BILL ANALYSIS
AB 1839
Page 1
Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Anthony J. Portantino, Chair
AB 1839 (Torrico) - As Amended: April 12, 2010
2/3 vote. Fiscal committee.
SUBJECT : School safety: The Safe Schools Initiative: Vehicle
License Fee.
SUMMARY : Establishes the Safe Schools Initiative, under which
the Superintendent of Public Instruction (SPI) shall award
grants to school districts with high schools located in areas
with the highest crime rates. Increases the Vehicle License Fee
(VLF) to fund the Safe Schools Initiative program.
Specifically, the tax-related provisions of this bill :
1)Augment the annual amount of the VLF by 0.025% for vehicles
with a market value of $50,000 or more.
2)Exclude from the additional VLF increase of 0.025% a trailer
or semitrailer, as described in subdivision (a) of Vehicle
Code (VC) Section 5014.1, and a trailer coach that is required
to be moved under permit as authorized in VC Section 35790.
3)Specify that the revenues collected from the 0.025% VLF
increase shall be used to fund the Safe Schools Initiative
program.
EXISTING LAW :
1)Imposes a VLF, which is in lieu of a personal property tax on
California motor vehicles, at a rate based on the taxable
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. Prior to May 19,
2009, the VLF tax rate was set at 0.65% of the value of a
vehicle. For vehicles registered after May 19, 2009 and on or
before June 30, 2011, the VLF rate is temporarily increased to
1.15% [ABx3 3 (Evans), Chapter 18, Statutes of 2009]. The
revenues from the portion of the rate increase from 0.65% to
1% are deposited in the state General Fund (GF), whereas
revenues from the additional increase of 0.15% are dedicated
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to specific local public safety programs and are transferred
to the Local Safety Protection Account.
2)Provides, under Article XI, Section 15 of the California
Constitution, that VLFs collected by the state are allocated
to cities, counties, and cities and counties, less the costs
of collection and any refunds.
3)Allows taxpayers to deduct the VLF amount on their state
income tax returns as an itemized deduction. VLF is also
deductible for federal income tax purposes.
FISCAL EFFECT : Unknown.
COMMENTS :
1)The Author's Statement . The author states, "California's
future economic success depends on the quality of education we
deliver to students. Part of building that success in our
classrooms depends on creating a learning environment that is
safe and secure for all students, regardless of what
neighborhood or community they come from. In these tough
economic times, when budgets are being slashed, we should not
sacrifice campus security, especially in those communities
hardest hit by crime.
'AB 1839 establishes the Safe Schools Initiative Grant program
for 100 high schools in California, with priority given to
those located within communities with the highest crime rates.
This program funded through a partial restoration of the
vehicle license fee for vehicles with a value of $50,000 or
higher, will be administered by the California Department of
Education."
2)The Purpose of this Bill . This bill increases the vehicle
license fee by 0.025% for any vehicle with a market value over
$50,000 to provide grants to 100 high schools located in areas
with the highest crime rates. The author estimates that the
fee increase would generate approximately $10 million to $15
million per year. This bill specifies that the grant money
shall be used to employ at least one police officer to provide
services at the high school or high schools in the district
that qualified the school district for the award. The author
estimates the cost of one police officer to be $100,000. The
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remaining grant funds may be used for other safety initiatives
in conjunction with local law enforcement agencies.
3)The Arguments in Opposition . The opponents of this bill state
that "budgetary earmarks, such as the one proposed in this
bill, are not good fiscal policy. This bill proposes to raise
money with a General Fund tax to pay for a very narrow
program, while other vital General Fund programs are facing
major cuts. General Fund taxes should be allocated to the
General Fund." Furthermore, the opponents argue that the
police presence on school campuses will not decrease
incidences of crime and, instead, will have the unintended
consequence of fast tracking California youth, especially
youth of color, into the criminal justice system. They
advocate for alternatives to policing, such as positive
behavioral interventions.
4)Background . The VLF was established by the Legislature in
1935 in lieu of a property tax on vehicles. The VLF is a
state tax levied on the purchase price of a vehicle, and
subsequently annually assessed against the vehicle's value
adjusted by a statutory depreciation schedule. Proposition
1A, approved by the voters in November 2004, requires that VLF
revenue from the existing 0.65% rate be allocated to support
local health, mental health, and social services costs under
Realignment or, otherwise, allocated to local government.
However, the Legislature may increase the VLF rate, and there
is no restriction on the use of the additional revenue.
In February 2009, the rate of the VLF was temporarily
increased from the current rate of 0.65% to a rate of 1.15%,
except for commercial vehicles with a gross weight of 10,000
pounds or more. Revenues from the portion of the increase
from 0.65% to 1% are retained by the GF and revenues from the
additional increase of 0.15% are transferred to a newly
created Local Safety and Protection Account, which is
continuously appropriated for specific local public safety
programs. The VLF rate increase is effective for
registrations beginning May 19, 2009 (corresponding to the
timing of a weekly VLF billing cycle) and expires on June 30,
2011.
5)Local VLF . In 1993, AB 925 (Burton), Chapter 966, Statues of
1993, authorized the City and County of San Francisco to levy
a 2% VLF for purposes of public transit financing so long as
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transit fares are not increased. The fee requires a
two-thirds vote of the electorate and has never been enacted
by the City and County of San Francisco. At the time it was
estimated that the surcharge could have yielded over $300
million for the City and County of San Francisco. However,
the potential fee has effectively been voided due to a recent
increase in transit fares.
6)General Fund Appropriation or Special Fund Continuous
Appropriation ? While this bill states that the amount of
money collected pursuant to its provisions shall be used to
fund the Safe School Initiative program, it does not specify a
mechanism for transferring the revenues from the GF to the
program. This bill does not create a special fund from which
the money could be continuously appropriated for the program's
purposes nor does it not directly appropriate the funds for
these purposes. It does not establish an account in the GF to
which the revenues could be allocated. Thus, it appears that
the Legislature will have to appropriate annually funds to the
Safe School Initiative program and the amount of that
appropriation will depend on the amount of revenues actually
derived from the additional VLF increase.
The Committee staff suggests that this bill be amended to
create either a special fund or a special account in the GF
from which the money could be continuously appropriated to the
Safe School Initiative program, similar to the appropriation
of revenues derived from the VLF rate increase of 0.15% to
local public safety programs that were implemented as part of
the 2009-10 budget.
7)Deductibility of the VLF for federal and state income tax
purposes . As a personal property tax, the VLF is deductible
for both federal and state income tax purposes. Thus, 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 an additional VLF proposed by this bill,
which means that the state will be providing an indirect
subsidy to the Safe School Initiative program, and will incur
an annual GF loss as a result.
8)2/3 Vote Requirement . While this bill does not expressly
impose a new rate of VLF, it does so by providing that the
annual amount of the VLF "shall be augmented by 0.025%." An
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imposition of an additional 0.025% VLF will require a 2/3 vote
of the membership of each house of the Legislature. Committee
staff suggests a technical amendment to replace the word
"augmented" with "imposed" or "increased."
9)Double Referral . This bill was double-referred to the
Assembly Committee on Education and this committee. On April
7, 2009, the Education Committee voted this bill, as amended,
out on a 5-2 vote. For a more comprehensive analysis of this
bill, please refer to that Committee's analysis.
10)Related Legislation .
AB 2113 (Evans), introduced in the 2009-2010 legislative
session, authorizes a board of supervisors of any county, by
ordinance, to place on the ballot a local personal income tax
(PIT) or local VLF, or both, in accordance with all
constitutional and statutory requirements. AB 2113 is
currently pending in the Assembly Committee on Local
Government.
AB 1342 (Evans), introduced in the 2009-10 legislative
session, would have authorized counties, under specified
circumstances, to adopt a local PIT, a local VLF, or both. AB
1342 died in this Committee.
AB x3 2 2009 (Evans), introduced in the 2009 Third
Extraordinary Session, would have created a $15 annual "parks
pass" fee added to car registration issued or renewed on or
after January 1, 2010, with the revenue deposited in a new
State Parks Access Fund. AB x3 2 died in the Senate.
AB x3 39 2009 (Evans), introduced in the 2009 Third
Extraordinary Session, would have created a $15 annual "parks
pass" fee added to car registration issued or renewed on or
after January 1, 2010, with the revenue deposited in a new
State Parks Access Fund. AB x3 39 died in the Senate.
SB 10 (Leno), introduced in the 2009-10 Legislative Session,
would have authorized county boards of supervisors, by
ordinance, to impose a voter-approved local assessment for
general fund purposes. SB 10 was held under submission in the
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Assembly Committee on Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
Peace Officers Research Association of California
Opposition
American Civil Liberties Union
California Taxpayer's Association
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098