BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1492
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: leno
VERSION: 4/9/12
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 24, 2012
SUBJECT:
Vehicle license fee: local assessment
DESCRIPTION:
This bill authorizes the City and County of San Francisco to
place on the ballot a measure to impose an additional assessment
on vehicles owned by residents of that county.
ANALYSIS:
Existing state law imposes a vehicle license fee (VLF), which is
in lieu of a personal property tax on California motor vehicles,
at a rate based on the taxable value of the vehicle. The
taxable value of a vehicle is established by the purchase price
of the vehicle, depreciated annually according to a statutory
schedule.
The VLF tax rate is currently 0.65 percent of the value of a
vehicle, but historically it was two percent of the vehicle
value and for a period from May 2009 through July 2011, it was
1.15 percent. For the taxpayer, the VLF is deductible on both
state and federal income taxes.
This bill :
1.Authorizes the Board of Supervisors of the City and County of
San Francisco, by a two-thirds vote, to adopt an ordinance to
place before the voters in that county a measure to levy a
local assessment for general revenue purposes. The local
assessment would be placed on residents of the county for the
privilege of operating a vehicle or trailer coach subject to
the state VLF upon the public streets and highways of the
county. The ordinance may not create different classes of
vehicles based on type, size, fuel consumption, or any other
characteristic for differential taxation.
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2.Specifies that the assessment rate shall be equal to the
difference between the historical
2% state VLF rate and the current state VLF rate, thus
currently allowing imposition of a local assessment rate of
1.35% on the depreciated value of San Francisco's residents'
vehicles (2% minus the state VLF of 0.65%). The resulting
total VLF imposed on residents of San Francisco, if it did
adopt the assessment, would be two percent. The bill provides
for the local assessment to adjust so that San Francisco
residents would always pay two percent, even if the state were
to adjust its rate.
3.Requires that the ordinance proposing the assessment be
submitted to the electorate of the City and County of San
Francisco and approved by a majority of those voting.
4.Permits the San Francisco Board of Supervisors to adopt the
ordinance and the voters to vote on a local assessment prior
to this bill taking effect, provided that the assessment is
not levied until 90 days after the effective date of the bill
and the board ratifies its adoption of the ordinance after the
bill takes effect, but prior to the first levy of the
assessment.
5.Requires San Francisco, if imposing an assessment, to contract
with the Department of Motor Vehicles (DMV) to collect and
administer the fee and to pay DMV for its initial setup and
programming costs.
6.Requires DMV to do all of the following:
i) Collect the local assessment pursuant to a contract with
San Francisco;
ii) Deduct its costs from the assessments collected;
iii) Report to the Franchise Tax Board (FTB) data so
that FTB in turn can report to DMV state revenue losses
resulting from taxpayers deducting the local VLF assessment
authorized by this bill from their personal income tax and
their bank and corporation taxes. DMV shall remit that
amount to the State Controller for deposit in the state
General Fund, ensuring that the implementation of this bill
results in no loss of state revenue; and
iv) Transmit the collected revenues minus these
SB 1492 (LENO) Page 3
deductions to the City and County of San Francisco as
promptly as feasible.
7.Provides that the revenue generated by a local assessment
shall not supplant any monies that the state apportions to the
City and County of San Francisco.
COMMENTS:
1.Purpose . The author notes that while this bill does not
impose a local VLF in San Francisco, it provides the City and
County of San Francisco with the authority to propose a local
assessment measure to San Francisco voters, who would need to
approve it by a majority vote. He notes that key public
services could benefit from the local VLF the bill authorizes
and that these public services are under constant budget
pressures from increasing costs, such as labor, fuel, and
medical expenses, as well as from the expanding need for
public services, such as for homelessness, transit, HIV/AIDS,
and as a result of reduced state and federal funding.
He asserts that the local VLF could be one of the most
important tools available to voters to create livable
communities when local services, programs, and resources are
being cut or eliminated altogether. By ensuring that the
voters have the ability to levy a fee upon themselves to fund
vital services such as police and fire protection, public
health programs, and public transit, this bill gives San
Francisco voters a viable alternative to cutting services.
2.If at first you don't succeed . This is the fifth time this
author has carried legislation to allow the City and County of
San Francisco to impose a local VLF in this manner. Last
year, the author carried SB 223 (Leno), a bill identical to
this one, which Governor Brown vetoed (see next comment).
Last session, he authored SB 10 (Leno), also nearly identical
to this bill, which ultimately died on the Assembly floor. In
two previous sessions, the author carried two very similar
bills while he was serving in the Assembly. They were AB 799
(Leno) of 2005 and AB 1590 (Leno) of 2007. AB 1590 was never
taken up in a Senate policy committee, and Governor
Schwarzenegger vetoed AB 799.
3.Governor's veto just last year . When vetoing last year's SB
223 (Leno), which passed this committee on March 29, 2011 by a
6 to 3 vote, Governor Brown wrote, "Before we embark on a
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piecemeal approach for one city, we should try to fashion a
broader revenue solution to our state's fiscal crisis." The
committee may wish to ask what has changed since October when
the governor issued that veto message, as it appears that
nothing in this bill addresses the "piecemeal approach" the
governor found unacceptable in last year's bill.
4.Opposition . Opponents assert that California motorists are
overtaxed compared to the rest of the nation and note that
this bill would add to that problem. Increasing taxes makes
it more expensive to own or buy a car and exacerbate the
automobile industry's financial difficulties. Finally, the
California Taxpayers Association asserts that this bill must
be approved by a two-thirds vote of the Legislature, due to
the passage of Proposition 26 in 2010, and because the bill is
keyed a majority-vote measure it violates the California
Constitution.
5.Proposition 26 . Proposition 26 requires that any "change in
statute which results in a taxpayer paying a higher tax must
be imposed by an act passed by not less than two-thirds of all
members elected to each of the two houses of the Legislature."
This bill does not result in a taxpayer paying a higher tax
but delegates to the City and County of San Francisco the
authority to put before its voters an increase in the VLF on
vehicles registered to addresses in that county. The bill
does, however, require a two-thirds vote of the San Francisco
Board of Supervisors to place the assessment before the voters
of that county.
6.Constitutionality of local majority vote . The California
Constitution prohibits any local government from imposing,
extending, or increasing any "general tax" unless and until
that tax is submitted to the electorate and approved by a
majority vote. A special tax, in turn, may only be imposed if
that tax is approved by a two-thirds vote of the local
electorate. The California Constitution defines a general tax
as any tax imposed for general governmental purposes, while
the term "special tax" is defined as a tax imposed for
specific purposes. This bill authorizes a county board of
supervisors, by a two-thirds vote, to place before the voters
of the county, an ordinance to levy a local assessment for
general revenue purposes. As such, the ordinance only needs
to be approved by a majority of voters and does not require
the supermajority vote required for special taxes.
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7.Committee of second referral . The Rules Committee referred
this bill to the Governance and Finance Committee and to the
Transportation and Housing Committee. This bill passed that
committee on April 18 by a 6 to 3 vote.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 18,
2012)
SUPPORT: City and County San Francisco
San Francisco Chamber of Commerce
OPPOSED: California New Car Dealers Association
California Taxpayers Association