BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 289
                                                                  Page  1

          Date of Hearing:   May 27, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 289 (Cedillo) - As Amended:  May 24, 2011 

          Policy Committee:                              Revenue and 
          Taxation Committee                            Vote: 8-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill repeals the January 1, 2012 sunset on the sales and 
          use tax exemption for retail items sold by thrift stores 
          operated by nonprofit organizations to assist individuals with 
          human immunodeficiency virus (HIV) or acquired immune deficiency 
          syndrome (AIDS), thereby extending the SUT exemption 
          indefinitely.  This bill also provides that, notwithstanding 
          existing law, the state shall not reimburse any local agency for 
          any SUT revenues lost as a result of this bill.  The bill would 
          sunset on January 1, 2019.

           FISCAL EFFECT

           The BOE estimates that this bill would result in state and local 
          revenue losses of approximately $1 million annually.  

           COMMENTS  

           1)Purpose  .  According to the author "Current law provides an 
            exemption to the Sales and Use Tax Law for retail items sold 
            by thrift stores operated by non-profit organizations, which 
            raise funds for services to HIV or AIDS patients.  This 
            exemption will be repealed on January 1, 2012.  This bill is 
            intended to lift the sunset of such an exemption permanently 
            so that services may still be provided to patients regardless 
            of their ability to pay."  

           2)Support  .  Proponents contend thrift stores rely entirely upon 
            donations to stock their shelves and offer a customer a 
            variety of merchandise at affordable prices.  The sales at 
            thrift stores help the nonprofit organizations to provide free 








                                                                  AB 289
                                                                  Page  2

            or low cost legal assistance, counseling, referral services or 
            direct benefits.  Every sale helps fund vital community 
            resource programs.

           3)Background  .  The BOE notes there are currently three nonprofit 
            organizations operating thrift stores that qualify for this 
            exemption.  These organizations hold seller's permits, file 
            tax returns, and claim exempt sales pursuant to existing law.

           4)There is no registered opposition to this bill.
           

           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081