BILL ANALYSIS
AB 2533
Page 1
Date of Hearing: April 26, 2006
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 2533 (Leno) - As Amended: April 17, 2006
Policy Committee: Revenue and
Taxation Vote: 7-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill clarifies that the existing exemption from the Sales
and Use Tax that applies to the purchase of original works of
art by governmental entities and nonprofit organizations also
includes leases of original works of art leased for a term of 35
years or more between one nonprofit museum and another. The
bill further clarifies that costumes, dresses, clothing and
personal adornments are defined as "works of art" for purposes
of the exemption.
FISCAL EFFECT
The BOE identifies only one lease that would be affected by this
bill, the 15-year, $3.5 million lease between the Autry Center
and the California Historical Society (discussed below). BOE
staff indicates that it is not clear whether or not BOE's
auditors would find that this lease is taxable under current
law. Assuming that the City and County of San Francisco's
combined sales and use tax rate of 8.5% would apply to the
lease, this bill would result in the following state and local
revenue losses:
1)State General Fund revenue losses of $28,305 in 2006-07,
$22,015 in 2007-08, $18,870 in 2008-09 and $12,580 in 2009-10
and each of the succeeding 10 fiscal years.
2)Local revenue losses to the City and County of San Francisco
of $9,945 in 2006-07, $7,735 in 2007-08, $6,630 in 2008-09 and
$4,420 in 2009-10 and each of the succeeding 10 fiscal years.
The bill provides that notwithstanding the requirement in
Revenue and Taxation Code 2230 for the state to reimburse
AB 2533
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local sales and use tax losses arising from each statute
enacted after January 1, 1973, the state will not reimburse
local revenue losses arising from this bill.
COMMENTS
1)Background . Revenue and Taxation Code 6365 exempts from the
sales and use tax sales of original works of art which are
purchased by a governmental entity, a nonprofit organization
operating a museum under contract for a governmental entity, a
tax-exempt nonprofit entity that purchased the work of art for
display in a museum open to the public, or any donation of art
to a governmental entity or nonprofit organizations.
2)Purpose. This bill clarifies that the current sales tax
exemption 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.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081