Amended in Senate April 23, 2015

Amended in Senate March 26, 2015

Senate BillNo. 321


Introduced by Senator Beall

February 23, 2015


An act to amend Section 7360 of the Revenue and Taxation Code, relating to taxation, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 321, as amended, Beall. Motor vehicle fuel taxes: rates: adjustments.

Existing law, as of July 1, 2010, exempts the sale of, and the storage, use, or other consumption of, motor vehicle fuel from specified sales and use taxes and increases the excise tax on motor vehicle fuel, as provided.

Existing law requires the State Board of Equalization, for the 2011-12 fiscal year and each fiscal year thereafter, on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, to adjust the motor vehicle fuel tax rate in a manner as to generate an amount of revenue equal to the amount of revenue loss attributable to the sales and use tax exemption on motor vehicle fuel, based on estimates made by the board. Existing law also requires, in order to maintain revenuebegin delete neutralityend deletebegin insert for each yearend insert, the board to take into account actual net revenue gain or loss for the fiscal year ending prior to the rate adjustment date. Existing law requires thisbegin delete determinedend deletebegin insert adjustedend insert rate to be effective during the state’s next fiscal year.

This billbegin delete would,end delete for the 2015-16 fiscal year and each fiscal year thereafterbegin insert wouldend insert, instead require the board, on or before July 1, 2015, or March 1 of the fiscal year immediately preceding the applicable fiscal year, as specified, to adjust the rate in a manner as to generate an amount of revenue equal to the amount of revenue loss attributable to the exemption, based on estimates made by the board that reflect the combined average of the actual fuel price over the previous 4 fiscal years and the estimated fuel price for the current fiscal year, and continuing to take into account adjustments required by existing law to maintain revenue neutrality.begin delete This bill would authorize, for rate adjustments made after January 1, 2015, in order to reduce the potential volatility of the revenues generated by the motor vehicle fuel tax, the board to make partial adjustments over up to 3 consecutive years to take into account the net revenue gain or loss of any fiscal year.end delete

This bill would also authorize, if, due to clear changes in either fuel prices or consumption in the state, the board makes a determination that the amount of revenue being generated by the motor vehicle fuel tax will be significantly different than the estimates made by the board, the board to adjust the rate more frequently than annually, but no more frequently than every 6 months in order to reduce the potential volatility of the revenues.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

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SECTION 1.  

Section 7360 of the Revenue and Taxation Code
2 is amended to read:

3

7360.  

(a) (1) A tax of eighteen cents ($0.18) is hereby imposed
4upon each gallon of fuel subject to the tax in Sections 7362, 7363,
5and 7364.

6(2) If the federal fuel tax is reduced below the rate of nine cents
7($0.09) per gallon and federal financial allocations to this state for
8highway and exclusive public mass transit guideway purposes are
9reduced or eliminated correspondingly, the tax rate imposed by
10paragraph (1), on and after the date of the reduction, shall be
11recalculated by an amount so that the combined state rate under
12paragraph (1) and the federal tax rate per gallon equal twenty-seven
13cents ($0.27).

P3    1(3) If any person or entity is exempt or partially exempt from
2the federal fuel tax at the time of a reduction, the person or entity
3shall continue to be so exempt under this section.

4(b) (1) On and after July 1, 2010, in addition to the tax imposed
5by subdivision (a), a tax is hereby imposed upon each gallon of
6motor vehicle fuel, other than aviation gasoline, subject to the tax
7in Sections 7362, 7363, and 7364 in an amount equal to seventeen
8and three-tenths cents ($0.173) per gallon.

9(2) (A) For the 2011-12 fiscal year to the 2014-15 fiscal year,
10inclusive, the board shall, on or before March 1 of the fiscal year
11immediately preceding the applicable fiscal year, adjust the rate
12in paragraph (1) in that manner as to generate an amount of revenue
13that will equal the amount of revenue loss attributable to the
14exemption provided by Section 6357.7, based on estimates made
15by the board, and that rate shall be effective during the state’s next
16fiscal year.

17(B) For the 2015-16 fiscal year, the board shall, on or before
18July 1, 2015, adjust the rate in paragraph (1) in that manner as to
19generate an amount of revenue that will equal the amount of
20revenue loss attributable to the exemption provided by Section
216357.7, based on estimates made by the board that reflect the
22combined average of the actual fuel price over the previous four
23fiscal years and the estimated fuel price for the current fiscal year,
24and that rate shall be effective during the 2015-16 fiscal year.

25(C) For the 2016-17 fiscal year and each fiscal year thereafter,
26the board shall, on or before March 1 of the fiscal year immediately
27preceding the applicable fiscal year, adjust the rate in paragraph
28(1) in that manner as to generate an amount of revenue that will
29equal the amount of revenue loss attributable to the exemption
30provided by Section 6357.7, based on estimates made by the board
31that reflect the combined average of the actual fuel price over the
32previous four fiscal years and the estimated fuel price for the
33current fiscal year, and that rate shall be effective during the state’s
34next fiscal year.

35(3) In order to maintain revenue neutrality, beginning with the
36rate adjustment on or before March 1, 2012, the adjustment under
37paragraph (2) shall also take into account the extent to which the
38actual amount of revenues derived pursuant to this subdivision
39and, as applicable, Section 7361.1, the revenue loss attributable
40to the exemption provided by Section 6357.7 resulted in a net
P4    1revenue gain or loss for the fiscal year ending prior to the rate
2adjustment date on or before March 1. begin deleteFor rate adjustments made
3after January 1, 2015, in order to reduce the potential volatility of
4the revenues generated by the tax imposed under this subdivision,
5the board may make partial adjustments over up to three
6consecutive years to take into account the net revenue gain or loss
7of any fiscal year.end delete

8(4) If, due to clear changes in either fuel prices or consumption
9in the state, the board makes a determination that the amount of
10revenue being generated by the tax imposed by this section will
11be significantly different than the estimates made by the board,
12the board may adjust the rate in paragraph (1) more frequently
13than annually, but no more frequently than every six months in
14order to reduce the potential volatility of the revenues.

15(5) The intent of paragraphs (2) and (3) is to ensure that Chapter
166 of the Statutes of 2011, which added this subdivision and Section
176357.7, does not produce a net revenue gain in state taxes.

18 (6) It is the intent of the Legislature that the amendments made
19by the act adding this paragraph does not produce a net revenue
20gain in state taxes. Revenue neutrality, as used in this section, does
21not refer to revenues generated in any particular fiscal year, but
22instead means that, over a reasonable period of fiscal years, the
23actual amount of revenues derived pursuant to this subdivision is
24equal to the estimated amount of revenue loss attributable to the
25exemption provided by Section 6357.7.

26

SEC. 2.  

This act is an urgency statute necessary for the
27immediate preservation of the public peace, health, or safety within
28the meaning of Article IV of the Constitution and shall go into
29immediate effect. The facts constituting the necessity are:

30In order to avoid a significant and devastating decrease in the
31amount of funding available for the maintenance of California’s
32local streets and roads, it is necessary that this act take effect
33immediately.



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