifying information other than the
recipient's name, address, and Case Management Information and
Payroll System (CMIPS) client identification number, and shall
include, but not be limited to, all of the following information:
(1) The aggregate number of authorized hours before the reduction
pursuant to subdivision (a) and the aggregate number of authorized
hours after the reduction.
(2) That the recipient may direct the manner in which the
reduction of authorized hours is applied to the recipient's
previously authorized services.
(3) A county shall assess a recipient's need for supportive
services any time that the recipient notifies the county of a need to
adjust the supportive services hours authorized, or when there are
other indications or expectations of a change in circumstances
affecting the recipient's need for supportive services. Counties
shall not require recipients to submit a medical certification form
or a doctor's note to show evidence of a change in the recipient's
circumstances.
(c) A recipient shall have all appeal rights otherwise provided
for under Chapter 7 (commencing with Section 10950) of Part 2.
(d) The reduction specified in paragraph (1) of subdivision (a)
shall be ongoing and may be adjusted pursuant to Section 12301.03.
SEC. 10. Section 12301.03 of the Welfare and Institutions Code is
repealed.
12301.03. (a) It is the intent of this section to offset the
reductions described in Section 12301.02 to the extent that an
assessment as described in Section 12301.05 provides General Fund
savings. This section shall become operative only upon certification
by the State Department of Health Care Services that any necessary
federal approvals to implement the assessment referenced in Section
12301.05 have been obtained. This certification shall be provided
promptly to the Joint Legislative Budget Committee and the Department
of Finance.
(b) Within 30 days after receipt of the certification described in
subdivision (a), the Director of Finance shall perform the
obligations described in this subdivision for the fiscal year in
which the certification is received and for the following fiscal
year. Specifically, the Director of Finance shall do the following:
(1) Estimate the total amount of additional funding, less refunds,
that will be derived from the assessment for the next fiscal year.
(2) Estimate the amount of the total revenues, if any, that are
attributable to any permitted retroactive implementation of the
assessment.
(3) Estimate the amount of the total General Fund savings
generated by the assessment revenues that remain after taking into
account reductions such as the revenues attributable to any
retroactive application of the assessment that will be allocated
pursuant to Section 12301.04, and any General Fund costs associated
with establishment and administration of the assessment. The General
Fund costs shall be estimated following consultation with the
appropriate budget subcommittees of the Legislature.
(4) Calculate, as a percentage, the amount by which the reduction
described in Section 12301.02 is offset by General Fund savings. In
making this calculation, the Director of Finance shall estimate the
amount of the reduction that may be partially or completely offset.
If the estimated General Fund savings from the assessment are less
than the amount required to fully offset the reduction pursuant to
Section 12301.02, then the percentage offset shall be proportionate
to the level of General Fund savings. At no point may the reduction
pursuant to Section 12301.02 become negative or go below zero.
(5) Notify the Joint Legislative Budget Committee of the
determinations made in paragraphs (1) to (4), inclusive.
(c) On or before May 14, prior to the third fiscal year after the
certification described in subdivision (a) is received, the Director
of Finance shall perform the activities described in paragraphs (1)
to (5), inclusive, of subdivision (b).
(d) Within 10 days of the effective date of any federal change or
action that prevents or reduces the amount of General Fund savings
received from the assessment, the Director of Health Care Services
shall provide a notification to the Joint Legislative Budget
Committee and the Director of Finance of that change. Within 30 days
of the receipt of this notification, the Director of Finance shall
perform the activities described in paragraphs (1) to (5), inclusive,
of subdivision (b).
(e) Notwithstanding any provision of Section 12301.02, the
reduction of services required by Section 12301.02 shall be mitigated
by the percentage offset determined by the Director of Finance in
paragraph (4) of subdivision (b).
(f) (1) Any change in the percentage reduction of services as
provided in Section 12301.02 shall occur on the first day of the
first full month occurring 30 days after the determination provided
for in subdivision (b) is made by the Director of Finance.
(2) Any change in the percentage reduction of services as provided
in Section 12301.02 due to a determination of the Director of
Finance required by subdivision (c) shall occur on July 1 of the
fiscal year immediately following the determination.
(3) If a change in the percentage reduction of services as
provided in Section 12301.02 is triggered based on a determination of
the Director of Finance required by subdivision (d), that change in
hours of service shall occur on July 1 after the notification
referenced in subdivision (d) from the Director of Health Care
Services is received, if the notification is received between the
preceding September 30 and January 2. If the notification is received
on any other date, then a change in hours shall occur on the first
of the month that is nine months after the notification is received.
(g) In preparation of every Governor's Budget and for every May
Revision, the Director of Finance shall perform the obligation
described in paragraphs (1) to (3), inclusive, of subdivision (b).
SEC. 11. Article 6.7 (commencing with Section 14199.50) is added
to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:
Article 6.7. Managed Care Organization Provider Tax
14199.50. It is the intent of the Legislature that the department
implement a managed care organization provider tax effective July 1,
2016, to provide ongoing funding for the Medi-Cal program, minimize
to the extent possible any need for new reductions to the program,
and meet all of the following goals:
(a) Generate an amount of nonfederal funds for the Medi-Cal
program equivalent to the funds generated by the tax imposed pursuant
to Article 5 (commencing with Section 6174) of Chapter 2 of Part 1
of Division 2 of the Revenue and Taxation Code.
(b) In addition to the amount in subdivision (a), generate an
additional two hundred thirty million dollars ($230,000,000) to
increase the funding provided to regional centers and developmental
disabilities service providers.
(c) Comply with federal Medicaid requirements applicable to
permissible health care-related taxes.
(d) Structure the tax, to the extent possible, to have the lowest
aggregate net financial impact on the health plans subject to the tax
imposed pursuant to this article.
14199.51. The following definitions shall apply for the purposes
of this article:
(a) "Countable enrollee" means an individual enrolled in a health
plan, as defined in subdivision (e), each month of a taxable quarter.
"Countable enrollee" does not include an individual enrolled in a
Medicare plan, or a plan-to-plan enrollee, as defined in subdivision
( l ).
(b) "Department" means the State Department of Health Care
Services.
(c) "Director" means the Director of Health Care Services.
(d) "Excluded plan" means a health plan licensed pursuant to
Section 1351.2 of the Health and Safety Code.
(e) "Health care service plan" or "health plan" means a
full-service health care service plan licensed by the Department of
Managed Health Care under the Knox-Keene Health Care Service Plan Act
of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of
the Health and Safety Code) or a managed care plan contracted with
the State Department of Health Care Services to provide Medi-Cal
services.
(f) "Medi-Cal enrollee" means an individual enrolled in a health
plan, as defined in subdivision (e), who is a Medi-Cal beneficiary
and who is not concurrently enrolled in an additional health plan
during a taxable quarter.
(g) "Medi-Cal per enrollee tax amount" means the amount of tax
assessed per countable Medi-Cal enrollee within a Medi-Cal taxing
tier.
(h) "Medi-Cal taxing tier" means a range of cumulative enrollment
of countable Medi-Cal enrollees for a taxable quarter.
(i) "Other enrollee" means an individual enrolled in a health
plan, as defined in subdivision (e), who is not a Medi-Cal
beneficiary.
(j) "Other per enrollee tax amount" means the amount of tax
assessed per countable other enrollee within another taxing tier.
(k) "Other taxing tier" means a range of cumulative enrollment of
countable other enrollees for a taxable quarter.
(l) "Plan-to-plan enrollee" means an individual who receives his
or her health care services through a full-service health plan
pursuant to a subcontract from another full-service health plan.
(m) "Taxable quarter" means a calendar quarter of the state fiscal
year.
14199.52. (a) The Health and Human Services Special Fund is
hereby created in the State Treasury.
(b) All revenues, less refunds, derived from the taxes provided
for in this article shall be deposited in the State Treasury to the
credit of the fund.
(c) Notwithstanding Section 16305.7 of the Government Code, any
interest and dividends earned on moneys in this fund shall be
retained in the fund for purposes specified in subdivisions (d) and
(e).
(d) The sum of two hundred thirty million dollars ($230,000,000)
shall be transferred annually to the Developmental Disabilities Fund,
which is hereby created, and shall be used, upon appropriation by
the Legislature, to do both of the following:
(1) Increase the funding provided to a regional center for the
regional center's operating budget by up to 10 percent above the
levels in effect on the effective date of the act that added this
section.
(2) Notwithstanding any other law, increase all rates paid to
service providers for providing services under Division 4.5
(commencing with Section 4500) of the Welfare and Institutions Code
by up to 10 percent above the levels in effect on the effective date
of the act that added this section.
(e) After meeting the funding obligations pursuant to subdivision
(d), and notwithstanding Section 13340 of the Government Code, the
remaining funds deposited in the Health and Human Services Special
Fund pursuant to this article shall be continuously appropriated,
without regard to fiscal years, to the State Department of Health
Care Services for purposes of funding the nonfederal share of
Medi-Cal managed care rates for health care services furnished to
children, adults, seniors and persons with disabilities, and persons
dually eligible for Medi-Cal and Medicare.
14199.53. (a) Beginning with the 2016-17 state fiscal year,
within 45 days after the end of each state fiscal quarter, each
health plan shall submit reports to the department for the state
fiscal quarter that includes all of the following:
(1) Total cumulative enrollment for the quarter.
(2) Total Medicare cumulative enrollment for the quarter.
(3) Total Medi-Cal cumulative enrollment for the quarter.
(4) Total plan-to-plan cumulative enrollment for the quarter.
(5) Total other cumulative enrollment for the quarter that is not
otherwise counted in paragraphs (2) through (4), inclusive.
(b) The department, in consultation with the Department of Managed
Health Care, shall develop the methodologies used to determine the
enrollments required to be reported by health plans and the format of
those submissions.
(c) A report submitted under this section shall be accompanied by
a certification by the health plan attesting to the accuracy of the
reports.
(d) For the efficient operation of this section, the director, in
consultation with the Director of the Department of Managed Health
Care, may delegate the development of the format of the reports or
the collection of the
reports, or both, to the Department of Managed Health Care.
14199.54. (a) A managed care organization provider tax shall be
imposed on each health plan that is not an excluded plan.
(b) The department shall compute the quarterly tax for each health
plan subject to the tax during the state fiscal year pursuant to
Section 14199.55.
(c) On December 1, 2016, or the date the department receives
federal approval necessary for receipt of federal financial
participation in conjunction with the tax assessed pursuant to this
article, whichever is later, the following activities shall commence:
(1) The director shall certify in writing that federal approval
has been received, and within five business days shall post the
certification on its Internet Web site and send a copy of the
certification to the Secretary of State, the Secretary of the Senate,
the Chief Clerk of the Assembly, and the Legislative Counsel.
(2) Within 10 business days following receipt of the notice of
federal approval, the department shall send a notice to each health
plan subject to the tax, which shall contain the following
information:
(A) The quarterly tax due for the first taxable quarter, and any
subsequent taxable quarters for which data has been submitted and a
tax has been calculated.
(B) The date on which the tax payments are due.
(3) A health plan shall pay the quarterly tax, based on a schedule
developed by the department. The department shall establish the date
that each tax payment is due, provided that the first tax payment
shall be due no earlier than 20 days following the date the
department sends the notice pursuant to paragraph (2), and the tax
payments shall be paid at least one month apart, but no more than one
quarter apart.
(4) A health plan shall pay the quarterly taxes that are due, if
any, in the amounts and at the times set forth in the notice unless
superseded by a subsequent notice issued by the department.
(d) The managed care organization provider tax, as assessed
pursuant to this article, shall be paid by each health plan subject
to the tax to the department for deposit in the Health and Human
Services Special Fund created pursuant to Section 14199.52.
(e) (1) Interest shall be assessed on managed care organization
provider taxes that are not paid on the date due at a rate of 10
percent per annum. Interest shall begin to accrue the day after the
date the tax payment was due, and shall be deposited in the Health
and Human Services Special Fund created pursuant to Section 14199.52.
(2) If a tax payment is more than 60 days overdue, a penalty equal
to the interest charge described in paragraph (1) shall be assessed
and due for each month for which the tax payment is not received
after 60 days.
(f) (1) Subject to paragraph (2), the director may waive a portion
or all of either the interest or penalties, or both, assessed under
this article in the event that the director determines, in his or her
sole discretion, that the health plan has demonstrated that
imposition of the full amount of the managed care organization
provider tax pursuant to the timelines applicable under this article
has a high likelihood of creating an undue financial hardship for the
health plan, or creates a significant financial difficulty in
providing needed services to Medi-Cal beneficiaries.
(2) Waiver of some or all of the interest or penalties pursuant to
this subdivision shall be conditioned on the health plan's agreement
to make tax payments on an alternative schedule developed by the
department that takes into account the financial situation of the
health plan and the potential impact on services.
(g) For the efficient operation of this section, the director, in
consultation with the Director of Managed Health Care, may delegate
the collection of the taxes under this article to the Department of
Managed Health Care.
14199.55. (a) Prior to each fiscal year, beginning with the
2017-18 fiscal year and each fiscal year thereafter, the department,
in consultation with the Department of Managed Health Care, shall
determine the Medi-Cal taxing tiers, the other taxing tiers, the
Medi-Cal per enrollee tax amounts for each Medi-Cal taxing tier, and
the other per enrollee tax amounts for each other taxing tier, for
the fiscal year, in order to achieve the goals specified in Section
14199.50.
(b) For each fiscal year, beginning with the 2017-18 fiscal year,
the department shall include in the Medi-Cal Local Assistance
Estimate, released each January and May of the preceding fiscal year,
the Medi-Cal taxing tiers, the other taxing tiers, the Medi-Cal per
enrollee tax amounts for each Medi-Cal taxing tier and the other per
enrollee tax amounts for each other taxing tier, determined pursuant
to subdivision (a) and attributable to the applicable fiscal year.
(c) For the 2016-17 fiscal year, the Medi-Cal taxing tiers for
each fiscal quarter shall be as follows:
(1) Medi-Cal taxing tier I shall consist of all countable Medi-Cal
enrollees in a health plan for the fiscal quarter from 0 through
500,000, inclusive.
(2) Medi-Cal taxing tier II shall consist of all countable
Medi-Cal enrollees in a health plan for the fiscal quarter from
500,001 through 1,250,000, inclusive.
(3) Medi-Cal taxing tier III shall consist of all countable
Medi-Cal enrollees in a health plan for the fiscal quarter from
1,250,001 through 2,500,000, inclusive.
(4) Medi-Cal taxing tier IV shall consist of all countable
Medi-Cal enrollees in a health plan for the fiscal quarter greater
than 2,500,000.
(d) For the 2016-17 fiscal year, the Medi-Cal per enrollee tax
amount for each Medi-Cal taxing tier for each fiscal quarter shall be
as follows:
(1) The Medi-Cal per enrollee tax for Medi-Cal taxing tier I shall
be twenty-seven dollars and fifty cents ($27.50).
(2) The Medi-Cal per enrollee tax for Medi-Cal taxing tier II
shall be ten dollars and twenty-five cents ($10.25).
(3) The Medi-Cal per enrollee tax for Medi-Cal taxing tier III
shall be five dollars ($5.00).
(4) The Medi-Cal per enrollee tax for Medi-Cal taxing tier IV
shall be one dollar ($1.00).
(e) For the 2016-17 fiscal year, the other taxing tiers for each
fiscal quarter shall be as follows:
(1) Other taxing tier I shall consist of all countable other
enrollees in a health plan for the fiscal quarter from 0 through
125,000, inclusive.
(2) Other taxing tier II shall consist of all countable other
enrollees in a health plan for the fiscal quarter from 125,001
through 1,250,000, inclusive.
(3) Other taxing tier III shall consist of all countable other
enrollees in a health plan for the fiscal quarter greater than
1,250,000.
(f) For the 2016-17 fiscal year, the other per enrollee tax amount
for each other taxing tier for each fiscal quarter shall be as
follows:
(1) The other per enrollee tax for the other taxing tier I shall
be five dollars and eighty cents ($5.80).
(2) The other per enrollee tax for the other taxing tier II shall
be three dollars ($3.00).
(3) The other per enrollee tax for the other taxing tier III shall
be seventy-five cents ($0.75).
(g) The department may modify any methodology or other provision
specified in this article to the extent necessary to meet the
requirements of federal law or regulations, obtain federal approval,
or ensure federal financial participation is available, provided the
modifications do not otherwise conflict with the purposes of this
article.
(h) The department shall make adjustments, as necessary, to the
tax amounts specified in this section in order to ensure compliance
with the federal requirements set forth in Section 433.68 of Title 42
of the Code of Federal Regulations, or elsewhere in federal law or
regulation.
(i) The department shall request approval from the federal Centers
for Medicare and Medicaid Services as is necessary to implement this
article. In making such request, the department may seek, as it
deems necessary, a request for waiver of the broad-based requirement,
waiver of the uniformity requirement, or both, pursuant to
paragraphs (1) and (2) of subsection (e) of Section 433.68 of Title
42 of the Code of Federal Regulations, or a request for waiver of any
other provision of federal law or regulation necessary to implement
this article.
(j) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this article by means of provider bulletins,
all-plan letters, or other similar instruction, without taking
regulatory action. The department shall provide notification to the
Joint Legislative Budget Committee and to the Senate Committees on
Appropriations, Budget and Fiscal Review, and Health, and the
Assembly Committees on Appropriations, Budget, and Health within 10
business days after the above-described action is taken to inform the
Legislature that the action is being implemented.
SEC. 12. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.