BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 799|
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THIRD READING
Bill No: AB 799
Author: Leno (D)
Amended: 8/22/06 in Senate
Vote: 21
SENATE TRANS. & HOUS. COMMITTEE : 9-2, 6/21/05
AYES: Torlakson, Ashburn, Cedillo, Ducheny, Kehoe,
Lowenthal, Murray, Simitian, Soto
NOES: McClintock, Maldonado
NO VOTE RECORDED: Machado, Margett, Runner
SENATE REVENUE & TAXATION COMMITTEE : 4-3, 6/28/06
AYES: Machado, Alquist, Cedillo, Scott
NOES: Dutton, Poochigian, Runner
SENATE APPROPRIATIONS COMMITTEE : 9-4, 8/17/06
AYES: Murray, Alarcon, Alquist, Ashburn, Escutia, Florez,
Ortiz, Romero, Torlakson
NOES: Aanestad, Battin, Dutton, Poochigian
ASSEMBLY FLOOR : 42-35, 6/2/05 - See last page for vote
SUBJECT : Local vehicle license fee: San Francisco
SOURCE : City and County of San Francisco
DIGEST : This bill authorizes 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 on vehicles owned
by residents of San Francisco.
CONTINUED
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ANALYSIS : Existing law imposes a vehicle license fee
(VLF), which is in lieu of a personal property tax on all
California motor vehicles, at a rate of .65 percent 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 percent
of a vehicle's value, historically the rate was two percent
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:
1. Authorizes 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. Requires that the ordinance proposing the fee be
submitted to the electorate and approved by a majority of
those voting, as specified.
3. Specifies that the VLF rate for residents of San
Francisco would be equal to the difference between the
historical two percent state tax rate and the rate
currently paid to the state by vehicle owners (0.65
percent). Currently, this would impose a local tax rate
of 1.35 percent on the depreciated value of the San
Francisco residents' vehicles. The resulting total VLF
imposed on San Francisco residents would be two percent
(0.65 percent to the state, plus 1.35 percent to San
Francisco).
4. Requires 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. Requires DMV to do all of the following:
A. Collect the local VLF pursuant to its contract
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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.
E. Transmit the collected revenues minus these
deductions to San Francisco as promptly as
feasible.
F. Report annually to the Franchise Tax Board the
Names, addresses, and the amount paid by each
person or entity that paid a tax imposed under this
part in the prior year.
6. Provides that the revenue generated by a VLF imposed in
San Francisco shall not supplant any moneys that the
state apportions to San Francisco.
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.
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AB 925 (Burton), Chapter 966, Statutes of 1993, authorized
San Francisco to levy a surcharge on the two percent 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
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 prog./admin
one-time costs of approximately $1,500 SF*
(paid in advance by SF), ongoing costs
of $100 annually, reimbursed from VLF
revenues
FTB administration $170 annually,
reimbursed from GF
VLF revenues
Tax revenue loss from
annual tax revenue loss of approximately GF
Higher taxpayer $3,000, beginning in the year following
Deduction of VLF on implementation, reimbursed from VLF
Tax returns revenues
*Motor Vehicle Account
SUPPORT : (Verified 8/22/06)
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City and County of San Francisco (source)
American Federation of State County Municipal Employees
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
OPPOSITION : (Verified 8/22/05)
Automobile Club of Southern California
California State Automobile Association
California Taxpayers' Association
Department of Finance
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author's office,
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 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.
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,
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"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."
ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Calderon,
Chan, Chavez, Chu, Cohn, Coto, De La Torre, Dymally,
Evans, Frommer, Goldberg, Hancock, Jones, Karnette,
Klehs, Koretz, Laird, Leno, Levine, Lieber, Matthews,
Montanez, Mullin, Nation, Nava, Oropeza, Parra, Pavley,
Ridley-Thomas, Ruskin, Saldana, Salinas, Torrico, Vargas,
Wolk, Yee, Nunez
NOES: Aghazarian, Benoit, Blakeslee, Bogh, Canciamilla,
Cogdill, Daucher, DeVore, Emmerson, Garcia, Harman,
Haynes, Shirley Horton, Houston, Huff, Keene, La Malfa,
La Suer, Leslie, Maze, McCarthy, Mountjoy, Nakanishi,
Negrete McLeod, Niello, Plescia, Richman, Sharon Runner,
Spitzer, Strickland, Tran, Umberg, Villines, Walters,
Wyland
NO VOTE RECORDED: Gordon, Jerome Horton, Liu
JJA:do 8/22/06 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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