BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1422|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
CONSENT
Bill No: SB 1422
Author: Glazer (D)
Amended: 3/28/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/27/16
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SUBJECT: Public utilities and other service suppliers:
collection of local taxes
SOURCE: Author
DIGEST: This bill clarifies that cable service providers are
covered by a state law that limits public utilities and other
service providers' duties and liabilities with regard to
collecting local utility taxes.
ANALYSIS: Existing law establishes several limits on a public
utility or other service supplier's duties and liabilities with
regard to collecting utility users taxes (UUTs) and other taxes
that local governments impose on utility consumers (AB 3155,
Martinez, Chapter 939, Statutes of 1996). Specifically, to
protect utility service suppliers from litigation over taxes
that they collect (but don't impose) and to ensure that utility
providers have enough time to process any local modifications to
local utility taxes, existing law:
1)Specifies that the public utility or service supplier is not
liable to any customer for collecting the tax, regardless of
SB 1422
Page 2
whether the tax has been declared illegal, and has no duty to
inquire with the local agency about the tax's validity.
2)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.
3)Prohibits a public utility or other service supplier from
being named as a defendant in any action challenging the tax.
4)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.
5)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.
This bill:
1)Defines the term "other service suppliers" as including a
holder of a state franchise for the provision of video service
for the purposes of the statute that limits public utility or
other service suppliers' duties and liabilities with regard to
collecting utility taxes.
2)Declares that its provisions do not constitute a change in,
but are declaratory of, existing law.
Background
SB 1422
Page 3
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 three 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.
In the statute that establishes protections for public utilities
and other service providers that collect local utility taxes,
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.
Comments
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, Chapter 939, Statutes of 1996) and
a bill that contained an earlier version of those protections
(SB 2143, Hurtt, 1996) strongly suggest that the Legislature
intended to apply the protections to video service providers.
SB 1422
Page 4
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. This bill eliminates any uncertainty by
explicitly defining "other service suppliers" as including video
service providers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified4/27/16)
California Cable & Telecommunications Association
California Taxpayers Association
OPPOSITION: (Verified4/27/16)
None received
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
4/29/16 12:39:27
**** END ****
SB 1422
Page 5