BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 321|
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UNFINISHED BUSINESS
Bill No: SB 321
Author: Beall (D)
Amended: 8/18/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/15/15
AYES: Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 40-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner,
Stone, Vidak, Wieckowski, Wolk
ASSEMBLY FLOOR: 80-0, 9/10/15 - See last page for vote
SUBJECT: Motor vehicle fuel taxes: rates: adjustments
SOURCE: Author
DIGEST: This bill modifies the method by which the State Board
of Equalization (BOE) annually adjusts the motor vehicle "fuel
tax swap" rate to take into account a five-year average of fuel
prices, thereby smoothing perceived revenue volatility.
Assembly Amendments delay the operative date of this bill from
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the 2015-16 fiscal year to the 2016-17 fiscal year and remove
the provision allowing the BOE to adjust the rate more than once
a year.
ANALYSIS:
Existing law:
1)Defines "motor vehicle fuel" under the Motor Vehicle Fuel Tax
(MVFT) Law as gasoline and aviation gasoline. The term does
not include jet fuel, diesel fuel, kerosene, liquefied
petroleum gas, natural gas in liquid or gaseous form, alcohol,
or racing fuel.
2)Imposes, under the MVFT Law, an excise tax upon each gallon of
fuel.
3)Provides, on and after July 1, 2010, a partial SUT exemption
for "motor vehicle fuel".
4)Provides for the annual adjustment of the MVFT excise tax
rate. Specifically, for the 2011-12 fiscal year (FY) and each
FY thereafter, the BOE must adjust the rate so as to generate
revenues equal to the amount of revenue loss attributable to
the partial sales and use tax (SUT) exemption for motor
vehicle fuel. This calculation is made annually by March 1,
based on estimates made by the BOE, and the adjusted rate
applies to the immediately following FY.
5)Provides for a "true up" process to maintain revenue
neutrality. Specifically, beginning with the rate adjustment
calculated on or before March 1, 2012, the adjustment must
also take into account the extent to which actual revenues
derived resulted in a net revenue gain or loss for the FY
ending prior to the rate adjustment date.
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This bill:
1)Provides, for the 2016-17 FY and each FY thereafter, the BOE
shall, on or before March 1 of the FY immediately preceding
the applicable FY, adjust the motor vehicle fuel excise tax
rate so as to generate revenues equal to the amount of revenue
loss attributable to the partial SUT exemption, based on
estimates made by the BOE reflecting the combined average of
the actual fuel price over the previous four FYs and the
estimated fuel price for the current FY, and that rate shall
be effective during the state's next FY.
2)Provides legislative intent that the amendments made by this
bill shall not produce a net revenue gain in state taxes.
Background
In 2010, the Legislature enacted two "fuel tax swap" measures
that changed the imposition and rates of state taxes on gasoline
and diesel fuel, and required the BOE to annually determine the
appropriate excise tax rate adjustments to maintain revenue
neutrality (ABX8-6, Committee on Budget, Chapter 11) and (SB 70,
Committee on Budget and Fiscal Review, Chapter 9). The gasoline
tax changes became operative on July 1, 2010, and the diesel
fuel tax changes on July 1, 2011.
The fuel tax swap was partly enacted, to allow the use of
additional existing transportation revenue for highway purposes,
including General Obligation bond debt service, where that debt
service was related to transportation projects.
The swap bills exempted sales and purchases of gasoline from the
state sales and use tax rate. To offset the revenue loss
related to this partial exemption, the law increased the
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gasoline excise tax rate from $0.18 per gallon to $0.353 per
gallon. Conversely, the measure reduced the diesel fuel excise
tax rate from $0.18 to $0.13 per gallon, but increased the sales
and use tax rate on diesel fuel sales to offset the loss related
from the reduction, resulting in the following rates:
1.87%, effective July 1, 2011,
2.17%, effective July 1, 2012,
1.94%, effective July 1, 2013,
1.75%, effective July 1, 2014, and thereafter.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, the bill
will result in minor and absorbable administrative costs to BOE
and have an insignificant impact to state revenue.
SUPPORT: (Verified9/10/15)
American Public Works Association
Associated General Contractors
Bay Area Rapid Transit District
Board of Equalization
California Alliance for Jobs
California Association of Councils of Government
California State Association of Counties
California State Council of Laborers
California Transit Association
California Transportation Commission
City of Camarillo
City of Crescent City
City of Eureka
City of Fountain Valley
City of Glendale
City Goleta
City of Indian Wells
City of Lakewood
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City of Livermore
City of Lomita
City of Moreno
City of Rolling Hills Estates
City of Roseville
City of San Jose
City of Saratoga
City of West Hollywood
City/County Association of Governments of San Mateo County
County of Alpine
County of Contra Costa
County of Los Angeles
County of Mono
County of Monterey
County of Santa Cruz
Glendale City Employees Association
Kern Council of Governments
League of California Cities
Metropolitan Transportation Commission
Orange County Transportation Authority
Organization of SMUD Employees
Planning and Conservation League
Rural County Representatives of California
Sacramento Metropolitan Chamber of Commerce
San Bernardino Public Employees Association
San Diego Association of Governments (SANDAG)
San Diego County Court Employees Association
San Joaquin Valley Regional Transportation Planning Agencies
San Luis Obispo Council of Governments
San Luis Obispo County Employees Association
Santa Clara Valley Transportation Authority
Self-Help Counties Coalition
Town of Los Altos Hills
Transportation Agency for Monterey County
Transportation Authority of Marin
Transportation California
United Contractors
Urban Counties Caucus
Ventura County Transportation Commission
OPPOSITION: (Verified9/10/15
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None received
ARGUMENTS IN SUPPORT: According to the author, "Current law,
known as the "gas tax swap", requires the BOE to annually adjust
the state gasoline excise tax rate in order to collect roughly
the same amount of revenue as the state would have collected if
it still charged a sales tax on gasoline. The BOE does so by
forecasting gasoline prices for the year. Difficulty in
forecasting gas prices inevitably results in over- or
under-collecting revenue and requires future adjustments to
compensate for any discrepancy. That reconciliation leads to
volatility and big swings in the amount of tax collected from
year to year.
This volatility is bad for taxpayers who experience big swings
in prices at the pump, and for state and local governments, who
face uncertainty when preparing multiyear budgets.
SB 321 reduces this volatility by changing the way the BOE
estimates gas prices. It requires BOE to base next year's gas
price estimate on an average of the previous four years' actual
prices (as opposed to its current one year model)."
ASSEMBLY FLOOR: 80-0, 9/10/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
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Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
9/10/15 23:22:50
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