BILL ANALYSIS
AB 2533
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Date of Hearing: April 17, 2006
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Johan Klehs, Chair
AB 2533 (Leno) - As Amended: April 17, 2006
Majority vote. Tax Levy. Fiscal Committee.
SUBJECT : Sales and Use Tax: Exemption: Public Art
SUMMARY : Provides an exemption from Sales and Use Tax (SUT) to
works of art leased from one nonprofit organization to another,
or leased by a state or local government. Specifically, this
bill :
1)Exempts from SUT original works of art that are leased from
one nonprofit organization to another nonprofit organization
for 35 years or more, if both the lessor and lessee are
operating museums, as defined.
2)Specifies that this exemption shall apply only to works of art
purchased to become part of the permanent collection of a
museum, a specified nonprofit corporation, any city, county,
city and county, or other local government entity and the
State of California which leases from a governmental entity
public art for display to the public in buildings, parks,
plazas, or other public places. Specifies that these areas
shall be open to the public not less than 20 hours per week
for not less than 35 weeks of the calendar year.
3)Defines "work of art" as a work of visual art, including, but
not limited to, a drawing, painting, mural, fresco, sculpture,
mosaic, film, or photograph, a work of calligraphy, a work of
graphic art, crafts, or mixed media. Provides that:
a) A "work of graphic art" includes, but is not limited to,
an etching, lithograph, offset print, silk screen, or a
work of graphic art of like nature.
b) "Crafts" include, but is not limited to, crafts in clay,
textile, fiber, wood, metal, plastic, glass, costume,
dress, clothing, personal adornment, and like materials.
c) "Mixed media" includes, but is not limited to, a
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collage, assemblage, or any combination of the foregoing
art media.
4)Defines "museum" to only include a museum which has a
significant portion of its space available to the public
without charge, which has a significant portion of its space
available to the public without charge for not less than six
hours during any month the museum is open to the public, or
which is open to a segment of the student or adult population
without charge.
5)Defines "permanent collection", as it applies to leases of
original works of art, as a lease term of 35 years or more.
6)Requires any public entity or nonprofit organization claiming
this exemption to maintain records as prescribed by the Board
of Equalization (BOE), sufficient to substantiate its claim.
The records shall include, but not be limited to, the date of
purchase, the purchase price, the date the property was first
brought into this state, and the dates and locations of the
work of art was on display at a museum.
7)Does not require the state to reimburse any local agency for
any SUT lost as a result of this exemption.
8)Goes into effect immediately but becomes operative on the
first day of the first calendar quarter commencing more than
90 days after the effective date.
EXISTING LAW :
1)Imposes SUT on the gross receipts from the sale or in
California of, or the storage, use, or other consumption in
California of, tangible personal property.
2)Imposes SUT on the leasing of tangible personal property,
based on the rental price.
3)Provides a SUT exemption for sales of original works of art,
as specified, items which have value as museum pieces, as
specified, and certain purchases of public art by the state or
any local government entity for display to the public in
public places, as specified.
4)Does not provide an exemption for long-term leases of original
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works of art from one non-profit organization to another
non-profit organization.
FISCAL EFFECT : BOE staff estimate a state revenue loss of
$23,625 in fiscal year (FY) 2006-07, $18,375 in FY 2007-08, and
$15,750 in FY 2008-09.
Proposition 98 Fiscal Effect : Based upon the anticipated FY
2006-07 Budget, this bill will have no revenue impact on funding
for K-14 schools in FY 2006-07. Committee staff estimate that
the revenue loss to K-14 school funding will be $9,923 in FY
2007-08, and between $6,300 and $9,450 in FY 2008-09.
COMMENTS :
1)According to the author, this bill is intended to expand the
current sales tax exemption to include the long-term lease of
artwork from one non-profit organization to another. Last
year, the Autry Center entered into a long-term collections
sharing agreement with the California Historical Society.
Sixty major paintings and over 600 articles of rare dress and
clothing - all pertaining to California's early history - will
be stored and exhibited by the Autry Center at its Museum of
the American West in Los Angeles. The Autry Center will
assume general curatorial control of the collection, storage
and transit responsibilities, and exhibition space and public
access responsibilities. In return, the Autry Center will
contribute $3.5 million to the California Historical Society,
over a 15 year period. These works of art have largely been
inaccessible to the public for over 75 years.
2)BOE staff identified several technical issues with this bill.
This bill was amended on April 17, 2006 to address these
technical issues.
3)Committee staff note that this bill could set a precedent for
extending sales tax exemptions for leasing agreements of other
goods to non-profits and government entities (such as schools,
fire districts, and police departments, among others).
4)Supporters note that, "[T]his bill will support
collection-sharing efforts and an innovative partnership
between two respected California museums, the California
Historical Society and the Autry National Center, while also
serving as a model for other museums across the state. They
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continue, "Museums contribute significantly to the state's
arts and cultural landscape by serving over 26 million
visitors annually, acting as a repository for California
natural and cultural history, and providing and supporting
educational programs for all ages."
REGISTERED SUPPORT / OPPOSITION :
Support
Autry National Center
California Arts Advocates
California Association of Museums
Opposition
None on file
Analysis Prepared by : Sabrina Landreth / REV. & TAX. / (916)
319-2098