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 | | |
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|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
SB 802 (Committee on Governance and Finance) 3/24/15 Page 2
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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.
SB 802 (Committee on Governance and Finance) 3/24/15 Page 4
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Support and
Opposition 4/23/15
Support : State Board of Equalization.
Opposition :
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