BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 898|
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                                   THIRD READING 


          Bill No:  SB 898
          Author:   Nguyen (R), et al.
          Amended:  5/31/16  
          Vote:     21 

           SENATE GOVERNANCE & FIN. COMMITTEE:  7-0, 4/20/16
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,  
            Pavley

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/27/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           SUBJECT:   Sales and use taxes:  exemption:  animal blood


          SOURCE:    Author


          DIGEST:  This bill provides a sales and use tax (SUT) exemption  
          for the sale of animal blood sold by a nonprofit animal blood  
          bank.


          ANALYSIS:  


          Existing law:


          1)Imposes a SUT on the sale, storage, or use of tangible  
            personal property unless exempted by state law.  


          2)Exempts human whole blood, plasma, blood products, and blood  
            derivatives, or any human body parts held in a bank for  








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            medical purposes, from SUT.  


          This bill:


          1)Provides a SUT exemption for the sale of animal blood, plasma,  
            blood products, and blood derivatives, sold by nonprofit  
            animal blood banks for use in the cure, mitigation, treatment,  
            or prevention of injury or disease in animals. 


          2)Requires the Board of Equalization (BOE) to cancel any current  
            notice of determination and any related penalties and  
            interest, and precludes BOE from issuing a new notice of  
            determination.


          Background


          According to the California Department of Food and Agriculture,  
          only two animal blood banks in California hold licenses to  
          produce, market, and sell animal blood and blood products.   
          These facilities provide whole blood, plasma, platelets, and  
          clotting factors to veterinary hospitals and clinics.  The blood  
          used to make these products is collected from an animal "blood  
          donor" housed permanently or semi-permanently at the blood bank.  
           California law does not allow pet owners to volunteer their  
          animals as donors to commercial blood banks.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee:




          BOE estimates that this bill would result in an annual revenue  








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          loss of $158,000, $76,000 of which would be General Fund.  The  
          remainder of the reduction would impact local governments.   
          Additionally, BOE indicates that the bill would result in minor  
          and absorbable implementation costs.




          SUPPORT:   (Verified5/31/16)


          ACVS Veterinary Surgeon
          American Emergency Clinic
          American Holistic Veterinary Medical Association
          American Holistic Veterinary Medical Foundation
          Animal Urgent Care; California Veterinary Medical Association
          Center for Integrative Animal Medicine; Eye Care for Animals
          George Runner, Board of Equalization Member
          Hemopet
          Holistic Veterinary Care
          Meridian Veterinary Care
          SAGE Centers for Veterinary Specialty and Emergency Care
          VCA Emergency Animal Hospital and Referral Center


          OPPOSITION:   (Verified5/31/16)


          California State Association of Counties
          League of California Cities


          ARGUMENTS IN SUPPORT:     According to the author, "SB 898  
          amends the California Revenue and Taxation code to clarify that  
          the sale and use of animal blood, blood products, and  
          derivatives by a licensed animal blood bank are not subject to  
          tax.  Since one of the two animal blood bank organizations  
          provides an integral portion of the California's animal donor  
          blood, the need to ensure the protection of this vital service  
          is necessary and appropriate.  Furthermore a similar tax  
          exemption exists in the California tax code for human blood  
          banks, a logical application of this exemption should extend  








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          towards animals as well."


          ARGUMENTS IN OPPOSITION:     Opponents argue that sales and use  
          tax exemptions continue to erode the already shrinking local  
          sales tax base.  Cities and counties continue to struggle  
          financially, and sales and use tax exemptions only further  
          exacerbate the issue.



          Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
          5/31/16 20:45:44


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