BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1492|
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UNFINISHED BUSINESS
Bill No: SB 1492
Author: Leno (D)
Amended: 8/22/12
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 4/18/12
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
SENATE TRANSPORTATION & HOUSING COMM. : 6-3, 4/24/12
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Rubio,
Simitian
NOES: Gaines, Harman, Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SENATE FLOOR : 22-16, 5/29/12
AYES: Alquist, Calderon, Corbett, De Le�n, DeSaulnier,
Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu,
Lowenthal, Padilla, Pavley, Price, Simitian, Steinberg,
Vargas, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Correa,
Dutton, Emmerson, Fuller, Gaines, Harman, Huff, La Malfa,
Negrete McLeod, Strickland, Walters, Wyland
NO VOTE RECORDED: Rubio, Runner
ASSEMBLY FLOOR : 46-29, 8/27/12 - See last page for vote
SUBJECT : Voter-approved local assessment: vehicles
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SOURCE : San Francisco Chamber of Commerce
DIGEST : This bill authorizes the City and County of San
Francisco (City and County) to impose a vehicle license fee
(VLF). The fee must first be authorized by the Board of
Supervisors and then be placed before the voters of that
county for a vote.
Assembly Amendments (1) create the San Francisco Vehicle
Assessment Fund where the local assessment funds will be
deposited, as specified, (2) add a provision specifying how
reimbursements to the state will be made, (3) require the
Franchise Tax Board (FTB) to make adjustments to estimated
revenue losses based on actual filings and returns and
provide for reimbursement of any differences, and (4) make
other clarifying and technical changes.
ANALYSIS : Existing state law imposes a VLF, 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 1.15% of the value of a
vehicle, but historically the rate has been 2% of value.
Until May 19, 2009, the rate was 0.65%, after the passage
of AB 3X3 (Evans), Chapter 18, Statutes of 2009-10, Third
Extraordinary Session, temporarily increased the VLF rate
to 1.15% and dedicated revenue from the portion of the
increase from 0.65% to 1% to the state General Fund and
revenue from the additional increase of 0.15% to specific
local public safety programs. The bill VLF rate increase
became effective for vehicle registrations on May 19, 2009
and expired on June 30, 2011.
This bill enacts the Local Assessment Act, which authorizes
the City and County to place on the ballot a measure to
impose an additional assessment on vehicles owned by
residents of that City and County. Specifically, this
bill:
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1. Allows the Board of Supervisors of the City and County,
by ordinance, to impose a voter-approved local
assessment for general revenue purposes, if specified
conditions are met, including compliance with specified
provisions of existing law relating to voter approval of
taxes, as follows:
A. The ordinance proposing the assessment is
approved by 2/3 of all members of the Board of
Supervisors;
B. The ordinance proposing the assessment is
submitted to the electorate of the City and County
and is approved by a majority vote of the voters
voting on the ordinance;
C. The Board of Supervisors transmits to the
Department of Motor Vehicles (DMV) and the FTB a
certified copy of the ordinance imposing that
assessment immediately after the results of the
election are certified; and,
D. The ordinance proposing the assessment does not
create different classes of vehicles (whether by
type, size, passenger capacity, value or cost, fuel
consumption or any other characteristic) for
differential taxation (whether by rate, method,
assessment ratio, or any other means), except for
specified VLF exemptions contained in existing law.
2. Requires the ordinance imposing a voter-approved local
assessment to contain the following:
A. A provision that the assessment is imposed for
the privilege of a resident of the City and County to
operate upon the public highways a vehicle or trailer
coach, the registrant of which is subject to tax
under Vehicle License Fee Law;
B. A provision establishing the annual amount of the
assessment at a rate that equals the difference
between the following two rates:
(1) 2% of the market value of the vehicle or
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trailer coach; and,
(2) The rate, including any offset to that
rate, set forth in Vehicle License Fee Law for a
vehicle or trailer coach.
C. A provision that the rate established under the
provision described in #B is subject to both of the
following:
(3) That the rate may not exceed 2% of the
market value of the vehicle or trailer coach; and,
(4) That any adjustment that is required to be
made to the rate because of a change in the rate,
or any offset to that rate, set forth in Vehicle
License Fee Law, shall not take effect until the
first day of the first fiscal year that follows
the fiscal year in which the change to the rate or
offset set forth in that part became operative.
D. A provision that the assessment will begin to be
imposed as follows:
(5) If the election in which the ordinance
receives voter approval occurs between January 1
and June 30, on January 1 following that election;
or,
(6) If the election in which the ordinance
receives voter approval occurs between July 1 and
December 31, on July 1 following that election.
E. Provisions identical to those contained in
Vehicle License Fee Law, insofar as they relate to
VLFs and are applicable, except that the name of the
City and County as the taxing agency shall be
substituted for that of the state;
F. A provision that all amendments, subsequent to
the effective date of the voter-approved local
assessment ordinance, to the section of law relating
to VLFs and not inconsistent with the provisions of
this bill shall automatically be incorporated into
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the voter-approved local assessment ordinance; and,
G. A provision that requires the City and County to
contract with DMV, and requires the contract to
contain provisions in substance as follows:
(7) A requirement that DMV perform all
functions incident to the administration and
collection of the voter-approved local assessment;
(8) A provision specifying the manner in which
refunds as incorporated in the voter-approved
local assessment ordinance will be made and
administered;
(9) A provision that requires the City and
County to pay DMV for the initial setup and
programming costs identified by DMV; and,
(10) A provision specifying how reimbursements
to the state will be made in compliance with #9,
as described below, after the inoperation or
repeal of a voter-approved local assessment.
3. States that any ordinance approved shall be valid and
enforceable, if approved by the Board of Supervisors and
by the voters prior to the effective date of this bill,
but only if both of the following apply:
A. Any assessment imposed pursuant to the approval
of the ordinance is not levied until at least 90 days
after the effective date of this bill; and,
B. The Board of Supervisors ratifies its adoption of
the ordinance after the effective date of this bill
and prior to the first levy of the assessment imposed
pursuant to the approval of the ordinance.
4. Requires DMV to do all of the following:
A. Collect the voter-approved local assessment,
pursuant to a contract with the City and County, and
deposit it into the San Francisco Vehicle Assessment
Fund (which this bill creates) within the State
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Treasury;
B. Calculate the costs of administering the
voter-approved local assessment;
C. From the assessments collected under #A,
calculate the amount necessary to compensate the
General Fund for the estimated loss that is expected
to occur in the next year as a result of the
deductions taken by taxpayers for the VLF under the
Personal Income Tax Law and the Corporation Tax Law,
described in #7, and if necessary adjusted by a
revision of the estimated amount based on actual
filings and returns described in #8;
D. Transmit revenues derived from the assessments
collected under #A above to the City and County, as
promptly as feasible, and clarify the funds necessary
to accomplish the transfer of revenues will be
continuously appropriated; and,
E. Develop with FTB, a reporting process that
enables DMV to report to FTB in a timely manner the
data necessary for FTB to prepare the estimate of
revenue loss from tax deductions.
5. Provides that this bill's provisions should not be
construed to supplant any moneys that the state
apportions to the City and County, as specified.
6. Provides that reimbursement by the state shall not be
made to the City and County for loss in revenue due to a
voter-approved local assessment as specified.
7. Requires the FTB to report to DMV, on or before January
1 of the year that follows a year in which an assessment
was imposed, and annually thereafter, an estimate of the
total amount of the revenue loss to the state from
deductions taken under the Personal Income Tax Law and
the Corporation Tax Law for taxes paid or incurred as a
result of a tax being enacted pursuant to this bill's
provisions.
8. Requires the FTB to report to DMV, on or before January
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1 of the year that follows a year in which an assessment
was imposed, and annually thereafter, a revision of the
applicable estimate described in #7 based on actual
filings and returns.
9. Specifies for any revisions to previous estimates made
by the FTB on or after January 1 following the
inoperation or repeal of a voter-approved local
assessment pursuant to #7 or #8, the following apply:
A. Requires the Controller to reimburse the City and
County from the San Francisco Vehicle Assessment Fund
if FTB's estimate as described in #7 exceeds the
revision described in #8;
B. Requires the City and County to reimburse the
state if the estimate described in #7 is less than
the revision of the estimate described in #8; and,
C. Prohibits any revision of an applicable previous
estimate from being reported to the DMV and requires
it to be reported to the Controller.
10.States that this act shall be known, and cited, as the
Local Assessment Act.
11.Defines several terms related to this bill's
provisions.
12.States that the Legislature finds and declares that a
special law is necessary because numerous groups in the
City and County have requested that authorization be
granted for such an assessment in the City and County.
Comments
AB 925 (Burton), Chapter 966, Statutes of 1993, authorized
the City and County to levy a surcharge on the 2% VLF for
purposes of public transit financing so long as transit
fares are not increased. The fee would have required a
two-third vote of the electorate. It has never been
enacted by the City and County. At the time of its
enactment in the Legislature, it was estimated that the
surcharge could have yielded over $300 million for the City
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and County. However, the potential fee has effectively
been voided due to a recent increase in transit fares.
Prior Legislation
This bill is almost identical to SB 223 (Leno, 2011) which
was vetoed by Governor Brown; the veto message stated:
"Before we embark on a piecemeal approach for one city, we
should try to fashion a broader revenue solution to our
state's fiscal crisis."
SB 10 (Leno, 2010) was similar to SB 223 (Leno, 2011) and
was held in the Assembly.
AB 799 (Leno, 2005) and AB 1590 (Leno, 2007) were both very
similar to this bill. AB 1590 was never taken up in a
Senate policy committee and Governor Schwarzenegger vetoed
AB 799. His veto message read in part:
Within hours of taking office in 2003, I signed an
Executive Order to reverse the car tax increase. That
action returned $4 billion to the people of California.
Putting that money back into the hands of hard working
Californians is one of the ways we have helped our
economy grow over the last three years.
This measure would, in effect, reinstate the car tax for
the people of San Francisco. In fact, if the vehicle
license fee increase proposed by this bill were enacted,
the people of San Francisco could pay more than twice the
amount to register their vehicles than anyone else in the
state.
As noted in my veto messages of prior years, I am not
opposed to modest increases in fees if such increases are
approved by the impacted voters and not addressed in a
piecemeal fashion. Although this bill requires voter
approval, it impacts only one county.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, a net
city and county rate of 1.35% will produce approximately
$128 million for the City and County. This estimate is
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based on a forecast by the Department of Finance of an
estimated gross value of automobiles in California of $352
billion and recent Controller figures on the proportion of
VLF revenues that derive from car registrations in the City
and County, 2.7%.
DMV will incur administrative costs exceeding $100,000
annually which will be reimbursed from the proceeds of the
fees. FTB will incur some costs which are expected to be
minor and absorbable.
The fees paid are deductible from income taxes, resulting
in a loss to the General Fund. However, DMV will reimburse
the state out of fee proceeds in the San Francisco Vehicle
Assessment Fund, eliminating any loss to the General Fund.
SUPPORT : (Verified 8/28/12)
San Francisco Chamber of Commerce (source)
City and County of San Francisco
OPPOSITION : (Verified 8/28/12)
California New Car Dealers Association
California Taxpayer's Association
ARGUMENTS IN SUPPORT : According to the author, "This
bill would give the City and County of San Francisco the
authority to implement a voter approved local assessment, a
fee on the value of motor vehicles registered in the
county, only after the Board of Supervisors has agreed by a
two-thirds vote to allow voters to consider it on a
countywide ballot."
ARGUMENTS IN OPPOSITION : According to the opposition,
"?with the current poor economic climate in our state-high
unemployment, gasoline prices exceeding $4/gallon, weak
income and sales tax revenue and new vehicle sales down at
least 33% from those in the last decade-we believe there
continues to be no reason to further increase the cost of
vehicle ownership in California."
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ASSEMBLY FLOOR : 46-29, 8/27/12
AYES: Allen, Ammiano, Atkins, Beall, Block, Blumenfield,
Bonilla, Bradford, Brownley, Butler, Charles Calderon,
Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng,
Feuer, Fong, Fuentes, Furutani, Gatto, Gordon, Hall,
Hayashi, Roger Hern�ndez, Hill, Hueso, Huffman, Lara,
Bonnie Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan,
Perea, V. Manuel P�rez, Skinner, Solorio, Swanson,
Torres, Wieckowski, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Garrick, Gorell, Grove, Hagman,
Halderman, Harkey, Huber, Jeffries, Jones, Knight, Logue,
Mansoor, Miller, Morrell, Nestande, Nielsen, Norby,
Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Alejo, Buchanan, Galgiani, Portantino,
Williams
AGB:k 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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