BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |SB 802                           |Hearing    |4/29/15  |
          |          |                                 |Date:      |         |
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          |Author:   |Committee on Governance and      |Tax Levy:  |No       |
          |          |Finance                          |           |         |
          |----------+---------------------------------+-----------+---------|
          |Version:  |3/24/15                          |Fiscal:    |Yes      |
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          |Consultant|Grinnell                                              |
          |:         |                                                      |
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                         EMERGENCY TELEPHONE USER SURCHARGE 



          Makes technical changes necessary for BOE to implement the  
          Prepaid Mobile Telephony Services Surcharge Collections Act.


           Background, Existing Law, and Proposed Law

           Last year, the Legislature enacted the Prepaid Mobile Telephony  
          Services Surcharge Collections Act, which requires purchasers of  
          prepaid wireless to pay a surcharge for each retail sale (MTS  
          Fee) on and after January 1, 2016 (AB 1717, Perea, 2014).  The  
          MTS Fee is a percentage of the sales price, and is in-lieu of  
          all other state and local charges, fees, and taxes that  
          currently apply.  BOE administers the MTS Fee according to the  
          Fee Procedures Collections Law, and must calculate the rate  
          according to the bill each year no later than November 1,  
          commencing on November 1, 2015 by adding:

                 The 911 Surcharge rate, and

                 The CPUC reimbursement and cumulative universal service  
               fees.

          Additionally, AB 1717 also required the seller to also collect  
          at the point of sale, from consumers of prepaid wireless an  
          amount equal to adding the following according to rate  







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          approximations in the bill:

                 Local UUTs, and

                 Charges for access to communications services or local  
               911 emergency telephone systems.

          The Legislature only enacted the MTS Act last year, and BOE has  
          found a few technical fixes necessary to ensure the fee is  
          properly implemented.

          I.  OES surcharge calculation date.  Currently, the Office of  
          Emergency Services (OES) calculates a surcharge rate sufficient  
          to fund the state's 911 infrastructure needs.  OES transmits the  
          911 surcharge and the 911 surcharge rate applicable to MTS to  
          BOE.  BOE then calculates the total MTS rate by adding the 911  
          surcharge portion and CPUC surcharge portion.  Retailers then  
          collect the MTS surcharge from consumers when selling prepaid  
          services, along with any local 911 charges and local utility  
          user taxes, and remit the fee to BOE for distribution back to  
          the state and agencies imposing the fees.

          AB 1717 directs OES to inform BOE of the surcharge rates by  
          October 15th of each year.  BOE must publish the 911 surcharge  
          rate as part of its minutes from a public meeting by November  
          15th. While BOE meets monthly; however, the dates change each  
          year, and the Bagley-Keene Open Meeting Act requires the BOE to  
          issue a Public Agenda Notice at least 10 days prior to each  
          meeting.  BOE may not be able to comply with both deadlines in  
          some circumstances. For example, should OES notify the BOE of  
          the new 911 surcharge rate on October 15, BOE would have  
          scheduled its regular October meeting after October 25th to meet  
          the 10 day notice requirement, or defer action to its November  
          meeting.  However, if BOE holds its regular November meeting  
          after the 15th, BOE would have to hold a special Board Meeting  
          before the 15th solely for the purpose of publishing the new 911  
          rate.  BOE wants OES to move up the date to inform BOE of the  
          911 surcharge rate from October 1th to October 1st.  

          Senate Bill 802 requires OES to inform BOE of the 911 surcharge  
          rate by October 1st, thereby ensuring BOE can approve the rate  
          before the current deadline of November 15th.  The measure also  
          contains an urgency clause to ensure that it will apply to OES's  
          calculation this year.








          SB 802 (Committee on Governance and Finance) 3/24/15    Page 3  
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          II. Informing taxpayers.  AB 1717 directed BOE to inform  
          retailers of the rate by mail, but BOE can use less costly, more  
          efficient means than mail to provide this information.  SB 802  
          allows BOE to use other means available, including electronic  
          mail or publishing the information on its website.

          III. Consistency between MTS and local charges.  AB 1717  
          requires retailers to collect the prepaid MTS surcharge and  
          local charge at the time of the retail transaction and include  
          necessary provisions, that allow for the BOE to efficiently and  
          effectively administer the bill, such as providing that any  
          amount collected by a retailer but unreturned to the consumer  
          that is not owed as part of the surcharge, constitutes a  
          seller's debt to the state.  However, the language for the MTS  
          surcharge and the local charge are different.  SB 802 makes the  
          two consistent.


                                 State Revenue Impact

           BOE states that SB 802 has no impact on state revenues.


           Comments

           1.  Purpose of the bill  .  SB 802 makes several technical changes  
          to the MTS Act to ensure that BOE can correctly implement it  
          beginning later this year.  BOE states that the measure will  
          also help reduce its costs and improve taxpayer communication,  
          Senate Rule 23 requires all members of the Committee to sign  
          Committee Bills prior to introduction, so SB 802 can only  
          contain items with universal agreement; should anyone object to  
          a provision in the measure, it will be removed.

          2.   Urgency  .  As an urgency measure, SB 802 would take effect  
          immediately upon signature of the Governor.  An urgency measure  
          is necessary because BOE must begin calculating the MTS fee in  
          October, before the general effective date for bills enacted  
          this year of January 1, 2016.












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          Support and  
          Opposition   4/23/15


           Support  :  State Board of Equalization.


           Opposition  : 



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