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