BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          AB 289 (Cedillo)
          
          Hearing Date: 08/25/2011        Amended: 05/24/2011
          Consultant: Mark McKenzie       Policy Vote: G&F 9-0
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          BILL SUMMARY: AB 289 would extend a sales and use tax exemption 
          until January 1, 2019 that applies to sales at thrift stores 
          operated by nonprofit organizations that provides medical, 
          hospice, or social services to persons with human 
          immunodeficiency virus (HIV) or acquired immune deficiency 
          syndrome (AIDS).
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          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14    Fund
           SUT revenue loss       $246       $492        $492      
          General**
                                 $16        $31         $31       Special*
                                 $192       $383        $383      Local**
          ____________           $54        $108        $108      District
          * State Fiscal Recovery Fund
          ** Includes 2011-12 Budget Act shift of 1.0625% from General 
          Fund portion to the Local Revenue Fund of 2011 for public safety 
          realignment purposes.
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          STAFF COMMENTS:  SUSPENSE FILE. 

          Existing law applies the sales and use tax to the sale or use of 
          tangible personal property, unless specifically exempted or 
          excluded.  AB 3187 (Martinez), Chapter 781 of 1996, established 
          a sales and use tax exemption for sales of used clothing, 
          household items, and other retail items sold by thrift stores 
          operated by a nonprofit organization.  To qualify, at least 75 
          percent of the proceeds from thrift store sales fund medical, 
          hospice, or social services to persons with HIV or AIDS.  This 
          exemption has been extended twice and is scheduled to sunset on 
          January 1, 2012.  Certain other thrift stores, such as those 
          operated by Goodwill, the Salvation Army, and St. Vincent de 
          Paul, also qualify for a sales and use tax "welfare" exemption 








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          by meeting a different set of statutory criteria.

          This bill would extend, until January 1, 2019, the sales and use 
          tax exemption that applies to sales of merchandise by thrift 
          stores operated by a nonprofit organization whose purpose is to 
          provide services to persons with HIV or AIDS.

          The Board of Equalization indicates that there are currently 
          three nonprofit organizations operating thrift stores that 
          qualify for the exemption provided in this bill.  These 
          organizations hold seller's permits, file tax returns, and 
          claimed exempt sales of $12.5 million in 2009.  Total sales and 
          use tax revenue losses associated with this magnitude of exempt 
          sales would be approximately $1 million.