BILL ANALYSIS
AB 1981
Page 1
ASSEMBLY THIRD READING
AB 1981 (Hill)
As Amended May 28, 2010
Majority vote
NATURAL RESOURCES 9-0 APPROPRIATIONS 12-5
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|Ayes:|Chesbro, Gilmore, |Ayes:|Fuentes, Ammiano, |
| |Brownley, | |Bradford, |
| |De Leon, Hill, Huffman, | |Charles Calderon, Coto, |
| |Knight, Logue Skinner | |Davis, Monning, Ruskin, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
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SUMMARY : Exempts new car dealers from collecting the California
tire fee for each new tire sold with a new or used vehicle, and
instead allows dealers to collect a "vehicle tire fee" only on
new vehicles sold. Specifically, this bill:
1)Exempts new tires sold with a new or used motor vehicle that
is sold by a dealer from the definition of a new tire for
purposes of this bill and thereby exempts dealers from
collecting the tire fee for these tires.
2)Requires dealers to collect a "vehicle tire fee" of $10.50 for
every new vehicle sold before January 1, 2015, and reduces the
fee to $5.50 on and after that date. Exempts used vehicles
sold by dealers from this fee.
3)Specifies that the vehicle tire fee be listed separately from
the tire fee on the conditional sale or lease agreement.
4)Specifies that $5.98 of the vehicle tire fee be deposited into
the Tire Recycling Management Fund (Fund) and $4.52 of the
vehicle tire fee be deposited into the Air Pollution Control
Fund (APCF) until December 31, 2014.
5)Requires, on or before January 1, 2012, the State Board of
AB 1981
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Equalization, in consultation with the State Air Resources
Board and the Department of Resources Recycling and Recovery,
to report to the Legislature concerning the fiscal impacts of
imposing the vehicle tire fee.
6)Makes conforming changes to the Automobile Sales Finance Act.
EXISTING LAW , pursuant to the California Tire Recycling Act,
requires retail sellers of new tires to collect a fee of $1.75
per tire, of which $1.00 is deposited into the Fund to promote
recycling and other alternatives to landfill disposal and
stockpiling of waste tires, and $0.75 is deposited in the APCF
for the mitigation of remediation of air pollution caused by the
decomposition of tires. Beginning January 1, 2015, reduces the
fee to $1.00 to be deposited into the Fund.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs to the Board of Equalization (BOE) of an
unknown amount, but at least several hundred thousand dollars,
to develop a new California vehicle tire fee program,
applicable to new car sellers only (California Tire Recycling
Management Fund (CTRMF)). BOE's work would include
identifying affected vehicle dealers, creating and revising
forms and publications, developing or modifying computer
programs and completing study on effect of fee on revenue.
2)The bill declares the intent that the fee changes be revenue
neutral. The bill may result in increased annual revenue to
the APCF and the CRRMF, or decreased annual revenue to those
funds. However, the vehicle fee is set at an amount to make
increases in revenue more likely that decreases in revenue.
The direction and magnitude of revenue change in a given year
would depend upon the ratio of new vehicle sales to used
vehicle sales and the ratio of used vehicles sold by new
vehicle dealers, which would not be subject to fee, to used
vehicles sold by used vehicle dealers, which would still be
subject to the fee.
COMMENTS : According to the New Car Dealers Association, the
sponsor of this bill, "collection of the existing tire fee has
proved difficult for dealers? especially since this is the only
fee collected from a customer that is not charged on a per
AB 1981
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vehicle basis. Since only new tires are subject to the fee,
dealers must determine whether a new vehicle has a spare tire or
dual rear tires, and, on used vehicles, whether any new tires
were installed on the vehicle prior to sale. Dealers have
difficulty in keeping track of the number of new tires mounted
on vehicles sold and charging customers accordingly, thereby
subjecting dealers to liability and audit costs."
Instead of charging a per tire fee, this bill allows new car
dealers to charge a per vehicle tire fee on new vehicles sold,
and exempts used vehicles sold by a new car dealer from any tire
fee. The author indicates that this bill is intended to be
revenue neutral; however, is extremely difficult to establish
the appropriate level of the fee on new vehicles to offset any
income lost by exempting used vehicles under this bill. The
ratio of new to used vehicles sales changes constantly. When
the economy slows, new vehicle sales decrease substantially and
customers are more likely to purchase less expensive used
vehicles.
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092
FN: 0004702