BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: SB 636 HEARING: 4/29/09
AUTHOR: Ashburn FISCAL: No
VERSION: 4/13/09 CONSULTANT:
Weinberger
VEHICLE LICENSE FEES
Background and Existing Law
In lieu of a property tax on motor vehicles, the state
collects an annual Vehicle License Fee (VLF) and allocates
the revenues, minus administrative costs, to cities and
counties. In 1998, the Legislature began cutting the VLF
rate from 2% to 0.65% of a vehicle's value.
The most recent State Budget increased the VLF rate on most
vehicles from 0.65% to 1.15% of a vehicle's value (AB 3xxx,
Evans, 2009). The increased rate takes effect on May 19,
2009 and will last through June 30, 2013 if voters approve
a ballot measure imposing a new state spending cap. If
voters do not approve the spending cap, the increased VLF
rate will only be in effect through June 30, 2011.
Revenues from a portion of the new VLF rate equal to 0.15%
of a vehicle's value must be deposited in the newly created
Local Safety and Protection Account and allocated to local
governments to fund specified local law enforcement
programs.
In March 1996, Nevada County voters approved Measure F, an
ordinance which required that all funds received from the
State of California from motor vehicle license fee funds,
as defined in the State Constitution and in statute, must
be segregated into a separate accounting fund. The County
must spend at least half of those funds in each fiscal year
only for public roads, ways, and highways for maintenance,
repair, circulation enhancement, general road safety, and
fire access.
Nevada County officials believe that Measure F will require
them to make a general fund expenditure on roads in an
amount equal to half of the amount of additional VLF
revenues that are allocated to them for law enforcement
purposes under the new state budget. They want legislators
to clarify that the additional VLF revenues provided to
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local governments under the recently enacted budget do not
constitute VLF funding for the purpose of local ordinances.
Proposed Law
Senate Bill 636 states that the additional revenue
resulting from the increase in Vehicle License Fees enacted
as a part of the State Budget approved by legislators in
February is not revenue derived from taxes imposed pursuant
to the Vehicle License Fee statutes that is subject to
subdivision (a) of Section 15 of Article XI of the
California Constitution, for purposes of a local ordinance
that governs the expenditure of Vehicle License Fee funds
received by a local government agency.
SB 636's provisions sunset on July 1, 2011 unless an
amendment to the California Constitution is approved at a
statewide election held during the 2009 calendar year, that
limits the total amount that, under Section 20 of Article
XVI of the California Constitution, may be transferred by
statute from the Budget Stabilization Account, or any
successor to that account, to the General Fund. (For
example, Proposition 1A on the May 19, 2009 Statewide
Special Election ballot.) If such an amendment is
approved, SB 636 sunsets on July 1, 2013.
Comments
1. Unintended consequences . By replacing state general
funding with VLF funding as the source of state subventions
for local law enforcement programs, the recently approved
State Budget inadvertently requires Nevada County to make
approximately $735,000 in new general fund expenditures on
roads. A voter-approved ordinance requires that Nevada
County spend - on roads - at least half of the VLF funding
the County receives, regardless of the purpose or nature of
that funding. Because the VLF funding from the new State
Budget must be spent on specified public safety programs,
the requisite additional expenditures on roads will come
from the County's General Fund. SB 636 protects the Nevada
County General Fund from this unintended consequence.
2. Only in Nevada County . SB 636 applies generally to
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local ordinances adopted by local government agencies.
Because the interaction between Nevada County's Measure F
and the VLF provisions in this year's State Budget appears
to be unique, the Committee may wish to consider amending
SB 636 to apply only to Nevada County, thereby avoiding any
unintended impacts on other local ordinances.
3. Double referral . The Senate Rules Committee ordered
the double-referral of SB 636; first to the Senate Local
Government Committee and then back to the Rules Committee.
Support and Opposition (4/23/09)
Support : Nevada County.
Opposition : Unknown.