BILL ANALYSIS
AB 799
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 799 (Leno)
As Amended August 22, 2006
Majority vote
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|ASSEMBLY: |42-35|(June 2, 2005) |SENATE: |25-14|(August 23, |
| | | | | |2006) |
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Original Committee Reference: L. GOV.
SUMMARY : Authorizes 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.
The Senate amendments :
1)Specify that the VLF could begin to be imposed either on the
first January 1 following the election or on the first July 1
following the election, depending on whether the election in
which the ordinance receives voter approval occurs in the
first or second half of the year.
2)Require the Department of Motor Vehicles (DMV) to report
annually, rather than monthly, to the state Franchise Tax
Board (FTB) the name, address, taxpayer identification number
or social security number, and amount paid for each person
that paid the local-option VLF in the prior year.
EXISTING LAW imposes a VLF in lieu of a personal property tax on
all California motor vehicles at a rate of .65% of the
depreciated value of the vehicle.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)The additional VLF authorized by this measure would raise
approximately $75 million annually for San Francisco.
2)One-time set-up costs to DMV of approximately $1.5 million and
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annual costs in the range of $100,000, but these costs would
be reimbursed from San Francisco's VLF revenues.
3)Approximately $170,000 annually for FTB administration, which
would be reimbursed from the VLF revenues.
4)General Fund revenue losses of approximately $3 million
annually, beginning in the year following implementation,
resulting from higher deductions of VLF payments on tax
returns. This loss would also be reimbursed by the VLF
revenues.
COMMENTS : Existing law imposes an annual VLF (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 depreciated value, but was
permanently reduced to 0.65% pursuant to the enactment of SB
1096 (Committee on Budget and Fiscal Review), Chapter 211,
Statutes of 2004.
This bill 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. With the current state VLF rate of 0.65%, the local rate
would thus be 1.35%. Revenues collected would be for general
purposes, so the ordinance would require a majority vote. San
Francisco would be required to contract with 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.
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. For those who itemize deductions,
up to 40% of the additional VLF would effectively be borne by
the state and federal governments in the form of reduced income
tax payments. The same would be true of a local VLF such as
that proposed by this bill. This bill would require FTB 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
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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.
According to the author, the VLF is one of San Francisco's
largest sources of general-purpose tax revenues. These revenues
fund vital city programs, including public safety, public
health, social services, fire protection, public works and
cultural activities. If San Francisco chooses to use this local
VLF option, the Senate Appropriations Committee estimates that
an additional $75 million would be brought in above and beyond
what San Francisco currently receives. Any enactment of San
Francisco's local option VLF is applicable only up to 2% of the
depreciated value of registered vehicles. This measure does not
apply in the event that the state rate meets or exceeds 2%. The
author asserts that by ensuring that the people of San Francisco
have the ability to control their own revenues, this proposal
gives San Francisco voters a viable alternative to cutting
services at a time when the City and County is facing a severe
budget shortfall.
Analysis Prepared by : Anya Lawler / L. GOV. / (916) 319-3958
FN: 0017094