BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 1422 |Hearing |4/27/16 |
| | |Date: | |
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|Author: |Glazer |Tax Levy: |No |
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|Version: |3/28/16 |Fiscal: |No |
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|Consultant|Weinberger |
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Public utilities and other service suppliers: collection of
local taxes
Clarifies that cable service providers are covered by a state
law that limits public utilities and other service providers'
responsibilities for collecting utility user taxes.
Background
Utility users taxes (UUTs) are excise taxes imposed by cities
and counties on the consumption of utility services, including
electricity, gas, water, sewer, telephone, sanitation, and cable
television. Although a city or county can impose a UUT as a
special tax, generating revenues that must be used for a
specific purpose, nearly all UUTs are imposed as general taxes,
which allow revenues to be used for any purpose. In the 2014-15
fiscal year, 159 cities and 3 counties reported collecting, in
total, more than $2 billion in UUT revenues. In jurisdictions
that impose a UUT, a utility service provider collects the tax
through the bills it sends to utility customers and remits the
revenues to the local government that imposed the tax.
State law establishes several limits on a public utility or
other service supplier's duties and liabilities with regard to
collecting UUTs and other taxes that local governments impose on
utility consumers (AB 3155, Martinez, 1996). Specifically, to
protect utility service suppliers from litigation over taxes
SB 1422 (Glazer) 3/28/16 Page 2
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that they collect (but don't impose) and to ensure that utility
providers have enough time to process any local modifications to
utility users taxes, state law:
Specifies that the public utility or service supplier is
not liable to any customer for collecting the tax,
regardless of whether the tax has been declared illegal,
and has no duty to inquire with the local agency about the
tax's validity.
Directs that a local jurisdiction is solely responsible
for refunding the tax if it is ordered to do so, although
the utility or service supplier may assist the local
jurisdiction if the local jurisdiction reimburses the cost
of assistance.
Prohibits a public utility or other service supplier
from being named as a defendant in any action challenging
the tax.
Requires a local jurisdiction to notify the utility or
service supplier in writing if it adopts a new tax, or
makes changes to an existing tax that would affect
collection and remittance.
Grants a utility or service provider at least 90 days
after notification to begin collecting a new tax and at
least 60 days after notification to implement a change in
an existing tax.
In the statute that establishes these protections for public
utilities and other service providers, the term "other service
providers" is not defined. Some cable service providers worry
that the absence of a definition of "other service providers"
creates ambiguity that could allow current law to be
misinterpreted as excluding cable operators from the protections
that apply to public utilities. They want the Legislature to
amend state law to explicitly include cable operators.
Proposed Law
SB 1422 (Glazer) 3/28/16 Page 3
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Senate Bill 1422, for the purposes of the statute that limits
public utility or other service suppliers' duties and
liabilities with regard to collecting utility taxes, defines
the term "other service suppliers" as including a holder of a
state franchise for the provision of video service. The bill
declares that its provisions do not constitute a change in, but
are declaratory of, existing law.
State Revenue Impact
No estimate.
Comment
Purpose of the bill . State law seeks to ensure that public
utilities and other service suppliers are not subject to legal
liability or other negative consequences for collecting utility
user taxes that a local agency may be imposing on consumers
improperly. Because the statute does not define the term "other
service suppliers," advocates for some cable operators and other
video service providers worry that it is ambiguous whether these
statutory protections apply to a company that holds a state
franchise to provide video service. Legislative histories of
both the bill that enacted the protections for utility service
providers (AB 3155, Martinez, 1996) and a bill that contained
earlier version of those protections (SB 2143, Hurtt, 1996)
strongly suggest that the Legislature intended to apply the
protections to video service providers. Committee and floor
analyses of these two bills indicate that cable companies were
included among the sponsors of those bills and parenthetically
cite cable companies as an example of "service suppliers."
Despite this legislative history, there remains some risk that
the statutory language could be misinterpreted to exclude cable
operators and other video service providers. SB 1422 eliminates
any uncertainty by explicitly defining "other service suppliers"
as including video service providers.
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Support and
Opposition (4/21/16)
Support : California Cable and Telecommunications Association.
Opposition : Unknown.
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