BILL ANALYSIS Ó
SB 1422
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Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Mike Gatto, 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. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS:
1)Author's Statement: According to the author, "This bill
clarifies the definition of 'other service supplier' to
include a cable or video service provider."
2)Utility User Tax (UUT): 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 establishing protections for public utilities
and other service providers that collect UTTs, 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
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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.
3)Prior Legislation:
AB 3155 (Martinez), Chapter 939, Statutes of 1996: Created the
UTT liability protection for utilities and other service
providers. Legislative records indicate that it was the intent
of the Legislature to include cable providers within the
definition of other service providers. According the Assembly
Floor Analysis of AB 3155, AB 3155 was "sponsored by the
Telecommunications Energy Utility Roundtable, a consortium of
energy and telecommunications companies that were brought
together by Cal-Tax." The analysis also states that "investor
owned 'public' utilities and cable providers sponsored the
contents of [AB 3155]."
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:Darion Johnston / U. & C. / (916)
319-2083