BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Kevin Murray, Chairman
799 (Leno)
Hearing Date: 8/17/06 Amended: 6/21/06
Consultant: Mark McKenzie Policy Vote: T&H(9-2),Rev/Tax
(4-3)
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BILL SUMMARY: AB 799 would authorize the Board of Supervisors
of the City and County of San Francisco to place a measure on
the ballot to impose a vehicle license fee (VLF) on vehicles
registered in San Francisco.
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Fiscal Impact (in thousands)
Major Provisions 2006-07 2007-08 2008-09 Fund
S.F. VLF revenue annual revenue gain of approximately
local
$75,000 annually to San Francisco
DMV program/admin one-time costs of approximately $1,500SF*
(paid in advance by SF), ongoing costs of
$100 annually, reimbursed from VLF
revenues
FTB administration $170 annually, reimbursed from VLF
revenues GF
Tax revenue loss from annual tax revenue loss of
approximatelyGF
higher taxpayer deduction $3,000, beginning in the year
following
of VLF on tax returns implementation, reimbursed from VLF
revenues
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* Motor Vehicle Account
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STAFF COMMENTS: SUSPENSE FILE.
Existing law imposes an annual vehicle license fee (in lieu of a
personal property tax) on all motor vehicles not otherwise
exempt. The VLF is calculated by multiplying the depreciated
value of the vehicle by a rate of 0.65%, with the revenue
dedicated to local governments. The VLF had historically been
levied at a rate of 2% of a vehicle's value, but was permanently
reduced to .65% pursuant to the enactment of SB 1096 (Committee
on Budget and Fiscal Review), Chapter 211, Statutes of 2004.
AB 799 would allow the Board of Supervisors of the City and
County of San Francisco, by a 2/3 vote of the board, to place
before its voters a measure to levy an additional VLF on
vehicles registered in San Francisco. This local VLF would be
equal to the difference between 2% and the rate levied by the
state, and revenues collected would be for general purposes.
San Francisco would be required to contract with the Department
of Motor Vehicles (DMV) to collect and administer the fee. San
Francisco would pay DMV for initial setup and programming costs,
and DMV would recover any ongoing administrative costs from the
VLF revenues collected.
-continued-
Page 2
AB 799 (Leno)
Existing law provides that the VLF, which is effectively a
property tax on vehicles, is deductible for both the state and
federal income tax purposes. AB 799 would require the Franchise
Tax Board to estimate the increased amount of tax revenue loss
due to deductibility of this additional VLF for state purposes.
The estimated state revenue loss for the prior year would be
deducted by DMV from the amount of fee revenue collected and
deposited in the General Fund. FTB's costs for determining and
reporting this information would be reimbursed from the VLF
revenues collected by DMV.
STAFF NOTES that the bill currently provides that the local VLF
would be imposed beginning on the first January 1 following
voter approval of the ordinance. In order to allow DMV
sufficient time to contract with San Francisco for the
collection and administration of the fee, make necessary
programming changes, and notify San Francisco vehicle owners of
the additional VLF obligation, STAFF RECOMMENDS an amendment to
specify that local VLF would be imposed as follows:
Beginning the first January 1 following voter approval
of the ordinance at an election that occurs between January
1 and June 30, or
Beginning the first July 1 following voter approval of
the ordinance at an election that occurs between June 30
and December 31
AB 799 would require DMV to annually report specified
information to FTB about each individual or entity that paid
this additional VLF, including taxpayer identification numbers
or social security numbers. STAFF NOTES that DMV does not
currently collect this information on vehicle registration
documents, and notes that such an effort would require
substantial programming costs of over $1 million.