Government Finance and Operations 04/15/2011
Unreimbursed Tax Exemptions
AB 865 (Nestande) – Oppose Unless Amended
As Introduced on February 17, 2011
AB 865, by Assembly Member Brian Nestande, would extend by 17 years the property tax exemption for newly constructed active solar energy systems.
Counties have no quarrel with the Legislature exempting these projects, which can add significant value to nearly valueless land, from property taxes. However, AB 865 fails to reimburse local agencies for the resulting revenue loss, as provided in statute. Unilaterally using county revenue to favor these projects during times of such fiscal stress seems ill-considered at best. If favoring these projects is an issue of statewide concern, as passing this bill would indicate, then the state should be willing to use statewide revenues to reimburse counties for their losses, as provided by statute.
The Legislature seems unable to resolve the state’s ongoing budget deficit with a balanced approach of program reductions and revenues. A budget solution that relies solely on cuts can only result in catastrophic effects on counties. Over the past three years, counties have laid off thousands of employees, furloughed many more, and eliminated services, despite growing needs in safety net services, all in response to historic declines in their major revenue sources. To, at the same time, further erode county revenues with unreimbursed exemptions such as the one contemplated in AB 865 adds insult to grievous injury.
The Assembly Revenue and Taxation Committee placed AB 865 on its suspense file at its meeting on Monday, April 11.
AB 1007 (Cook) – Oppose Unless Amended
As Introduced on February 18, 2011
AB 1007, by Assembly Member Paul Cook, would exempt purchases of clothes, shoes, sports equipment, and school supplies from the state and local sales and use taxes during three days of each year.
If the state chooses to use its own funds to favor these purchases of clothes, shoes, sports equipment, paper, pens, and the rest during three days in August over the same purchases on other days of the year, counties will not complain. However, counties do take issue with the Legislature unilaterally using county revenues to do so. If favoring these projects is an issue of statewide concern, as passing this bill would indicate, then the state should be willing to use statewide revenues to reimburse counties for their losses, as provided by statute.
The Assembly Revenue and Taxation Committee placed AB 1007 on its suspense file at its meeting on Monday, April 11.
AB 1376 (Nestande) – Neutral
As Amended on April 4, 2011
AB 1376, by Assembly Member Brian Nestande, would exempt from sales and use taxes purchases of anything used for the construction of a renewable energy generation facility. The author recently amended the bill to specify that the exemption does not apply to local sales and use taxes or to transactions and use taxes, removing CSAC’s opposition.
The Assembly Revenue and Taxation Committee placed AB 1376 on its suspense file at its hearing on Monday, April 11.
SB 106 (Blakeslee) – Support
As Introduced on January 13, 2011
SB 106, by Senator Sam Blakeslee, would change statute to say that the state shall pay the costs of legislative vacancy special elections.
A statute to this effect was in effect for many years up through the end of 2008. Since the beginning of 2009, counties have spent at least $20 million to fill eleven vacancies, and more vacancies will need to be filled later this year. SB 106 would cover elections held between January 1, 2009, and April 19, 2011.
The Senate Appropriations Committee did not take up SB 106 as it was expected to do at its hearing on Monday, April 11.
SB 141 (Price) – Support
As Amended on March 17, 2011
SB 141, by Senator Curren Price, is exactly like SB 106, above, except that it does not specify a reimbursement period from January 1, 2009, to April 19, 2011.
The Senate Appropriations Committee passed SB 141 unanimously at its hearing on Monday, April 11.
Use Tax Collection
SB 234 (Hancock) – Support
As Introduced on February 9, 2011
SB 234, by Senator Loni Hancock, would expand the definition of retailers that must collect sales tax to include any retailer upon which federal law and the commerce clause of the U.S. Constitution allow the state to impose that duty. It also removes a specific exclusion from the definition.
The bill aims specifically at internet and mail order companies who predicate their business on avoiding collecting taxes from Californians. Because the companies have no direct physical presence in California, they are therefore not currently required to collect sales and use taxes from Californians who buy items from them. Under current law, the liability for remitting these taxes rests with the consumers, who have an opportunity to announce such liabilities on their personal income tax filings, but who rarely do.
SB 234 aims to reduce the use tax gap caused by the increasing use of the internet by Californians to purchase goods. As such, SB 234 attempts to collect taxes that Californians currently owe but do not pay. A portion of these uncollected taxes would benefit counties.
The Senate Appropriations Committee passed SB 234 on a party-line vote at its hearing on Monday, April 11.
Ballot Measure Fiscal Impacts
AB 1021 (Gordon) – Support
As Introduced on February 18, 2011
AB 1021, by Assembly Member Rich Gordon, would require voter notification when proposed ballot measures would increase net costs by over $1 million per year.
Voters love to decide policy using California’s expansive and inflexible initiative system. Current law requires the Attorney General and the Legislative Analyst to prepare summaries that help voters decide whether to place items on the ballot and whether to pass them when they are on the ballot. These summaries include fiscal effects.
AB 1021 would require these summaries to notify voters when a ballot measure would establish or expand a program costing more than $1 million without providing for new revenue or offsetting savings. Many ballot measures impose costs on counties, and many others that cost the state money put pressure on state funding for programs counties provide on the state’s behalf. Voters should be clearly notified of the effects of their decisions.
The Assembly Elections and Redistricting Committee passed AB 1021 on a party-line vote at its hearing on Tuesday, April 12.