Government Finance and Operations 10/11/2013
Utility User Taxes
AB 792 (Mullin) – Oppose
Chapter No. 534, Statutes of 2013
AB 792 by Assembly Member Kevin Mullin exempts distributed generation energy from utility user taxes (UUTs). Companies that own distributed generation equipment are not currently collecting UUTs from their customers, and they sponsored the bill to exempt their products from the tax.
Distributed generation is the name given to small electricity generators installed where the energy will be used, like solar panels on roofs, for example. The currently popular business model is for the company that installs the equipment to maintain ownership of it and then sell the energy to the homeowner or business.
The property owner benefits from the arrangement because the distributed generation company charges lower rates than the central electric company. The distributed generation company benefits in two ways, first by selling some electricity directly to the property owner, but also by selling the rest of the electricity back to the grid at retail rates.
CSAC opposed AB 792 because the bill implements a state priority using local tax revenues. If the state believes it is a matter of statewide importance, then they should have used statewide revenue to grant yet another benefit to these few companies that already are the recipient of so many other incentives.
The Governor signed AB 792 on Friday, October 4.
AB 300 (Perea) – Support
AB 300, by Assembly Member Henry Perea, would have created a point-of-sale system for collecting state and local charges—including utility user taxes—on prepaid wireless services.
Local agencies that impose a utility user tax on wireless communication are seeing this revenue source slowly fall, despite the ever-increasing number of cell phone subscribers. One reason for this decline in revenue is the increasing popularity of prepaid, non-contract payment plans.
Once associated primarily with users who had bad credit, prepaid wireless plans are becoming a more widespread service model. Due to this business model change, and because counties do not currently collect applicable taxes from prepaid wireless consumers, counties support the development of a system that captures the taxes that are owed on this activity.
However, the bill faced vigorous opposition from the California Public Utilities Commission, who would have essentially lost jurisdiction over collection of the various state charges to the Board of Equalization.
The Governor’s veto message stated that “there is no question that the state needs an effective system for capturing local taxes related to the sale of prepaid phones.” However, he found the method contemplated by the bill “duplicative, complex,” and unnecessarily costly to the state. He encouraged the author to work together with local agencies and affected state agencies to design “a more cost effective solution.”
SB 740 (Padilla) – Support
Chapter No. 522, Statutes of 2013
SB 740, by Senator Alex Padilla, will improve the California Advanced Services Fund (CASF) by broadening eligibility for some funds and increasing the overall funding level.
Ideally, the improved program would not have singled out local governmental agencies for special restrictions, but the increased funding authorization for the program—an additional $90 million—to support last mile projects where they are most needed is critical for the rural counties and overrides concern about those restrictions.
The increased program authorization, which will continue to be funded by a fractional percent on the state’s telecommunication services, will help provide the infrastructure that will allow some of the state’s hardest to reach residents to enjoy the economic benefits of broadband services, which the rest of us have taken for granted for years.
The Governor signed SB 740 on Thursday, October 3.
SB 360 (Padilla) – Support
Chapter No. 602, Statutes of 2013
SB 360, by Senator Alex Padilla, makes various changes to the law to allow a county to devise and test a nonproprietary voting system.
Among the specific changes the bill makes are those that would allow the Secretary of State to conditionally approve a voting system, allow a county to use public funds to develop such a system, and create a process to set the conditions for a pilot program to test the system.
While none of these changes alone represent a revolution in the way elections are run, together they create the opportunity for Los Angeles County to pursue what is frankly a very exciting advance in the administration of elections. Once their system is developed, there is a strong possibility that other counties who are interested could work with LA to implement the system there as well. With these changes, the effort already underway can continue to move forward.
The Governor signed SB 360 on Saturday, October 5.
AB 483 (Ting) – Support
Chapter No. 552, Statutes of 2013
AB 483, by Assembly Member Phil Ting, clarifies certain terms included in Proposition 26.
Specifically, the terms ‘specific benefit’ and ‘specific government service’ were used but not defined in the language that voters added to the California Constitution. Resolving the ambiguity about their meanings in a manner consistent with the clear intent of Proposition 26, as AB 483 does, ensures that local governments may continue to establish and renew tourism marketing districts and business improvement districts, bolstering economic development and job growth throughout the state.
The Governor signed AB 483 on Friday, October 4.
AB 781 (Bocanegra) – Support
Chapter No. 532, Statutes of 2013
AB 781, by Assembly Member Raul Bocanegra, makes it generally illegal to use, own, install, or sell an automated sales suppression device.
The sorts of devices targeted by this bill automatically hide actual sales levels from auditors, cheating both consumers and the public while unjustly enriching tax scofflaws. When unscrupulous Californians skirt their tax responsibilities, the burden of funding public services falls more heavily on those who follow the law.
By prohibiting the sale and installation of sales suppression devices, not only their ownership and use, the bill makes it easier for the Board of Equalization to reduce their use.
The Governor signed AB 781 on Friday, October 4.
AB 1235 (Gordon) – Watch
Assembly Member Rich Gordon’s AB 1235 would have required local agencies’ governing boards to receive financial management training. Such training would have been based on a standardized criteria developed by the State Controller’s Office and State Treasurer’s Office and would be required by officeholders once per term.
In his veto message, Governor Brown cited the potential costs for the state in imposing a state-mandated program.