BILL ANALYSIS
SB 348
Page 1
SENATE THIRD READING
SB 348 (Cogdill)
As Amended July 14, 2009
2/3 vote. Urgency
SENATE VOTE :37-0
JUDICIARY 10-0
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|Ayes:|Feuer, Tran, Brownley, | | |
| |Evans, Jones, Knight, | | |
| |Krekorian, Lieu, Monning, | | |
| |Silva | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Changes how car rental companies are permitted to
impose vehicle license fee (VLF) charges on customers.
Specifically, this bill :
1)Defines "increased vehicle license recovery fee" to mean a
charge that is designed to recover the amount of increased VLF
actually paid by a rental company for the class of vehicle
rented. Permits this fee to be unbundled and separately
advertised, quoted, and charged.
2)Deletes existing law which provides that the yearly amount
that may be charged to consumers for the increased VLF be
pro-rated based on the annual VLF paid by the rental company
for the particular vehicle being rented, and would instead
provide that the amount of the fee shall reflect the increased
VLF prorated across on the general class of vehicles covering
the particular vehicle being rented. The amount that may be
charged for each vehicle is to be the average of the total VLF
increase paid by the rental company for the number of vehicles
in that vehicle's class.
3)Provides that the total of all increased vehicle license fees
charged to customers by the rental company for each class of
vehicle shall not exceed the total of increased vehicle
license recovery fees actually paid for vehicles in those
classes on an annual basis.
SB 348
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4)Revises the formula and timing for calculation of the amount
of the VLF increase that may be charged directly to consumers.
FISCAL EFFECT : None
COMMENTS : The author explains the reason for the bill as
follows, "Senate Bill 348 makes several changes to SB 10xx which
was passed as part of the February 2009 Budget deal. In passing
SB 10 xx the Legislature intended to allow rental car companies
to "pass-through" the costs associated with the VLF increase.
However, several provisions of SB 10 xx make it nearly
impossible for rental car companies to do so. SB 348 makes
changes to these provisions n a manner that allows rental car
companies to utilize the pass-through while also ensuring that
customers are protected. Existing law requires rental car
companies to bundle, or include, the VLF paid in the rental rate
that is advertised, quoted, and charged to rental car customers.
As a part of the 2009 Budget Act, the VLF was increased
temporarily from the current rate of 0.65 percent to a rate of
1.15 percent. Beginning May 21, 2009, rental car companies are
permitted to separately state a portion of the increased VLF as
an unbundled charge that is not included with the current
bundled rental rate. This bill, which was introduced at the
request of several rental car companies, would revise how this
charge is calculated and allow rental car companies to recover
from rental car customers the actual costs incurred by the
companies for the payment of the increased VLF."
As the author notes, existing law authorizes rental car
companies to "pass through" the VLF increase that was approved
as part of the February 2009 budget deal. For practical
purposes, the customer pass-through allows rental car companies
to include the amount of the VLF increase as a separate line
item on a customer's bill. The rental car companies argue that
SB 10xx requires them to know at the time of the reservation
which particular car will be assigned to the customer when the
rental commences, which they claim is impossible since most
customers reserve rental cars days or even weeks prior to the
rental period. Since customers reserve a class of car rather
than a specific vehicle, SB 348 responds to these predicaments
by permitting rental companies to base their VLF recovery fee on
how much more they pay to license their fleets per year instead
of calculating the increased costs car-by-car.
SB 348
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Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0001893