BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1338|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: SB 1338
Author: Lara (D), et al.
Amended: 5/4/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/27/16
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: zero-emission and
near-zero-emission equipment
SOURCE: Author
DIGEST: This bill provides a partial sales and use tax (SUT)
exemption for zero and near zero-emission port equipment.
ANALYSIS:
Existing law:
1)Imposes a sales and use tax (SUT) on the sale, storage, or use
of tangible personal property unless exempted by state law.
Cities and Counties may increase the SUT rate up to 2% as a
transactions and use tax for either specific or general
purposes with a vote of the people.
2)Imposes a SUT rate of 7.5%, but beginning January 1, 2017, the
state SUT rate on tangible personal property will be 7.25%.
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This bill provides a partial SUT exemption for zero and near
zero-emission port equipment. Specifically this bill:
1)Provides a General Fund (3.9375%) SUT tax exemption for
"qualified TPP" purchased by a "qualified person" to be used
"primarily" in, at, or on a marine terminal of a California
public port for carriage, handling, or movement of freight,
cargo, and goods.
2)Defines "qualified tangible personal property" as any of the
following:
a) Zero-emission or near-zero-emission equipment used in
conjunction with the movement of goods or freight,
including computers, data-processing equipment, and
computer software required to operate, control, regulate,
or maintain the qualified equipment.
b) Parts used for the repair and replacement of qualified
equipment with a useful life of one or more years.
c) Special purpose buildings and foundations used as an
integral part of the utilization process of zero-emission
or near-zero-emission equipment.
d) Leases of qualified tangible personal property.
3)Defines "primarily" as 50% or more of the time.
4)Defines "qualified person" as a stevedore, marine terminal
operator, operator of a port, rail ramp, rail yard, imtermodal
facility, or freight yard, or any other person that is engaged
in cargo and freight loading, delivery, movement, storage, and
conveyance at or within a California public seaport.
5)Defines "Zero-emission or near-zero-emission equipment" as
equipment, off-road vehicles, and related technologies used
within the boundaries of a California public seaport that
reduces or eliminates greenhouse gas emissions and improves
air quality as identified by the State Air Resources Board in
consultation with the State Energy Resources Conservation and
Development Commission. Additionally, "zero-emission and
near-zero-emission equipment" may include advanced or
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alternative fuel engines and hybrid or alternative fuel
technologies for seaport equipment.
6)Provides that the exemption does not apply if, within one year
from the date of purchase, the qualified person (a) uses the
qualified property in a manner not qualifying for the
exemption, (b) converts the qualified property from an exempt
use to a non-qualifying use, or (c) removes the qualified
property from California. Finally, this bill contains
reporting requirements, as specified.
7)Applies to taxable years beginning January 1, 2017, and before
January 1, 2030.
Background
The ports of Los Angeles and Long Beach are the busiest in the
nation and generate more air pollution than any other facility
in the Los Angeles Basin. In 2006, the ports of Long Beach and
Los Angeles together adopted the landmark Clean Air Action Plan
(CAAP). The CAAP focuses on strategies to reduce health risks
to communities surrounding the ports by reducing air pollutants.
Both the ports of Los Angeles and Long Beach have each reduced
diesel particulates by over 80 percent, but more needs to be
done. According to the Air Resources Board, despite substantial
progress over the last decade, the remaining localized risks of
cancer and other adverse effects near major freight hubs must be
significantly reduced. Infants and children are 1.5 to three
times more sensitive to the harmful effects of exposure to air
toxics, like those emitted from freight equipment, than
previously understood, which heightens the need for further risk
reduction.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
The Board of Equalization (BOE) indicates that this bill would
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result in an annual General Fund revenue loss of $4.6 million.
BOE's implementation costs have yet to be determined, but would
minimally reach the hundreds of thousands of dollars annually
(General Fund).
SUPPORT: (Verified5/27/16)
Bay Area Air Quality Management District
Breathe California
California Electronic Transportation Coalition
California League of Conservation Voters
Coalition for Clean Air
Environment California
Environmental Defense Fund
Move LA
Natural Resources Defense Council
Pacific Merchant Shipping Association
OPPOSITION: (Verified5/27/16)
International Longshore and Warehouse Union
ARGUMENTS IN SUPPORT: According to the author, "The
California economy is largely dependent on international trade
and commerce. The state is home to three of the largest ports in
the nation, located in Los Angeles, Long Beach, and Oakland, and
eight smaller public-owned ports situated from Humboldt Bay and
south to San Diego. More than 40% of containerized cargo
arriving in the United States enters through the state's 11
seaports. The Southern California region allows for the
quickest, direct shipping routes to the Pacific Rim. 75% of
total container volume coming through the Ports of Los Angeles
and Long Beach come from East Asia alone. However, greenhouse
gas emissions from the transportation sector continue to impact
public health throughout the state. According the American Lung
Association's State of the Air 2016 report, the Los Angeles
region leaders the nation in harmful ozone pollution. Simply
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put, air quality degradation, congestion, and additional
infrastructure impacts cripple not only the economic viability
of a region, but also the health and quality of life for those
living in communities situated in high volume transportation
corridors. Capital expenses associated with the procurement of
the latest zero-emission or near-zero emission cargo handling
equipment is in the tens of billions of dollars. Replacing
current equipment at the ports of Los Angeles, Long Beach, and
Oakland is estimated to cost $23 billion. Smart investments to
offset and eliminate negative environmental impacts from freight
transport positions the state to work towards achieving clean
energy and climate goals established by landmark legislation
such as AB 32 (Nunez, Chaptered 2006) and SB 350 (De Leon,
Chaptered 2015). To that end, the state has a critical role in
assisting California ports transition from the more conventional
to next generation infrastructure to improve the public health
of communities in and around our goods movement sector."
ARGUMENTS IN OPPOSITION: Opponents argue this bill will lead to
jobs loss and will not address the true source of harmful
emissions, idle trucks. Specifically, the opponents argue this
bill may lead to automation of jobs currently held by union
members.
Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
5/28/16 17:12:00
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