BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 23X1|
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THIRD READING
Bill No: SB 23X1
Author: Senate Budget and Fiscal Review Committee
Amended: 6/2/11
Vote: 21
WITHOUT REFERENCE TO COMMITTEE
SUBJECT : Local taxation: counties: school districts:
community college districts: county offices of
education: general authorization
SOURCE : Author
DIGEST : This bill authorizes counties, cities, any
school district, county offices of education and community
college districts to impose a local personal income tax,
vehicle license fee, transactions and use tax, extractive
business activities tax, oil severance tax, and excise tax,
with voter approval.
ANALYSIS : Under the California Constitution, local taxes
are either general taxes or special taxes. A "general tax"
means any tax imposed for general governmental purposes. A
"special tax" is any tax imposed for specific purposes.
Local general taxes require majority-voter approval.
Special taxes need two-thirds voter approval.
Under the constitutional municipal affairs doctrine,
charter cities can levy taxes which are not preempted by
the state or federal governments. In contrast to a charter
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city, a general law city can impose those taxes allowed by
state statutes. However, the Government Code allows all
general law cities to levy any tax which may be levied by
any charter city unless a different general law limits or
prohibits such a tax. This blanket authority means that a
general law city's authority to tax is similar, but not
identical, to a charter city's authority.
Counties can levy only the local taxes allowed by state
statutes. Unlike charter cities, the charter counties
don't have constitutional authority to levy additional
taxes. Counties can levy utility user taxes, business
license taxes, and transient occupancy (hotel) taxes.
This bill authorizes the governing body of any county or
city and county, school district, county office of
education and community colleges district, subject to
constitutional voter approval requirements, to levy,
increase, or extend the following taxes:
A local personal income tax not to exceed one percent on
any of all of the residents of the county or school
district.
A local vehicle license fee (VLF) not to exceed 1.35
percent.
An additional transactions and use tax which would be
excluded from the current two percent combined county
and city rate limit.
This bill allows for local excise taxes but does not limit
counties and school districts to these taxes.
Specifically, this bill allows:
Alcoholic beverage tax of five cents per five ounces and
at a proportionate rate for any other quantity. The tax
will be imposed on the seller, not the consumer.
Cigarette and tobacco products tax of up to five cents
per cigarette or one dollar per pack.
Oil severance tax not to exceed 10 percent of the gross
value of the product upon a producer for the privilege
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of severing oil from the earth or water in the county
for sale, transport, consumption, storage, profit, or
use, as authorized.
Sweetened beverage tax not to exceed one cent per fluid
ounce.
Local medical marijuana tax.
For the alcohol beverage tax . This bill states that any
tax imposed would not be regulatory within the meeting of
Section 22 of Article XX of the California Constitution,
which pertains to the regulation of the manufacture, sale,
purchase, possession and transportation of alcoholic
beverages.
This bill requires the Board of Equalization (BOE), the
Franchise Tax Board (FTB), and the Department of Motor
Vehicles (DMV) to perform various functions related to the
administration and collection of a local tax if the county
or city and county contracts with the state agency to
perform those functions.
For the oil severance tax . This bill exempts a stripper
well in which the average value of oil as of January 1 of
the prior year is less than $30 per barrel price of
California oil. The Department of Conservation (DOC)
provides notification of all wells that have been certified
as a stripper well. A "stripper well" means a well that
has been certified by the DOC as an oil well incapable of
producing an average of more than 10 barrels of oil per day
during the entire taxable month.
This bill exempts from the local tax all oil owned or
produced by the state and any political subdivision's
proprietary share of oil produced under any unit,
cooperative, or other pooling agreement.
No exemption is provided from payment of an ad valorem tax
related to equipment, material, or other property by reason
of the payment of the gross severance tax pursuant to the
Administrative Procedures Act.
The local tax will be reduced to zero for a period of 10
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years for oil produced from a well that qualifies as a
"hazardous well" or "idle-deserted well") or which has been
inactive for at least the preceding five consecutive years.
The DOC must determine which wells qualify under these
provisions.
Similar Legislation
SB 653 (Steinberg) of 2011 is identical to this bill.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
Local revenue gains Unknown, very major revenue
gains to Local
counties and school districts that impose
one or more local taxes.
FTB one-time costs Unknown significant startup
costs to General
establish procedures and mechanisms for
administering local income taxes
(reimbursement likely impractical)
FTB ongoing costs All ongoing administrative
costs paid Local
by local taxing entities on a
reimbursement basis
BOE one-time costs Unknown significant fixed
startup costs General
that exceed reimbursement authority
BOE ongoing costs Preparatory costs for each
new tax Local
reimbursed as they are incurred, and
ongoing administrative costs reimbursed
upon collection
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DOC: certify stripper Annual costs of up to $3,200
if all General/
wells require certification Special*
DMV: VLF admin. $116 one-time programming costs,Special**
ongoing costs reimbursed by local
tax entities
Tax revenue loss Maximum one-time loss of
$150,000 General
(VLF deductions) if all counties impose 1.35%
VLF
(losses reimbursed in the following year)
* Oil, Gas, and Geothermal Administrative Fund
** Motor Vehicle Account
According to the Senate Appropriations Committee analysis,
total local revenue gains will depend upon the number of
entities imposing a tax, which local taxes are imposed, and
the rates of those taxes. For example, if the following
taxes were imposed statewide at the specified rates, annual
local revenue gains would be:
1% personal income tax on all residents: $8 billion
0.5% transactions and use tax: $2.2 billion
1.35% VLF on all vehicles: $4.6 billion
2% oil severance tax: $378 million
5 cents per cigarette ($1 per pack): $813 million
5 cents per drink alcoholic beverage tax: $16.1 million
Revenue impact of a 1 cent per ounce sweetened beverage
tax is unknown
This bill requires a local taxing entity to contract with
FTB for the administration of a local income tax approved
by voters. FTB indicates that additional staff and General
Fund resources will be necessary to implement this bill
without adversely affecting existing revenue generating
functions. The reimbursement structure established in this
bill requires FTB to incur significant costs until the
local income tax generated new revenues sufficient to
provide reimbursement by the local entity.
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The following support and opposition are listed in SB 653
which is identical to this bill.
Support
American Federation of State, County, Municipal Employees
California Federation of Teachers
California Labor Federation
California Nurses Association
California Public Defenders Association
California School Employees Association
California State Association of Counties
California State Parent, Teacher Association
Laborers' Locals 777 and 792
Los Angeles Unified School District
Peace Officers Research Association
San Bernardino Unified School District
San Diego County Court Employees Association
San Francisco Unified School District
Service Employees International Union, State Council
Yolo County
Opposition
Air Logistics Corporation
American Council of Engineering Companies
Anheuser-Busch Companies Inc.
Association of California Life and Health Insurance
Companies
Association of California Cities - Orange County
Association of California Life and Health Insurance
Companies
California Aerospace Technology Association
California Apartment Association
California Association of Bed and Breakfast Inns
California Attractions and Parks Association
California Automated Vendors Association
California Bankers Association
California Beer and Beverage Distributors
California Business Properties Association
California Cable and Telecommunications Association
California Chamber of Commerce
California Farm Bureau Federation
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California Grocers Association
California Hotel and Lodging Association
California Independent Grocers Association
California Manufacturers and Technology Association
California New Car Dealers Association
California Restaurant Association
California Retailers Association
California Spa and Pool Industry Education Council
California State Automobile Association
California Taxpayers Association
California/Nevada Soft Drink Association
Council on State Taxation
Direct Selling Association
Distilled Spirits Council of the United States
Family Winemakers of California
Granite Construction Incorporated
Grocery Manufacturers Association
Heineken USA
Howard Jarvis Taxpayers Association
Insurance Brokers and Agents of the West
Kern County Board of Supervisors
LAX Coastal Area Chamber of Commerce
Los Angeles County Business Federation
MillerCoors
Motion Picture Association of America
National Association of Theatre Owners of California/Nevada
National Federation of Independent Business
Orange County Board of Supervisors
Personal Insurance Federation of California
San Francisco Chamber of Commerce
San Gabriel Valley Legislative Coalition of Chambers
South Bay Association of Chambers of Commerce
TechAmerica
Vending Plus
Western Growers Association
Western States Petroleum Association
Wine Institute
Worldwide Vending
AGB:kc 6/9/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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