HomeMy WebLinkAboutMINUTES - 06092015 - C.43RECOMMENDATION(S):
ADOPT a "Support" position on SB 120 (Anderson), as amended: Sales and Use Taxes: First Responder Equipment,
a bill that would, in the sale of any public safety first responder vehicle that is purchased by a local public agency and
in the sale of any equipment required on a public safety first responder vehicle that is purchased by a local public
agency, exclude from the terms "gross receipts" and "sales price," amounts of the gross receipts or sales price in
excess of $300,000, as recommended by the Legislation Committee.
FISCAL IMPACT:
Cost savings.
SB 120's exemption cuts costs for one branch of government, but reduces revenues for others. Since the sales tax is
levied by the State, cities, and counties, any exemption from the tax means a loss in revenues to those entities. For
example, if Fire District Z purchases a $100,000 fire engine in neighboring City A, they will save $7,500 in sales and
use tax. City A, where the fire engine was sold, will lose approximately $2,063. The county City A is in will lose
$1,000, and the State General Fund will lose $4,438. In effect, the State, city, and county governments would help
subsidize the purchase of a first responder vehicle.
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 06/09/2015 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I
Supervisor
Candace Andersen, District II
Supervisor
Mary N. Piepho, District III
Supervisor
Karen Mitchoff, District IV
Supervisor
ABSENT:Federal D. Glover, District V
Supervisor
Contact: L. DeLaney, 925-335-1097
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED: June 9, 2015
David Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
C. 43
To:Board of Supervisors
From:LEGISLATION COMMITTEE
Date:June 9, 2015
Contra
Costa
County
Subject:SB 120 (Anderson) Sales and Use Taxes: First Responder Equipment
BACKGROUND:
At its May 7, 2015 meeting, the Legislation Committee considered and accepted the recommendation from the
Fire Chief to recommend a position of "Support" to the Board of Supervisors on SB 120.
Introduced: 01/15/2015
Last Amend: 05/06/2015
Disposition: Pending
Committee: Senate Appropriations Committee
Hearing: 05/18/2015 10:00 am, John L. Burton Hearing Room (4203)
Summary: Excludes, in the sale of any public safety first responder vehicle that is purchased by a local public
agency and in the sale of any equipment on a public safety first responder vehicle that is purchased by a local
public agency, from the terms gross receipts and sales price amounts of the gross receipts or sale price of an
individual item in excess of a specified amount. Defines local public agency as a fire protection district or a fire
department of a city, county, municipal corporation, or district.
Status:
05/18/2015 In SENATE Committee on APPROPRIATIONS: To Suspense File.
.
Background and Existing Law
State law imposes a sales and use tax on the sale, storage, or use of tangible personal property unless exempted by
state law. Generally, nonprofits, public agencies, and charities are subject to sales and use tax, unless otherwise
exempted. Cities and Counties may increase the sales and use tax rate up to 2% as a transactions and use tax for
either specific or general purposes with a vote of the people.
The current state sales and use tax rate on tangible personal property is 7.5% and is imposed as follows:
Rate Jurisdiction Purpose/Authority
3.9375% State (General Fund) State general purposes
1.0625% Local Revenue Fund 2011 Realignment of local public safety services
0.25% State (Fiscal Recovery Fund) Repayment of the Economic Recovery Bonds
0.25% State (Education Protection Account) Schools and community college funding
0.50% State (Local Revenue Fund) Local governments to fund health and welfare programs
0.50% State (Local Public Safety Fund) Local governments to fund public safety services
1.00% Local (City/County) City and county general operations. Dedicated to county transportation purposes
0.75% City and County
0.25% County
7.50% Total Statewide Rate
Proposed Law
Senate Bill 120 exempts purchases in excess of $300,000 of public safety first responder vehicles, and any
required equipment on those vehicles, from sales and use taxes.
The bill defines "local public agency" as a city, county, municipal corporation, district, or public authority located
within this state which provides or may provide first responder emergency services.
This measure does not reimburse local governments for the sales tax loss. As a tax levy, SB 120 takes effect
immediately, but shall not become operative until the first day of the calendar quarter commencing more than 90
days after the effective date of this act.
State Revenue Impact
State Revenue Impact
The Board of Equalization (BOE) estimates that this bill would result in an annual sales and use tax loss of $3
million. This estimate only takes into account purchases of first responder vehicles (fire and ambulance) and any
equipment required on those vehicles.
Comments
1. Purpose of the bill. According to the author, "Our local government first responders are on the front lines
ensuring public safety in our communities. Their efforts are funded with the tax dollars of hard-working families.
Taxpayers expect the taxes they pay to fund first responder services go directly to ensuring public safety. This bill
will ensure that our tax money is spent on providing the best public safety services possible to keep out
communities safe by reducing government public safety first responder's state and local sales tax liability on
emergency vehicles and related emergency equipment to the first $300,000 of the sales price of an individual
item."
2. Precedent. This bill sets a potentially dangerous precedent for extending a sales and use tax exemption to local
government entities. This precedent is of concern for two reasons:
* additional exemptions will result in a greater overall reduction in sales tax revenues; and
* exempting local government entities from sales and use taxes has the potential to reallocate significant amounts
of local sales tax revenue among the state's taxing jurisdictions. (See Comment #3)
3. Effect of Exemption. SB 120's exemption cuts costs for one branch of government, but reduces revenues for
others. Since the sales tax is levied by the State, cities, and counties, any exemption from the tax means a loss in
revenues to those entities. For example, if Fire District Z purchases a $100,000 fire engine in neighboring City A,
they will save $7,500 in sales and use tax. City A, where the fire engine was sold, will lose approximately $2,063.
The county City A is in will lose $1,000, and the State General Fund will lose $4,438. In effect, the State, city,
and county governments would help subsidize the purchase of a first responder vehicle.
4. Let's get clear. SB 120 does not define "public safety first responder." Without a definition, a first responder
could be almost anyone. For example, if a mountain lion is roaming city streets and animal control is called,
animal control would be a public safety first responder, and therefore able to claim the sales and use tax exemption
for the purchase of a new animal control vehicle. Additionally, SB 120 does not explicitly state if each transaction
or each item over $300,000 qualifies for the sales and use tax exemption. The Committee may wish to consider
clarifying the bill's language to carry out the author's intent.
5. Related Legislation. Last year's SB 1367 (Anderson) contained provisions similar to this bill without the
$300,000 threshold. The bill failed passage out of this Committee.
Support and Opposition
(4/23/15)
Support: California State Firefighters' Association (CSFA); Fire Districts Association of California (FDAC);
North Tahoe Fire Protection District.
Opposition: Unknown
CONSEQUENCE OF NEGATIVE ACTION:
Contra Costa County would not have a position on the bill.
ATTACHMENTS
Attachment A - Bill Text
AMENDED IN SENATE MAY 6, 2015
AMENDED IN SENATE MARCH 26, 2015
SENATE BILL No. 120
Introduced by Senator Anderson
(Coauthor: Assembly Member Jones)
January 15, 2015
An act to add Section 6012.4 to the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.
legislative counsel’s digest
SB 120, as amended, Anderson. Sales and use taxes: exclusion: public
safety first responder vehicle and equipment.
Existing sales and use tax laws impose a tax taxes on retailers
measured by the gross receipts from the sale of tangible personal
property sold at retail in this state, or on the storage, use, or other
consumption in this state of tangible personal property purchased from
a retailer for storage, use, or other consumption in this state, measured
by sales price. The Sales and Use Tax Law defines the terms “gross
receipts” and “sales price.”
This bill would, in the sale of any public safety first responder vehicle
that is purchased by a local public agency and in the sale of any
equipment required on a public safety first responder vehicle that is
purchased by a local public agency, exclude from the terms “gross
receipts” and “sales price,” amounts of the gross receipts or sales price
of an individual item in excess of $300,000. The bill, for the purposes
of this exclusion, would define “local public agency” as a fire protection
district or a fire department of a city, county, municipal corporation,
district, or public authority located within this state.
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Attachment A
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes
counties and cities to impose local sales and use taxes in conformity
with the Sales and Use Tax Law, and existing law authorizes districts,
as specified, to impose transactions and use taxes in accordance with
the Transactions and Use Tax Law, which generally conforms to the
Sales and Use Tax Law. Amendments to state sales and use taxes are
incorporated into these laws.
Section 2230 of the Revenue and Taxation Code provides that the
state will reimburse counties and cities for revenue losses caused by
the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse any local agencies for sales and use tax revenues
lost by them pursuant to this bill.
This bill would take effect immediately as a tax levy, but its operative
date would depend on its effective date.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no.
The people of the State of California do enact as follows:
line 1 SECTION 1. Section 6012.4 is added to the Revenue and
line 2 Taxation Code, to read:
line 3 6012.4. (a) (1) For purposes of this part, “gross receipts” and
line 4 “sales price” shall not include amounts of the gross receipts or
line 5 sales price of an individual item in excess of three hundred
line 6 thousand dollars ($300,000) from the sale in this state of, and the
line 7 storage, use, or other consumption in this state of, any public safety
line 8 first responder vehicle purchased by a local public agency.
line 9 (2) For purposes of this part, “gross receipts” and “sales price”
line 10 shall not include amounts of the gross receipts or sales price above
line 11 of an individual item in excess of three hundred thousand dollars
line 12 ($300,000) from the sale in this state of, and the storage, use, or
line 13 other consumption in this state of, any equipment required on a
line 14 public safety first responder vehicle, that is purchased by a local
line 15 public agency.
line 16 (b) “Local For the purposes of this section, “local public
line 17 agency” means any a fire protection district or a fire department
line 18 of a city, county, municipal corporation, district, or public authority
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— 2 —SB 120
Attachment A
line 1 located within this state that provides or may provide first
line 2 responder emergency services. state.
line 3 SEC. 2. Notwithstanding Section 2230 of the Revenue and
line 4 Taxation Code, no appropriation is made by this act and the state
line 5 shall not reimburse any local agency for any sales and use tax
line 6 revenues lost by it under this act.
line 7 SEC. 3. This act provides for a tax levy within the meaning of
line 8 Article IV of the Constitution and shall go into immediate effect.
line 9 However, the provisions of this act shall become operative on the
line 10 first day of the first calendar quarter commencing more than 90
line 11 days after the effective date of this act.
O
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SB 120— 3 — Attachment A