Government Finance and Operations 10/04/2013
Vehicle License Fee
AB 701 (Quirk-Silva)
Chapter No. 393, Statutes of 2013
AB 701 by Assembly Member Sharon Quirk-Silva implements an adjustment to Orange County’s Vehicle License Fee Adjustment Amount (VLFAA), and contains intent language that directs the parties involved in Department of Finance v. Grimes to reach a settlement agreement in that case. CSAC supports the resolution of this ongoing dispute between the County and the state.
In 2004, when California cities and counties swapped Vehicle License Fees (VLF) for property taxes, Orange County instead retained a portion its VLF as those revenues were tied to bonded indebtedness associated with the County’s bankruptcy debt. Orange County then was impacted by SB 89 (2011) when those VLF revenues were redirected to fund realigned public safety programs. AB 701 addresses this issue by adjusting the county’s VLFAA for 2013-14 and in the future, as well as setting the path for resolving the litigation in this matter by including intent language directing a settlement that includes a repayment plan over a period of six years.
The Governor signed AB 701 into law on September 27.
AB 619 (Garcia)
Chapter No. 452, Statutes of 2013
AB 619, by Assembly Member Cristina Garcia, applies interest penalties uniformly for underpayments to various state funds. Currently, underpayments to the State Trial Court Construction Fund are penalized at a far higher rate than those for all other funds.
AB 619 makes the state whole for local underpayments by requiring full repayment plus penalties equal to the annual LAIF returns. The LAIF rate is what the money would have earned absent underpayment. The current, higher penalty would continue to apply from thirty days after the underpayment is discovered. If the amount owed is extraordinary, the Controller will now have the authority to work out a payment schedule with the entity that underpaid.
This change to statute not only ensures the state is made whole, but is also fair to counties. The State Controller only audits most counties every few years, and the current high penalty rate is applied annually, so an error made a few years before the discovering audit results in an exorbitant penalty.
The Governor signed AB 619 on October 1.