BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 799
SENATOR TOM TORLAKSON, CHAIRMAN AUTHOR: leno
VERSION: 5/27/05
Analysis by: Carrie Cornwell FISCAL: Yes
SUBJECT:
Vehicle license fee: San Francisco.
DESCRIPTION:
This bill would authorize the Board of Supervisors of the City
and County of San Francisco to place on the ballot a measure to
impose a vehicle license fee (VLF) on vehicles owned by
residents of San Francisco.
ANALYSIS:
Existing law imposes a VLF, which is in lieu of a personal
property tax on all California motor vehicles, at a rate of .65%
of the value of the vehicle. The taxable value of a vehicle is
established by the purchase price of the vehicle, depreciated
annually according to a statutory schedule. Although the tax
rate on vehicles is currently 0.65% of a vehicle's value,
historically the rate was 2% of value. For the taxpayer, VLF is
deductible on both state and federal income taxes. Revenue from
VLF is dedicated to local governments.
This bill would :
1)Authorize the Board of Supervisors of the City and County of
San Francisco, by a two-thirds vote of the board, to place
before the voters of San Francisco a measure to levy an
additional VLF rate on vehicles owned by residents for general
revenue purposes.
2)Require that the ordinance proposing the fee be submitted to
the electorate and approved by a majority of those voting.
3)Specify that the VLF rate for residents of San Francisco would
be equal to the difference between the historical 2% state tax
rate and the rate currently paid to the state by vehicle
AB 799 (LENO) Page 2
owners (0.65%). Currently, this would impose a local tax rate
of 1.35% on the depreciated value of the San Francisco
residents' vehicles. The resulting total VLF imposed on San
Francisco residents would be 2% (0.65% to the state, plus
1.35% to San Francisco).
4)Require San Francisco to contract with the Department of Motor
Vehicles (DMV) to collect and administer the fee and to pay
DMV for the initial setup and programming costs identified by
DMV.
5)Require DMV to do all of the following:
a) Collect the local VLF pursuant to its contract with
San Francisco;
b) Deduct its costs from those fees;
c) Deduct the amount identified by the Franchise Tax
Board (FTB) as state revenue losses resulting from
taxpayers deducting the local VLF fees authorized by this
bill for purposes of the Personal Income Tax Law and the
Corporation Tax Law, and transmit that amount to the
State Controller;
d) Deduct FTB's costs for determining state revenue
losses and transmit to FTB reimbursement for its costs;
and
e) Transmit the collected revenues minus these
deductions to San Francisco as promptly as feasible.
6)Provide that the revenue generated by a VLF imposed in San
Francisco shall not supplant any moneys that the state
apportions to San Francisco.
COMMENTS:
1) Purpose of the bill . According to the author, this bill
ensures that the people of the City and County San Francisco
have the ability to control their revenues at the local
level and offers San Francisco the chance to protect city
programs. San Francisco is facing a severe budget shortfall
of over $100 million. Mayor Gavin Newsom notes that this
deficit "was worsened by the roll-back of the VLF in 2003,
which was not fully back filled by the State, resulting in a
loss of nearly $56 million." Local officials in San
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Francisco have already embarked on extensive layoffs and
pared back services.
Given that the Vehicle License Fee is one of San Francisco's
largest sources of general fund revenue, this proposal
provides San Franciscan voters an alternative to cutting
services or raising gross receipts and payroll taxes. The
Mayor indicates that this bill could generate an additional
$60 million in revenue for the City and County of San
Francisco.
2) Arguments in opposition . The California Taxpayers'
Association asserts that tax increases, whether at the state
or local level, further delay economic recovery. The Auto
Clubs note in their letter of opposition that, "Fairness
dictates that the VLF rate should not be increased to levels
that exceed the rate at which other forms of personal
property are taxed."
3) Double referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the
Revenue and Taxation Committee. Therefore, should this bill
pass this committee, it will be referred to the Senate
Revenue and Taxation Committee.
RELATED LEGISLATION
AB 1208 (Yee), also on the committee's agenda today, would
authorize the San Francisco Board of Supervisors to levy an
additional on the vehicle registration to fund local road
street improvement. If both AB 1208 and AB 799 were to be
enacted, then San Francisco could levy both the AB 1208 fee and
the additional VLF authorized in this bill.
AB 1187 (Leno) of 2004 was similar to this bill and would also
have allowed the San Francisco Board of Supervisors to place on
the ballot a measure to impose a vehicle license fee (VLF) on
vehicles owned by residents of San Francisco. That bill failed
passage in the Senate Appropriations Committee.
AB 925 (Burton), Chapter 966, Statutes of 1993, authorized San
Francisco to levy a surcharge on the 2% VLF, for purposes of
public transit financing, so long as transit fares were not
increased. The fee would have required a 2/3 popular vote. San
Francisco never enacted this surcharge, and the authority to do
so was voided by a recent transit fare increase.
AB 799 (LENO) Page 4
Assembly Votes:
Floor: 42 - 35
Appr: 13 - 5
R&T: 4 - 3
L. Gov: 5 - 2
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 15, 2005.)
SUPPORT: City and County of San Francisco (sponsor)
Association of Bay Area Governments
Rescue MUNI
San Francisco Bicycle Coalition
San Francisco Chamber of Commerce
San Francisco Labor Council, AFL-CIO
San Francisco Planning and Urban Research
Association
Transportation for a Livable City
Walk San Francisco
OPPOSED: Automobile Club of Southern California
California State Automobile Association
California Taxpayers' Association