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HomeMy WebLinkAboutMINUTES - 06162015 - C.37RECOMMENDATION(S): ADOPT the following legislative position: "SUPPORT" Senate Bill 321 (Beall), a bill that would require that the State Board of Equalization, for both the coming (2015-2016) and future Fiscal Years, be required to use averaging of past, known fuel prices along with a future forecast to set motor fuel excise tax rates. FISCAL IMPACT: None to the County and none to the State. The subject bill is revenue neutral. BACKGROUND: The Transportation, Water, and Infrastructure Committee (TWIC), based on our State Legislative Platform(1) and discussion at the June 1, 2015 Committee meeting, is recommending a "Support" position to the Board of Supervisors on Senate Bill 321. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 06/16/2015 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: John Cunningham (925) 674-7833 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 16, 2015 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: C. 37 To:Board of Supervisors From:TRANSPORTATION, WATER & INFRASTRUCTURE COMMITTEE Date:June 16, 2015 Contra Costa County Subject:LEGISLATIVE POSITION OF "SUPPORT": SB 321 (Beall) BACKGROUND: (CONT'D) > Below is the status of the bill and the analysis from the 5/27/15 Senate Governance and Finance Committee: Title: Motor Vehicle Fuel Taxes: Rates: Adjustments Introduced : 02/23/2015 Last Amend: 05/27/2015 Disposition : Pending Location : ASSEMBLY Status (06/01/2015): In SENATE. Read third time. Passed SENATE. To ASSEMBLY. 1) Require the State Board of Equalization (BOE) to adjust the excise tax rate based on a five-year average that relies on fuel price data from the immediately preceding four years and estimated fuel prices for the current fiscal year to generate a forecasted fuel price that is weighted primarily by known fuel price data. That adjusted rate must be determined by July 1, 2015, and that rate would be effective for fiscal year (FY) 2015-16, 2) Require that the BOE follow the same estimate methodology as above, but the rate be adjusted by March 1 of the fiscal year immediately preceding the applicable fiscal year, beginning FY 2016-17, and 3) Allow BOE to adjust the rate before March 1, but not sooner than six months between the intervening adjustments, if changes in either fuel prices or consumption in the state occur. As stated in the fiscal impact section of this report, SB 321 is revenue neutral; it reduces volatility by smoothing revenue spikes, negative or positive. An analysis of past gasoline sales and corresponding tax generation shows that if the methodology proposed in SB 321 was used it would have 1) generated the same amount of revenue as the current methodology, and 2) that revenue flow would stabilize. This stability helps consumers, the public sector, and the private sector. In the short term, SB 321 will prevent a substantial decrease in transportation funding in 2015-16 and reduce drastic rate hikes in the future. In February the Board of Equalization significantly reduced the gasoline excise tax for 2015-16 for two reasons: 1) they had set a rate that was too high in 2013-14, and 2) there was a significant decrease in the price of gasoline around that time. SB 321 would address both of these issues by tempering increases/decreases in the rate and looking at historical price data in addition to considering current and projected gas prices. The full text of the subject bill is attached, as well as the latest Senate analysis. 2015 Contra Costa County - State Legislative Platform (1) Transportation Issues 144. SUPPORT increased flexibility in the use of transportation funds. General Revenues/Finance Issues 48. SUPPORT state actions that maximize Federal and State revenues for county-run services and programs. CONSEQUENCE OF NEGATIVE ACTION: By not taking the recommended actions, the Board of Supervisors may forgo an opportunity to further its legislative platform. ATTACHMENTS Sample Support Letter SB 321 Senate Floor Analyses (5-31-15) SB321 Text-SB321 (Beall) Motor Vehicle Fuel Taxes-Rates Adj Txt SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 SB 321 THIRD READING Bill No: SB 321 Author: Beall (D) Amended : 5/27/15 Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/15/15 AYES: Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 SUBJECT: Motor vehicle fuel taxes: rates: adjustments SOURCE: Author DIGEST: This bill changes the methodology used to determine the fuel tax rates . Senate Floor Amendments of 5/27/15 remove the urgency clause from the bill. ANALYSIS: Existing law: 1) Requires the Board of Equalization (BOE) to annually adjust the gasoline and diesel fuel excise tax rates either upward or downward. For gasoline, the BOE determines: (a) whether the sales and use tax revenue loss related to the partial exemption was fully offset by the adjusted rate, and (b ) the projected sales and use tax revenue loss for the next fiscal year, considering forecasted gasoline prices and consumption. For diesel fuel, the BOE determines: (a) whether the revenue gain from the increased sales and use tax rate on diesel fuel sales and purchases was fully offset by the adjusted diesel fuel excise tax rate, and (b ) the projected sales and use tax revenue gain for the next fiscal year, considering forecasted diesel fuel prices and consumption. By March 1 each year, the BOE must determine the rate adjustments, and the adjusted rate applies on the following July 1. SB 321 Page 2 2) Requires BOE to maintain revenue neutrality, so that the revenues derived from the increased gasoline excise tax and the increased diesel sales and use tax equals the revenues that would have been derived had the gasoline sales and use tax partial exemption and the diesel fuel excise tax reduction, respectively, not occurred. 3) Requires BOE Members approve these rates annually in a public meeting. This bill: 1) Requires BOE to adjust the excise tax rate based on a five-year average that relies on fuel price data, from the immediately preceding four years and estimated fuel prices for the current fiscal year, to generate a forecasted fuel price that is weighted primarily by known fuel price dat a. That adjusted rate must be determined by July 1, 2015, and that rate would be effective for fiscal year (FY) 2015-16. 2) Requires BOE follow the same estimate methodology as above, but the rate be adjusted by March 1 of the fiscal year immediately prece ding the applicable fiscal year, beginning FY 2016-17. 3) Allows BOE to adjust the rate before March 1, but not sooner than six months between the intervening adjustments, if changes in either fuel prices or consumption in the state occur. Background In 2010, the Legislature enacted two “fuel tax swap” measures that changed the imposition and rates of state taxes on gasoline and diesel fuel, and required the BOE to annually determine the appropriate excise tax rate adjustments to maintain revenue neutrality (ABX8-6, Committee on Budget, Chapter 11) and (SB 70, Committee on Budget and Fiscal Review, Chapter 9). The gasoline tax changes became operative on July 1, 2010, and the diesel fuel tax changes on July 1, 2011. The fuel tax swap was partly enacted, to allow the use of additional existing transportation revenue for highway purposes, including General Obligation bond debt service, where that debt service was related to transportation projects. The swap bills exempted sales and purchases of gasoline from the state sales and use tax rate. To offset the revenue loss related to this partial exemption, the law increased the gasoline excise tax rate from $0.18 per gallon to $0.353 per gallon. Conversely, the measure reduced the diesel fuel excise tax rat e from $0.18 to $0.13 SB 321 Page 3 per gallon, but increased the sales and use tax rate on diesel fuel sales to offset the loss related from the reduction, resulting in the following rates: •1.87%, effective July 1, 2011, •2.17%, effective July 1, 2012, •1.94%, effective July 1, 2013, •1.75%, effective July 1, 2014, and thereafter. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No SUPPORT: (Verified 5/29/15) Associated General Contractors California Alliance for Jobs California Association of Councils of Government California State Association of Counties California Transit Association California Transportation Commission City of Crescent City City of Lakewood City of Rolling Hills Estates City of Saratoga County of Los Angeles Glendale City Employees Association League of California Cities Orange County Transportation Authority Organization of SMUD Employees Rural County Representatives of Califo rnia San Bernardino Public Employees Association San Diego County Court Employees Association San Luis Obispo County Employees Association Santa Clara Valley Transportation Authority Self-Help Counties Coalition State Board of Equalization Transportation Agency for Monterey County Transportation California Urban Counties Caucus OPPOSITION: (Verified 5/29/15) SB 321 Page 4 None received ARGUMENTS IN SUPPORT: According to the author, “The Board of Equalization (BOE) annually adjusts the price-based portion of the excise tax on gasoline in order to collect roughly the same amount of revenue, as the state would have collected if it still charged a sales tax on gasoline. Difficulty in forecasting gas prices inevitably results in either over- or under-collecting revenue and future adjustments must reconcile this discrepancy. The reconciling adjustment, or “true up,” leads to volatility from year to year. Uncertainty, in future revenue puts a significant strain on state and local governments when preparing their multiyear transportation budgets. SB 321 makes changes to the administrative process, for setting the price-based excise tax in order to give BOE the tools necessary to reduce the overall volatility of this revenue.” Prepared by: Myriam Bouaziz / GOV. & F. / (916) 651-4119 5/31/15 13:51:22 **** END **** 2015 CA S 321 Author:Beall Version:Amended Version Date:05/27/2015 An act to amend Se cti on 7360 of th e Revenue and Ta xation Code, re l ating to taxation , and declaring the urgency thereof, to take effe ct immediately. taxation. LEGISLATIVE COUNSEL'S DIGEST SB 321, as amended, Beall. Mo tor vehicle fuel ta xes: rates: adjustments. Existing law, as of July 1, 20 10, exempts the  sale of, and the  storage, use, or oth er consumptio n of, motor vehicle fuel from specified sales and use taxes and increa ses the excise  tax on motor ve hicle fuel, as pro vi ded. Existing law requires the State  Board of Equ alization, for the  2011­12 fiscal year and each fiscal year there after, on or before March 1 of the fiscal year imme diately preceding th e applicable fiscal year, to adjust the motor vehicle fuel tax rate in a manner as to g enerate an amo unt of revenue eq ual to the amo unt of revenue loss attributable to the sale s and use tax exemption on mo tor vehicle fuel, b ased on estima tes made by the  board. Existing law also requ i res, in order to ma i ntain revenue for each year, the  board to take i nto account actu al net revenue ga i n or loss for the fisca l  year ending prio r to the rate adjustment date. Existin g law require s this adjusted ra te to be effective d uring the state's next fiscal yea r. This bill for th e 2015­16 fiscal year and each fiscal year therea fter would, instea d require the bo ard, on or before July 1, 2015, o r March 1 of the fiscal year imme diately preceding th e applicable fiscal  year, as sp ecified, to adjust the ra te in a manner as to generate an amount of reven ue equal to the amount of reven ue loss attributable to the exemp ti on, based on  estimates made  by the board that reflect the combin ed average of the  actual fuel price  over the previo us 4 fiscal years and the estimated  fuel price for th e current fiscal ye ar, and contin uing to take into  account adjustments required by existing law to maintain reven ue neutrality for ea ch year. This bill w ould also authorize , i f, due to clear changes in eithe r fuel prices or consumption in the state, the board makes a determin ation that the a mount of revenue  being generate d by the motor vehicle fuel tax will be significantly different than the estimates made by the boa rd, the board to a djust the rate more frequently tha n annually, but no  more frequently th an every 6 mo nths in order to re duce the pote ntial volatility of the revenues. This bill w ould declare that it is to take effect immediately as an  urgency statute . Vote Require d: TWO THIR D S MAJORITY Ap propriation: NO Fiscal Committee: YES Local Program: NO Immed i ate Effect NO U rgency: NO Tax Le vy: NO Election : NO Usual Current Expenses: N O Budget Bill: N O Prop 25 Traile r Bi l l: NO The people o f the State of Ca l i fornia do enact as follows: Adde d: Green underl i ned text Deleted: Dark red text with a strikethro ugh Ve toe d: Red text AMENDED IN  SENATE March 2 6, 2015 AMENDED IN  SENATE April 2 3, 2015 AMENDED IN SENATE May 27 , 2015 CALIFORNIA LEGISLATURE­­2015­2016 REGULAR SESSION Senate Bill No. 321 Introduced by Senator Beall Febru ary 23, 2015 SECTION 1 . Section 7360 of the Revenue an d Taxation Cod e is amended to re ad: 7360. (a) (1 ) A tax of eighteen  cents ($0.18) i s hereby imposed upon each ga l l on of fuel subje ct to the tax in Sectio ns 7362, 7363, an d 7364. (2) If the fe deral fuel tax is reduced below the rate of nine cen ts ($0.09) per ga l l on and federal fin ancial allocatio ns to this state  for highway an d exclusive public mass transit g uideway purposes a re reduced or e l i minated corre spondingly, the tax rate imposed by paragraph (1), on and after the d ate of the red uction, shall be recalculated by an amount so that the  combined state  rate under paragraph (1) and the  federal tax rate pe r gallon equal twenty­seven cents ($0.27). (3) If any p erson or entity is exempt or partially exempt from the  federal fuel ta x at the time of a reduction, the perso n or entity shall co ntinue to be so  exempt under this section. (b) (1) On an d after July 1, 20 10, in addition  to the tax impose d by subdivision (a), a tax is here by imposed upon  each gallon of motor vehicle fuel, other than aviatio n gasoline, sub j ect to the tax in Sections 7362, 7 363, and 7364 in an a mount equal to seventeen and th ree­tenths cents ($0.173) per gallo n. (2) (A) For the  2011­12 fisca l  year to the 20 14­15 fiscal year, inclusive, the bo ard shall, on or be fore March 1 of the fiscal year immediately preceding  the applicable  fi scal year, adjust the rate in paragraph (1) in that manner as to gene rate an amount o f revenue that w i l l  equal the amoun t of revenue lo ss attributable to  the exemption pro vi ded by Sectio n 6357.7, based o n estimates mad e by the board, and that rate sha l l  be effective duri ng the state's next fiscal year. (B) For the  2015­16 fiscal year, the board sh all, on or before Ju l y 1, 2015, adju st the rate in pa ragraph (1) in that ma nner as to generate an amount of revenue that will equal the amo unt of revenue loss attributable to the exemption provid ed by Section 635 7.7, based on  estimates made  by the board that reflect the combin ed average of the actual fuel price o ver the previous four fiscal years and the estima ted fuel price for the  current fiscal year, and that ra te shall be effective during the 20 15­16 fiscal yea r. (C) For the 20 16­17 fiscal yea r and each fisca l  year thereafter, the board sha l l , on or before Ma rch 1 of the fisca l  year immediately preceding the a pplicable fiscal year, adjust the ra te in paragraph  (1) in that manne r as to gene rate an amount o f revenue that w i l l  equal the amoun t of revenue lo ss attributable to  the exemption pro vi ded by Sectio n 6357.7, based o n estimates mad e by the board that reflect the combined averag e of the actual fu el price over the previo us four fiscal years and the estima ted fuel price fo r the current fiscal year, and that ra te shall be effective during the state's next fiscal yea r. (3) In order to maintain revenu e neutrality, ne utrality for each  year, beginning with the rate adju stment on or before March 1, 2012, th e adjustment u nder paragraph (2) shall also take  i nto account the  extent to which the actual amou nt of revenues deri ved pursuant to this subdivision a nd, as applicab l e, Section 73 61.1, the revenue  l oss attribu table to the exe mption provided b y Section 6357.7 resulted in a ne t revenue gain or l oss for the fiscal year ending prior to the rate adjustme nt date on or before March 1. (4) If, due to clear changes in ei ther fuel price s or consumptio n in the state, the  board makes a determination that the  amount of revenue being gen era ted by the tax imposed by this section will be si gnificantly differe nt than the estimate s made by the b oard, the board  may adjust the rate in paragrap h (1) more frequen tl y than annua l l y, but no more frequ ently than every si x months in ord er to reduce the p otential volatility of the revenues. (5) The inten t of paragraphs (2) and (3) is to en sure that Chap ter 6 of the Statute s of 2011, which added this subdivision and Sectio n 6357.7, does no t produce a n et revenue gain in  state taxes. (6) It is the in tent of the Leg i sl ature that the amendments mad e by the act add i ng this paragrap h does not prod uce a net revenue  gain in state taxe s. Revenue neu trality, as used in this section, do es not refer to reve nues gene rated in any particu l ar fiscal year, bu t instead mean s that, over a re asonable period  of fiscal years, the actual amou nt of revenues deri ved pursuant to this subdivision is equal to the estimated amoun t of revenue loss attributable to the exe mption provid ed by Section 635 7.7. SEC. 2. This act is an urge ncy statute necessa ry for the imme diate preservation  of the public pe ace, health, or safety within the mea ning of Article IV o f the Constitution a nd shall go into  i mmediate effe ct. The facts co nstituting the necessity are: In order to avoi d a significa nt and devastati ng decrease in the  amount of fun ding available for th e mainte nance of California's local streets and roads, it i s necessary that th i s act take effe ct i mmediately. Copyright 20 15 State Net. All Rights Reserved .