BILL ANALYSIS Ó
SB 1422
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Date of Hearing: June 15, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
SB
1422 (Glazer) - As Amended March 28, 2016
SENATE VOTE: 36-0
SUBJECT: Public utilities and other service suppliers:
collection of local taxes.
SUMMARY: Clarifies that cable service providers are included in
the definition for other service providers, pursuant to existing
law, which limits the liabilities and responsibilities of public
utilities and other service providers collecting a utility user
tax. Specifically, this bill:
1)Defines "other service supplier" to include, but not be
limited to, a holder of a state franchise for the provision of
video service, for the purposes of existing law which defines
the duties and liabilities for public utilities and other
service suppliers collecting a utility user tax (UUT).
2)Provides that this bill does not constitute a change in, but
is declaratory of existing law.
EXISTING LAW:
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1)Authorizes a city or county to levy a UUT on the consumption
of electricity, gas, water, sewer, telephone, telegraph, and
cable television services.
2)Provides, the following, for taxes enacted by a local
jurisdiction imposed on the customers of public utilities or
other services suppliers, where taxes are collected by the
public utilities and other service suppliers and remitted to
the local jurisdiction:
a) Prohibits the public utility or other service supplier
from having any duty to independently investigate or
inquire concerning the validity of a local jurisdiction's
tax ordinance;
b) Prohibits a public utility or other services supplier
from being liable to any customer as a consequence of
collecting a tax of an invalid tax ordinance;
c) Requires, if a local jurisdiction is ordered to refund
the tax, that it be the sole responsibility of the local
jurisdiction, unless a public utility or other service
supplier is reimbursed for the cost, as specified;
d) Prohibits a public utility or other service supplier
from being named as a defendant in any action challenging
the tax;
e) 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
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collection and remittance; and,
f) 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.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. Existing law provides protections to public
utilities and other service suppliers that collect UUTs that
local governments impose on utility customers. Current law
does not define "other service provider," however, the
analysis provided for enacting legislation [AB 3155 (Martinez)
of 1996 and SB 2143 (Hurtt) of 1996] suggests the legislative
intent of the protections' applicability to video service
providers. This bill specifies that the definition of other
service supplier includes video service providers, and states
that this change is declaratory of existing law. This bill is
sponsored by the California Cable & Telecommunications
Association.
2)Author's Statement. According to the author, "Senate Bill
1422 seeks to clarify the definition of "other service
supplier" to include a cable or video service provider. The
bill would not constitute a change in current law, but would
be declaratory of existing law."
3)UUT. Under current law, a city may impose a UUT on the
consumption of utility services, including, but not be limited
to, electricity, gas, water, sewer, telephone, sanitation and
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cable television. The city determines the rate of the tax and
the use of its proceeds. UUTs can be imposed as a special tax
dedicated for a specific purpose, or a general tax to be used
for whatever purpose the city council decides. Additionally,
a county may levy a UUT on the consumption of electricity,
gas, water, sewer, telephone, telegraph and cable television
services in the unincorporated area. The city or county
determines the rate of the tax and the use of its proceeds.
UUTs are collected by the utility as part of its regular
billing, and then remitted to the city or county.
In California, 159 cities and three counties impose a UUT,
collecting, in total, more than
$2 billion UUT revenues. In most jurisdictions, UUTs provide
vital funding for municipal or county services. Reduced
funding by the state and other sources of funding for local
governments over the last several decades have increased the
popularity of UUTs, which are most commonly used to fund
police, fire, parks, and libraries.
4)Arguments in Support. Supporters argue that this bill
provides clarification in existing law that exempts utilities
and other service suppliers from liability for the collection
of taxes that were improperly authorized by local governments.
5)Arguments in Opposition. None on file.
6)Double-Referral. This bill is double-referred to the
Utilities and Commerce Committee.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Cable & Telecommunications Association [SPONSOR]
California Chamber of Commerce
California Taxpayers Association
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Opposition
None on file
Analysis Prepared by:Misa Lennox / L. GOV. / (916)
319-3958