CMRTA Policy Update Review

October 11, 2012
2012 CMRTA Annual Conference Edition
Walnut Creek, CA
Dear Colleagues,
On behalf of MuniServices, we would like to thank you again for the opportunity to present our legislative update
during your annual conference. Each year, generally in October, MuniServices researches recent and upcoming policy
decisions impacting local governments. Our report is designed to give CMRTA members and colleagues a succinct look
at recent legislation and policy decisions. Among the most pressing issues since we last met concerns the Supreme
Court’s ruling for redevelopment agencies to be dissolved by February 2 of 2012.
SB 1186 was just signed into law by the governor, imposing a $1 fee for local business licenses to help with ADA
requirements and education. This is especially important for the CMRTA, as the implementation requirements are
expected to be in place very soon.
This year’s state spending plan (AB 1464) will be impacted by the voters’ decision in November 2012 on Proposition 30
which calls for a ¼ cent sales tax for four years (if Proposition 30 fails there will be another $6 billion in “trigger” cuts to
the current budget).
The September 15, 2012 implementation of AB 155 means that efforts are underway for use tax collection by on-line
retailers. BOE Regulation 1684 includes the implementation provisions of AB 155. We reported last year that we were
awaiting final action on BOE Regulations 1807 and 1828, related to the reallocation of local taxes as well Compliance
Manual 9 (the operating manual for the Board concerning the reallocation process). The regulations have been enacted
and the necessary processes are in place.
Among the noteworthy successes for local governments this year was a blocking of the last minute amendments to AB
658, related to local place of sale rules. Proponents of the amendments were seeking to reverse a court decision that
had not yet been reviewed on appeal and to address complex areas of tax law and policy with a single, simplistic stroke.
Senator Wolk (Senate Governance and Finance Committee Chair) spoke during the hearing and expressed concern that,
because there are cities on either side of the issue, all parties should have the opportunity to participate in the
measure through the legislative process. All cities and counties in the state are better served by tax policy established
through a deliberative, public discussion of the impacts of the various tax allocation methods. The bill did not receive a
motion for a vote.
Finally, we are one year closer to the January 1, 2014 sunset for the City Business Tax Program. We look forward to
partnering with the CMRTA and FTB to ensure the continuation of this vital program. Legislatively speaking, this means
there are approximately 10 months to get a plan in place. We encourage the CMRTA to set their sights, during this
conference and over the next year, on the story to be told in October 2013.
This report includes our initial review of selected legislation considered this year. A final report with additional analysis
will be published and emailed to CMRTA members later this month. In the meantime, please let us know if you have
any questions or comments. We wish you a successful and productive conference.
Sincerely,
Fran Mancia and Brenda Narayan
Government Relations Team
Fran Mancia, VP, Government Relations
Brenda Narayan, Director of Government Relations
800.800.8181 (5013) | [email protected]
800.800.8181 (5014) | [email protected]
www.muniservices.com
11 October 2012
PRELIMINARY LEGISLATIVE REPORT OF SELECTED MEASURES
GOVERNMENT ADMINISTRATION
AB 1325 (Lara) Business: fictitious business name statements
AB 1532 (John Pérez) California Global Warming Solutions Act of 2006 Greenhouse Gas Reduction Fund
AB 1581 (Weickowski) Advertising: business location representations: floral businesses
AB 1642 (Gordon) County recorder: recordation of documents
AB 2323 (Perea) State Board of Equalization: administration: opinions
SB 1185 (Price) Centralized Intelligence Partnership Act/AB 1794 (Williams)
SB 1303 (Simitian) Vehicles: automated traffic enforcement systems
LOCAL GOVERNANCE AND FINANCE
AB 1098 (Carter) Vehicle license fees: allocation
AB 1404 (Feuer) Vehicles: additional registration fees: vehicle-theft crimes
AB 1616 (Gatto) Food safety: cottage food operations/ AB 2297 (Hayashi)
AB 2026 (Fuentes) Income taxes: credits: film: extension
AB 2231 (Fuentes) Sidewalks: repairs
AB 2366 (Eng) Vehicles: equipment violations: parking control officers
AB 2559 (Buchanan) Natural gas pipelines: pipeline integrity management
AB 2688 (Committee on Revenue and Taxation) Property taxes: sales and use taxes
SB 1330 (Simitian) Vehicles: License Plate Recognition Technology: personal information
SB 1388 (DeSaulnier) Parking: Parking Meters
SB 1492 (Leno) Voter-approved local assessment: vehicles
PROPERTY TAX / POST – REDEVELOPMENT
AB 345 (Torres) Redevelopment
AB 1191 (Huber) Local Government Finance: VLF Swap and the Triple Flip Reimbursements
AB 1484 (Budget) Community Redevelopment
AB 2144 (Pérez) Local Government: Infrastructure and Revitalization Financing Districts
AB 2551 (Hueso) Infrastructure financing districts: renewable energy zones
SB 214 (Wolk) Infrastructure financing districts: voter approval: repeal
SB 1156 (Steinberg) Community Development and Housing Joint Powers Authority
SALES AND USE TAXES
AB 658 (Charles Calderon) State Board of Equalization: administration.
AB 1126 (Calderon) Transaction and Use Tax: Rate
AB 1446 (Feuer) Los Angeles County Metropolitan Transportation Authority: transactions and use tax
AB 1963 (Huber) Personal Income Tax: Sales and Use Tax: Legislative Analyst’s Office: Reports
AB 2270 (Harkey) Sales and use tax: use tax: administration
AB 2638 (Eng) State government: fiscal affairs
SB 1125 (Hancock) Local Government Contracts: Seller's Permits and Certificates of Registration
SB 1128 (Padilla) Energy: alternative energy financing
SB 1243 (Lowenthal) Sales and use tax exemption: Marine or Maritime Fuel
UTILITY USERS TAXES
AB 1050 (Ma) Telecommunications: prepaid mobile
SB 1161 (Padilla) VOIP and Internet Protocol
SB 1257 (Hernandez) Utility User Tax: Public Transit Vehicles
HR 1002 (Lofgren) Five Year Wireless Moratorium
Federal Streamlined Sales and Use Tax Legislation
AT&T Wireless Class Action Settlement (Taxation of Data Plans)
Expiration of Internet Tax Freedom Moratorium
11 October 2012
GOVERNMENT ADMINISTRATION
AB 1325 (Lara) Business: fictitious business name statements
AB 1325 requires fictitious business name (FBN) statements to contain language specifying that false declarations are a
misdemeanor punishable by a fine of up to $1,000. It further requires FBN statement registrants, or their agents, to
provide specified personal identification information at the time of filing, beginning January 1, 2014. This bill
strengthens consumer protections and curbs fictitious business name identity theft. The provision specifies the types of
identification acceptable to county clerks and the requirements for filing a fictitious business name via mail. This bill
also amends the existing fictitious business name statement to include a reference to the penalties for providing false
information. Status: Chapter 368, Statutes of 2012.
AB 1532 (John Pérez) California Global Warming Solutions Act of 2006 Greenhouse Gas Reduction Fund
AB 1532 Creates the Greenhouse Gas Reduction Fund Investment Plan and Communities Revitalization Act (the Act) to
set procedures for the investment of regulatory fee revenues derived from the auction of greenhouse gas (GHG)
allowances pursuant to the cap and trade program adopted by the Air Resources Board (ARB) under the California
Global Warming Solutions Act of 2006 (AB 32 (Nuñez and Pavley), Chapter 488, Statutes of 2006). The bill is joined to SB
535 (Chapter 830, Statute of 2012) by Senator De Leon. Status: Chapter 807, Statutes of 2012.
AB 1581 (Weickowski) Advertising: business location representations: floral businesses
AB 1581 makes it an infraction for a provider or vendor of floral or ornamental products or services, as defined, to
misrepresent the geographic location of its business. Readers may recall AB 2076 (Salas) of 2010, which would have
made it unlawful for a floral vendor to misrepresent the geographic location of its business. AB 2076 was vetoed.
Proponents of this bill, and the four previous bills on this issue, contend that out-of-state flower vendors adopt local
sounding names, and then list a local telephone number in an effort to mislead consumers into believing that the
business is a local operation when the “local” telephone number actually routes to a distant location and the business,
in fact, has no local presence. Proponents have suggested that while there is nothing wrong with non-local
telemarketing of florist services, the consumer should be aware that the presumed local small business does not in fact
have a local physical presence. Current law generally prohibits and provides remedies for misleading or fraudulent
advertising practices. Status: Chapter 633, Statutes of 2012.
AB 1642 (Gordon) County recorder: recordation of documents
AB 1642 repeals the existing acknowledgment required for a notice of intent to preserve interest in real property. It
instead requires the use of the general acknowledgment form. This bill also authorizes a county recorder to file a real
property document as required by local ordinance. Status: Chapter 94, Statutes of 2012.
AB 2323 (Perea) State Board of Equalization: administration: opinions
AB 2323 requires the Board of Equalization (BOE) to write formal, memorandum, and summary opinions on tax appeal
cases when the amount in controversy exceeds $500,000, and to publish those opinions on the BOE website within 120
days of the BOE’s final decision. This bill does not apply to items decided on its consent calendar. Proponents (including
Board Member Steele) state that this bill ensures that the BOE provides adequate guidance to taxpayers about
California's intricate tax rules and how they are interpreted by the BOE and the Federal Tax Board (FTB). This bill will
ensure that more useful advice is available to taxpayers. Proponents are also in support of publishing cases involving
lesser amounts for the same reasons. Opponents (including Board Member Runner) stated the bill will be costly, cause
unnecessary confusion, and lead to unforeseen consequences. Opponents further note that AB 2323 will delay the BOE
appeals process because it will take longer for appeals to become final. Status: Chapter 778, Statutes of 2012.
11 October 2012
SB 1185 (Price) Centralized Intelligence Partnership Act/AB 1794 (Williams)
SB 1185 would have create a multiagency partnership (Centralized Intelligence Partnership) to serve as a consolidated
information intake center for receipt and analysis of data related to potential violation of labor, tax, and other laws by
organized criminal entities and/or serial offenders. The State Board of Equalization (BOE), Franchise Tax Board (FTB),
and the Department of Industrial Relations (DIR) are among the agencies that would make up the partnership. The
Governor signed AB 1794 (Williams) allowing the sharing of new hire information with the Contractors’ State Licensing
Board (CSLB) and the State Compensation Insurance Fund (SCIF) for the purposes of identifying fraud as well as
auditing, investigating, and prosecuting violations of tax and cash-pay reporting laws. Status: SB 1185 died; AB 1794
was chaptered.
SB 1303 (Simitian) Vehicles: automated traffic enforcement systems
SB 1303 changes the laws governing automated traffic enforcement systems to ensure that red light camera programs
maximize traffic safety and are implemented in a lawful and transparent manner. This bill was introduced to protect
the rights of Californians cited by automated traffic enforcement systems. It prohibits the use of automated systems for
the purpose of raising revenue, requires that governmental agencies demonstrate a safety need when approving the
use of such systems, and improves the means by which a person may challenge citations issued in error. Proponents
contend that this bill is necessary to increase public confidence in the fairness of red light camera operations. SB 1303 is
essentially the same as SB 29 (Simitian) from last year (vetoed). The governor's veto message said that while SB 29
standardized rules for local governments to follow when installing and maintaining red light cameras, this is a process
that elected officials can and should oversee. As reported in a committee analysis, the author is in discussions with the
administration and expects to find a compromise that the governor can support. Status: Chapter 735, Statutes of 2012.
LOCAL GOVERNANCE AND FINANCE
AB 1098 (Carter) Vehicle license fees: allocation
AB 1098 would have allocated approximately $18 million to several incorporated cities and cities with inhabited
annexations. SB 89 (Chapter 35, Statutes of 2011) was not intended as a VLF cut; it was intended to shift the VLF
revenue of local governments to support public safety services. However, it has unintentionally devastated public
safety funding within newly incorporated cities and cities with inhabited annexations. Without the funding proposed in
AB 1098, four newly-incorporated cities would need to make additional cuts to public safety. The funds are available
because the new $12 fee imposed by SB 89 is expected to generate approximately $355 million. The Governor’s veto
message said: "As drafted, this bill would undermine the 2011 Realignment formulas in a manner that would jeopardize
dollars for local public safety programs, provides cities new funding beyond what existed under previous law, and
would create a hole in the General Fund to the tune of $18 million. Given the current fiscal uncertainties, this is not
acceptable." Status: Vetoed.
AB 1404 (Feuer) Vehicles: additional registration fees: vehicle-theft crimes
AB 1404 allows several counties (by resolution of the county board of supervisors) to increase the surcharge imposed
on vehicle registrations in their respective jurisdictions from $1 to $2 to fund vehicle theft prevention, investigation,
and prosecution programs. Forty-seven counties impose the surcharge, including Los Angeles County, where, in 1993,
the Board of Supervisors imposed a $1 fee to create a vehicle theft program called the Taskforce for Regional Autotheft Prevention (TRAP). According to the Senate Appropriations Committee, all administrative costs to DMV and the
State Controller's Office will be fully recovered from fee revenues collected. Additionally, if increases to vehicle
surcharges are approved, there are potential revenue gains of approximately $7.2 million for Los Angeles County, $2.5
million for San Diego County, and $1.6 million for San Bernardino County. Status: Chapter 775, Statutes of 2012.
11 October 2012
AB 1616 (Gatto) Food safety: cottage food operations/ AB 2297 (Hayashi)
AB 1616 regulates the production and sale of certain non-potentially hazardous foods prepared in a home kitchen. The
League stated “While the League recognizes the author’s attempt to encourage the growth of these particular small
businesses, the effect of the measure is to undercut local zoning policies. Neighbors who do not wish to be located next
door to a business may be disturbed by increased traffic, noise and odors that could be produced from cottage food
operations. Local governments should be able to balance the impacts of such businesses on adjacent residents by
regulating: permitted location, hours of operation, on-site sales, inspections and advertising. Absent local zoning
guidelines, the residential character of a neighborhood could be eroded.” Clients are encouraged to read the bill for
permit and licensing requirements. Status: Chapter 415, Statutes of 2012.
AB 2026 (Fuentes) Income taxes: credits: film: extension
AB 2026 extends the operation of the California Motion Picture Tax Credit (Film Tax Credit) for two years, thereby
authorizing the allocation of an additional $100 million annually in tax credits to qualified productions from July 1,
2015, until July 1, 2017. A Los Angeles Economic Development Council 2011 economic impact study puts nearly 39% of
national motion picture and video industry employment, and 60% of industry labor, in California. That amounts to
around 20 million jobs. The study states that the industry prompted $6.4 billion in sales of goods and service, $1.7
billion in advertising, and $1.5 billion in rental or real estate services, for an aggregate total of $15.4 billion spent in
California. Status: Chapter 633, Statutes of 2012.
AB 2231 (Fuentes) Sidewalks: repairs
AB 2231 would have required voter approval to repeal an existing city or county ordinance that requires the local entity
to repair sidewalks. The bill would have prohibited a city or county that has such an ordinance in place from charging
property owners for sidewalk repairs unless the owner consents to the charge. AB 2231 would have limited the options
available to cities and counties to pay for sidewalk repairs by specifically prohibiting the imposition of any fees, charges,
or assessments on property owners. Status: Died.
AB 2366 (Eng) Vehicles: equipment violations: parking control officers
AB 2366 would have increased the fines for fix-it tickets issued with parking citations from $10 to $25. This would have
included citations for failure to properly display a license plate. According to the Public Parking Association, the
correction penalty for "fix-it" tickets issued to illegally parked cars (currently set at $10) has not increased in over 18
years. However a non-appealed fix-it ticket costs (a city) approximately $27.72 to issue and process. The current $10.00
penalty is a disincentive for cities to write “fix-it” tickets. The result is a loss of revenue to the state for unregistered
vehicles or for vehicles with expired tags. The Governor’s veto message stated: "This bill increases the cost of a fix-it
ticket issued by a parking enforcement agency from $10 to $25. Some localities are even charging as much as $20 for a
local employee's signature verifying that the repair in fact was made. The combination of fine and fee may encourage
the issuance of tickets solely to raise local revenue with perhaps a disproportionate impact on the owners of older
vehicles. Fix-it tickets should not be a profit center." Status: Vetoed.
AB 2559 (Buchanan) Natural gas pipelines: pipeline integrity management
AB 2559 requires that gas corporations notify a local entity whenever a pipeline integrity plan may result in pipeline
inspection, remediation, or replacement work in the jurisdiction. It also requires the local entity to expedite any
permitting or other actions necessary to complete the work. The author states: "AB 2559 provides the state's gas
utilities expedited local permitting for pipeline inspection, remediation and replacement work undertaken pursuant to
pipeline integrity management.” This bill results from a recommendation by the Independent Review Panel established
by the PUC in the wake of the San Bruno tragedy. Status: Chapter 486, Statutes of 2012.
11 October 2012
AB 2688 (Committee on Revenue and Taxation) Property taxes: sales and use taxes
AB 2688 is the omnibus BOE tax bill that includes several provisions addressing the sales and use tax law’s "bad debt"
deduction and refund provisions. A proper election for a bad-debt deduction is established when the retailer and the
lender prepare and retain an election form, signed by both parties, designating which party is entitled to claim the
deduction or refund. This provision could reduce the hurdles to claiming bad-debt deductions. Also the bill amended
Revenue and Taxation Code Sections 7261 and 7262 to conform to changes mandated by AB 686 (Huffman), Chapter
176, Statutes of 2011 (which decreased the rate at which a city or county may levy, increase, or extend a TUT from
0.25% (or a multiple thereof) to a rate of 0.125% (or a multiple thereof)). Clients are encouraged to contact
MuniServices for more detail on this bill and the potential impact on local revenues. Status: Chapter 362, Statutes of
2012.
SB 1330 (Simitian) Vehicles: License Plate Recognition Technology: personal information
SB 1330 would have established standards for how local law enforcement handles data collected through license plate
recognition (LPR) technology. SB 1330 sought to limit the data retention time to only 60 days and create numerous
reporting and tracking requirements for local agencies. The bill appeared to be designed to model aspects of a Budget
trailer bill from last year which prohibited the California Highway Patrol from retaining LPR data for more than 60 days.
MuniServices provided the author with a formal notice of opposition on the measure on the grounds that as it was
drafted, SB 1330 would not only have wide-sweeping implications for public safety, but compromise the technology
used by and on behalf of local governments to assist in the collection of payments of millions of dollars of unpaid
parking tickets. When the bill was introduced MuniServices joined stakeholders including the League of Cities,
California Contract Cities Association and others to oppose it. We were concerned with the provisions of the bill that
required on-going tracking, posting and reporting requirements for local and state law enforcement agencies. This
requirement added a time-consuming and unnecessary step to already over-burdened local law enforcement agencies
throughout California. LPR technology has proven to be a useful tool for local governments. There are 594 parking
authorities in California covering college campuses, port authorities and municipal governments. The Department of
Motor Vehicles has suggested there may be $500 million in unpaid parking tickets throughout California. As local
governments deal with budget shortfalls, these unpaid parking tickets represent funds that could go directly into a
locality’s general fund. Furthermore, local governments serve as fee collectors on behalf of the State of California for a
$12.50 state surcharge that is applied to all parking tickets. These revenues are sourced from those who already owe
the municipality and the state money, and have chosen not to pay their outstanding fines. MuniServices’ advocates
worked tirelessly to educate members on SB 1330’s wide-sweeping implications for public safety and the how LPR is
compromised as a revenue enhancement and collection tool for parking authorities and the state. Status: Died.
SB 1388 (DeSaulnier) Parking: Parking Meters
SB 1388 would establish a general rule that vehicle owners may park without penalty in any parking space for up to the
posted time limit if the parking meter or parking payment center is inoperable. The bill allows a city or county to adopt
a different rule if it provides adequate notice of the rule at parking locations, parking meters, or parking payment
centers. Status: Chapter 70, Statutes of 2012.
SB 1492 (Leno) Voter-approved local assessment: vehicles
SB 1492 authorizes the City and County of San Francisco (City and County) to impose a vehicle license fee (VLF). The fee
must first be authorized by the Board of Supervisors and then be placed before the voters of that county for a vote.
Last year Governor Brow vetoed a near identical measure. The veto message stated: "Before we embark on a
piecemeal approach for one city, we should try to fashion a broader revenue solution to our state's fiscal crisis."
Status: Chapter 898, Statutes of 2012.
11 October 2012
PROPERTY TAX / POST – REDEVELOPMENT
AB 345 (Torres) Redevelopment
AB 345 would have reformed, beginning January 1, 2018, how redevelopment agencies (RDA) spend their Low and
Moderate Income Housing Funds. Status: Vetoed.
AB 1191 (Huber) Local Government Finance: VLF Swap and the Triple Flip Reimbursements
AB 1191 would have provided cities and counties a process with which to seek reimbursement for revenues lost as a
result of the triple-flip and the VLF swap (which were designed to reimburse cities and counties for losses related to the
diversion of a quarter cent of the local sales tax and the permanent reduction of VLF to 0.65%). AB 1191 outlines a
process for county auditors to identify the reimbursement owed to each local agency (for both the Triple Flip and VLF
Swap) and to present that information to the State Controller. Status: Died
AB 1484 (Budget) Community Redevelopment
If a local successor agency does not make a payment of property taxes to other local taxing agencies by June 12, 2012,
AB 1484 (a redevelopment budget trailer bill) empowers the Department of Finance to notify the State Board of
Equalization to suspend sales tax payments to the affected city, effective July 18. AB 1484 was designed to achieve a
total of $3.3 billion of budget savings related to the dissolution of redevelopment agencies (RDAs) as estimated in the
Governor's May Revision of the Budget. The bill includes a process to identify excess redevelopment property tax
revenues that should have been allocated to schools, but was withheld by successor agencies or county auditor
controllers, and requires the rapid allocation of those funds. It further requires an audit process to identify and locate
the assets of the former redevelopment agencies and to require the return of cash balances for distribution as property
tax number. The bill also includes additional provisions. The League of Cities last month filed a suit in the Sacramento
Superior Court challenging specific provisions of AB 1484. Status: Chapter 26, Statutes of 2012.
AB 2144 (Pérez) Local Government: Infrastructure and Revitalization Financing Districts
AB 2114 would have expanded the types of facilities and projects that could be financed under the infrastructure
financing district (IFD) law, and reduced the voter threshold for the creation of an IFD and the issuance of bonds for the
IFD. Status: Vetoed.
AB 2551 (Hueso) Infrastructure financing districts: renewable energy zones
AB 2551 would have authorized a legislative body of a city or county to establish an infrastructure financing district
(IFD) in a renewable energy infrastructure area, as defined, and exempted the creation of the IFD from voter-approval
requirements. Status: Vetoed.
SB 214 (Wolk) Infrastructure financing districts: voter approval: repeal
SB 214 would have eliminated the voter approval requirement for a city or county to create an infrastructure financing
district (IFD) and expanded the types of projects that could be financed by an IFD. MuniServices requested the
Governor’s signature on SB 214; we believe the bill would have accomplished a long-needed rewrite of existing
Infrastructure Financing Districts Laws, which in turn would have provided an additional option for funding local
infrastructure. Status: Vetoed.
11 October 2012
SB 1156 (Steinberg) Community Development and Housing Joint Powers Authority
SB 1156 would have allowed local governments to establish a Sustainable Communities Investment Authority
(Authority) to finance specified activities within a sustainable communities investment area. The Governor’s veto
indicated: “I prefer to take a constructive look at implementing this type of program once the winding down of
redevelopment is complete and General Fund savings are achieved. At that time, we will be in a much better position
to consider new investment authority. I am committed to working with the Legislature and interested parties on the
important task of revitalizing our communities.” Status: Vetoed.
SALES AND USE TAXES
AB 658 (Charles Calderon) State Board of Equalization: administration.
AB 658 as reported earlier sought to reverse a superior court decision rendered in July 2012 which has not yet been
reviewed on appeal. MuniServices led the efforts to educate clients and local governments on the harmful impact of
this “gut and amend” measure. Proponents of the amendments were seeking to reverse a court decision that has not
been reviewed on appeal related to local place of sale rules. The amendments attempted to address complex areas of
tax law and policy with a single, simplistic stroke; all cities and counties in the state are better served by tax policy
established through a deliberative, public discussion over the impacts of the various tax allocation methods in light of
the Legislature’s profound interest in enacting sound tax policy that drives a healthy California economy both for the
state and its municipalities. Senator Wolk (Chair of the Senate Governance and Finance Committee) spoke during the
hearing and expressed concern that because there are cities on different sides of the issue that all parties should have
the opportunity to participate in the measure through the legislative process. The bill did not receive a motion for a
vote. Status: Died.
AB 1126 (Calderon) Transaction and Use Tax: Rate
AB 1126 would ensure that counties and cities can ask voters to raise transactions and use taxes in one-eighth cent
increments instead of one-quarter cent increments. AB 686 (Huffman), Chapter 176, Statutes of 2011 first permitted
this smaller increment. It amended various sections of the R&TC to decrease the rate at which a city or county may
levy, increase, or extend a transactions and use tax from 0.25% (or a multiple thereof) to a rate of 0.125% (or a multiple
thereof). AB 1126 would make the change in two sections left out of last year’s bill. Status: Chapter 739, Statutes of
2012.
AB 1446 (Feuer) Los Angeles County Metropolitan Transportation Authority: transactions and use tax
AB 1446 authorizes the Metropolitan Transportation Authority (MTA) to place on the ballot for Los Angeles County
voter approval the permanent extension of an existing, countywide 0.5% sales and use tax. Revenue from the existing
0.5% tax is dedicated to construction and operation of rail, highway, and bus projects in MTA's Long Range
Transportation Plan, as well as local initiatives such as street and signal improvements, bicycle and pedestrian projects,
and more. The anticipated new revenue can be bonded against to build projects in MTA's transportation plan as soon
as the tax extension is approved. Status: Chapter 806, Statutes of 2012.
AB 1963 (Huber) Personal Income Tax: Sales and Use Tax: Legislative Analyst’s Office: Reports
AB 1963 would have required the Legislative Analyst’s Office to write a report on state revenue volatility, to diversify
revenue sources, and to improve California's economic climate. The bill would have required an analysis of the effect a
tax on the sale or use of services, concurrent with a reduction of the sales and use tax rate. The Governor’s veto
indicated: "This bill would require another report on tax revenue volatility, this one from the Legislative Analyst. The
Legislature can have its own analyst prepare the report by simply asking. A law isn't needed." Status: Vetoed.
11 October 2012
AB 2270 (Harkey) Sales and use tax: use tax: administration
AB 2270 provides that, for reporting periods beginning on or after January 1, 2012, the qualified use tax of an eligible
purchaser (as defined in the bill) is due and payable to the Board of Equalization (BOE) on or before April 15th following
the close of the calendar year in which the use tax liability was incurred. The eligible purchaser is not required to be
registered with the BOE. The bill specifies that "qualified use tax" does not include the use tax imposed on specified
mobile homes, vehicles, and leases. This bill is sponsored by the BOE to make tax payment deadlines more consistent.
Under current law, a taxpayer may file his or her use tax on the income tax return by April 15th, but must file his or her
use tax payment directly with the BOE by January 31st. If the taxpayer pays the tax directly to the BOE on April 15th,
he or she would be considered late and the individual would be subjected to the late payment penalty and interest.
This bill makes the dates consistent and less confusing for the taxpayer. Status: Chapter 667, Statutes of 2012.
AB 2638 (Eng) State government: fiscal affairs
AB 2638 would have required the Department of Finance (DOF) to include additional information in its annual tax
expenditure report and to provide the Legislature with certain specified information. The bill would have required the
Franchise Tax Board (FTB) and the State Board of Equalization (BOE) to submit a report on the fiscal and tax effects of
specified tax expenditures to the DOF and the Legislature, on or before December 1 of each calendar year. Status:
Vetoed
SB 1125 (Hancock) Local Government Contracts: Seller's Permits and Certificates of Registration
SB 1125 would have prohibited any local government entity from contracting with a vendor, contractor, or an affiliate
of a vendor or contractor that does not possess a seller's permit or a certificate of registration. Current law prohibits
the state from contracting with a vendor, contractor, or affiliate of a vendor or contractor that does not possess a
seller's permit or a certificate of registration. The bill excludes special districts. This bill is sponsored by the State Board
of Equalization (BOE) and is part of the Sales and Use Tax Department’s Tax Gap Plan. MuniServices is actively involved
in the BOE’s discussions addressing the tax gap. The bill would have promoted the collection of use taxes by out-ofstate sellers who do business with local government entities. MuniServices worked closely with the BOE to develop
amendments into the bill to protect the situs allocation of taxes to cities. Status: Senate Appropriations suspense file.
Status: Died.
SB 1128 (Padilla) Energy: alternative energy financing
SB 1128 extends, until July 1, 2016, the sales and use tax exemption under the California Alternative Energy and
Advanced Transportation Financing Authority (CAEATFA) program to include "advanced manufacturing," as specified.
SB 71 (Padilla), Chapter 10, Statutes of 2010, expands the authority which allows CAEATFA to grant a sales and use tax
exemption to eligible firms that purchases property necessary to design, produce, manufacture, or assemble
advanced transportation technologies or alternative energy source products, components, or systems. Thus far,
CAEATFA has approved $104 million to 33 firms that applied for the SB 71 benefit, of which 33 firms have monetized
$31.6 million in exemptions. Some of the firms have purchased the property and deployed it in the manufacturing
process. Others have won the award, but not yet purchased the equipment. Status: Chapter 667, Statutes of 2012.
SB 1243 (Lowenthal) Sales and use tax exemption: Marine or Maritime Fuel
SB 1243 extends the sales and use tax exemption for marine or maritime fuel from January 1, 2014 to January 1, 2020.
Additionally, this bill revises the definition of “first out of state destination.” Currently, the term is defined as the first
point reached outside this state by a common carrier at which cargo or passengers are loaded or discharged, cargo
containers are added or removed, fuel is bunkered, or docking fees are charged. SB 1243 would replace the term
"bunkered" with "transferred." The bill does not include a provision for reimbursement to any local agency for any sales
and use tax revenues lost. The State Board of Equalization (BOE) estimates state and local revenue losses of between
$91.7 million and $137.5 million annually beginning in 2014. Status: Chapter 293, Statutes of 2012.
11 October 2012
UTILITY USERS TAXES
AB 1050 (Ma) Telecommunications: prepaid mobile
AB 1050 is designed to create a mechanism for collecting state and locally-authorized communications taxes, fees
and surcharges from pre-paid end-use consumers. Prepaid wireless presents some unique tax collection problems
as much of this popular new service is sold by retail stores such as Costco, 7-11, Walmart, and many others.
Consequently, the service providers are unable, as a practical matter, to collect the Utility Users Tax (UUT) directly
from the end-user. HR 3788 was also introduced in Congress to relieve service providers from collecting taxes on
prepaid wireless. We are continuing to explore with our UUT client cities and other stakeholders on how to best
fashion a state law requiring retailers to collect the local UUT on retail sales of prepaid wireless services. Status:
Died
SB 1161 (Padilla) VOIP and Internet Protocol
SB 1161 was introduced with the purpose to affirm California’s policy of not regulating Voice over Internet Protocol
(VoIP) and IP-enabled services accessible through a broadband connection unless authorized by federal law and
specified by the Legislature. The bill was designed to foster continued investment, job creation and innovation in
California’s technology sector and the Internet economy, and continued availability of affordable communications
technologies and services that meet consumer demand and provide consumer and public benefits. The author worked
with MuniServices during the legislative session and accepted proposed amendments that are in the final law that
removes any impairment that would otherwise allow public agencies (with voter approval) to impose local taxes and
fees on telecommunication providers, or to impose regulations of the use of their public right of way. Status: Chapter
733, Statutes of 2012.
SB 1257 (Hernandez) Utility User Tax: Public Transit Vehicles
SB 1257 prohibits a local government from levying a Utility Users Tax (UUT) on the consumption of electricity as a
motor vehicle fuel for an electric public transit bus. Current law prohibits the imposition of use fuel tax upon fuel used
by any transit district, transit authority, or city owning and operating a local transit system itself or through a wholly
owned nonprofit corporation. Status: Chapter 213, Statutes of 2012.
HR 1002 (Lofgren) Five Year Wireless Moratorium
As previously reported, the wireless industry is seeking a five year moratorium on new wireless taxes. An earlier version
of HR 1002 would have affected local jurisdictions that have not yet obtained voter approval of a modern telecom
ordinance. It would also have affected a city and county with a modern ordinance that might wish to go to the voters in
the future for a tax increase. MuniServices worked with the League of California Cities, other lobbyists and local leaders
to obtain an amendment that would exclude voter approved local taxes from the moratorium. HR 1002 now includes
that important provision. Status: Senate.
Federal Streamlined Sales and Use Tax Legislation
S. 1452 (Durbin – Illinois) was introduced as the Main Street Fairness Act to implement the Streamlined Sales and Use
Tax Agreement among the signatory states (which does not include California) to streamline the state sales tax laws in
exchange for the legal right to tax Internet sales. H.R. 2701 (Conyers – Michigan) is the House version of the proposed
Act. The legislation is intended to overturn the 1967 Bellas Hess case, and the 1992 Quill v. North Dakota cases; the
Supreme Court acknowledged in these cases that consumers owe the sales tax when they purchased goods through
catalogs or over the Internet, but ruled that states cannot force retailers to collect the tax. MuniServices will continue
to monitor the legislation so we will be able to respond to any amendments that impose unfair or inappropriate
restrictions on our local Users Utility Tax (UUT), particularly amendments that give control of our local UUT to the state
(e.g., Board of Equalization).
11 October 2012
AT&T Wireless Class Action Settlement (Taxation of Data Plans)
AT&T Wireless was sued in other states by class action lawyers for allegedly improperly applying state and local taxes to
AT&T Wireless data plans and smartphones for the past five years. AT&T and class action plaintiffs reached a
complicated settlement agreement whereby AT&T Wireless agreed to refund the class action plaintiffs to the extent
that it was able to obtain refunds from the various taxing jurisdictions (acting as the assignee of the class action
claims). Our Utility Users Tax (UUT) Program, in response to multiple refund claims asserted by AT&T Wireless against
our UUT client cities, conducted a series of conference calls (with the cooperation of the League City Attorneys) to
assist the City Attorneys in determining the best approach for responding to these refund claims. In addition, our UUT
Program has coordinated the creation of a settlement group to meet with AT&T Wireless and the class action plaintiffs
lawyers to carefully review the underlying legal and factual basis of the UUT refund claims, and to also explore the
possibility of a reasonable settlement, taking into account the one year statute of limitations and the prohibition
against class action claims (this issue was partially addressed by the California Supreme Court when it ruled against the
cities by holding that the California Tort Claims Act does not preclude class action lawsuits).
Expiration of Internet Tax Freedom Moratorium
In 2014, the federal moratorium on state and local taxation of Internet access will expire. A major battle will ensue
within the next year or so as powerful telecom industry advocates will seek to make this moratorium permanent. This is
a critical issue, as the moratorium definition of “Internet access” goes beyond true “Internet access” and includes any
broadband network service, such as DSL, cable modem, and wireless data plans. Since the old public switched network
is rapidly being replaced by broadband networks, the moratorium, if made permanent, will undoubtedly result in a loss
of existing User Utility Tax (UUT) revenues over time, especially if the telecom companies assign more value to their
broadband networks than their voice services on bundled packages. Clearly, the effect of a federal ban on local telecom
taxes on “Internet access” (i.e., broadband network charges) will be to significantly reduce the cities’ telecom UUT.
Since it is likely that a permanent ban will take place, it is critical that California UUT public agencies educate their D.C.
representatives on the nuances of this complicated issue. One approach may be to seek an exception for voter
approved ordinances, as in the current draft of HR 1002 (five year wireless moratorium). We anticipate this issue will
require our UUT client cities pay close attention and coordinate communications with their federal representatives.
2012 NOVEMBER BALLOT MEASURES
Please refer to the Legislative Analyst’s Office (www.lao.ca.gov) for further detail on the 10 statewide ballot initiatives
that will appear on the November ballot. We have provided below a summary of Proposition 30 and Proposition 31 as
these two propositions directly affect taxation and budgeting. Clients are also encouraged to refer to the League of
California Cities website at www.cacities.org (Revenue and Taxation Committee agenda from September 2012) for staff
analysis on these propositions.
Proposition 30: Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding

Increases personal income tax on annual earnings over $250,000 for seven years. Increases sales and use tax by ¼
cent for four years. Allocates temporary tax revenues as follows: 89 percent to K-12 schools, and 11 percent to
community colleges. Disallows the use of funds for administrative costs, but provides local school governing
boards discretion to decide, in open meetings and subject to annual audit, how funds are to be spent. Guarantees
funding for public safety services realigned from state to local governments.

What the votes mean: Yes vote: The state would increase personal income taxes on high-income taxpayers for
seven years and sales taxes for four years. The new tax revenues would be available to fund programs in the state
budget. No vote: The state would not increase personal income taxes or sales taxes. State spending reductions
($6 billion in “trigger” cuts), primarily to education programs, would take effect in 2012-13.
11 October 2012

Fiscal impact: Increased state revenues over the next seven fiscal years. Estimates of the revenue increases vary
from $6.8 billion to $9 billion for 2012-13 and from $5.4 billion to $7.6 billion, on average, in the following five
fiscal years, with lesser amounts in 2018-19. These revenues would be available to (1) pay for the state's school
and community college funding requirements, as increased by this measure, and (2) address the state's
budgetary problem by paying for other spending commitments. Limitation on the state's ability to make changes
to the programs and revenues shifted to local governments in 2011, resulting in a more stable fiscal situation for
local governments.
Proposition 31: State Budget. State and Local Government

Establishes a two-year state budget cycle. Prohibits Legislature from creating expenditures of more than $25
million unless offsetting revenues or spending cuts are identified. Permits the Governor to cut budget unilaterally
during declared fiscal emergencies if Legislature fails to act. Requires performance reviews of all state programs.
Requires performance goals in state and local budgets. Requires publication of all bills at least three days prior to
legislative vote. Gives counties the power to alter state statutes or regulations related to spending unless
Legislature or state agency vetoes the changes within 60 days.

What the votes mean: Yes vote: Certain fiscal responsibilities of the Legislature and Governor, including state and
local budgeting and oversight procedures, would change. Local governments that create plans to coordinate
services would receive funding from the state and could develop their own procedures for administering state
programs. No vote: The fiscal responsibilities of the Legislature and Governor, including state and local budgeting
and oversight procedures, would not change. Local governments would not be given (1) funding to implement
new plans that coordinate services or (2) authority to develop their own procedures for administering state
programs.

Fiscal impact: Decreased state revenues and commensurate increased local revenues, probably in the range of
about $200 million annually, beginning in 2013-14. Potential decreased state program costs or increased state
revenues resulting from changes in the fiscal authority of the Legislature and Governor. Increased state and local
costs of tens of millions of dollars annually to implement new budgeting practices. Over time, these costs would
moderate and potentially be offset by savings from improved program efficiencies.
SOURCES
California Legislature
League of California Cities
State Board of Equalization
Legislative Analysts Office
TaxAnalyst
CalTaxletter
GOVERNMENT RELATIONS
T h e Hu n t f or Tre as u re
2012 CMRTA A NNUAL CONFERENCE
WALNUT CREEK, C ALIFORNIA
Presented by
Fran Mancia, VP of Government Relations
800.800.8181 (5013) or [email protected]
www.MuniServices.com
Thursday, October 11, 2012
The Hunt for
Treasure - Topics
www.MuniServices.com
The October Review
II.
The spending plan (State Budget)
III. Legislative review (including SB 1186)
IV. Trivia: What was the year of the use tax law?
V.
November 2012 propositions
VI. Local “balloting” 101
VII. Revenue from parking citations
VIII. Sunrise or sunset: City Business Tax Exchange
Program
IX. Partnering with our Government Relations’ team
I.
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Thursday, October 11, 2012
Redevelopment


October Review
Supreme Court ruled redevelopment agencies to be dissolved on Feb 2; SB 659 would have given more
time to get organized
Recent lawsuit filed by the League challenging AB 1484 the redevelopment budget trailer bill from 2012
Vehicle License Fees


AB 1098 would have restored VLF allocations to cities that were eliminated by SB 89 (vetoed); SB 89 and
AB 118 increased VLF by $12 to free up $300 million for public safety programs
Lawsuit filed in Sacramento County Superior Court last year and a ruling expected in a few months
State Budget: AB 1464 and Proposition 30


Proposition 30 (1/4 cent for four years); $6 billion “trigger” cuts to current budget should it fail
League of California Cities “no position”
BOE Regulation 1684, Use Tax Collection/ AB 155

September 15, 2012 means use tax collection by on-line retailers
The Legislature and Governor are giving cities 4 months to implement SB 1186

Between January 1, 2013 to December 2018 a $1 fee is imposed on applicant for local business license,
“equivalent instrument or permit” to help with ADA requirements and education
State Board of Equalization


www.MuniServices.com
Regulations 1807 and 1828 related to petitions for reallocation of local tax process was approved by the
Office of Administrative Law
Compliance Policy and Procedure Manual, Chapter 9 related to local and district tax reallocations,
including petitions for reallocations process was adopted and implemented
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Thursday, October 11, 2012
AB 1464, 2012-13 State Budget Spending Plan
The Spending Plan
(State Budget)
 Expenditures of $130.7 billion($91.3 billion from the General Fund and
the Education Protection Account (created by Proposition 30), as well as
$39.4 billion from other special funds.
AB 1484, Redevelopment Trailer Bill
Governor signed the
Budget June 27, 2012
Between that date and
the end of August 2012
the Legislature sent over
40 budget trailer bills to
the Governor
 State authority to divert local sales and property tax to offset amounts
under dispute; powers to DOF
 Lawsuit by League filed in Sacramento Superior Court challenging
provisions
SB 1006, General Government
 Expands the Capital Investment Incentive Program to include “qualified
research and development facility.”
 All state-mandated local programs that are suspended in FY 2012-13 will
be suspended in the FY 2013-14 and FY 2014-15; prohibits payments for
past state-mandated local programs in FY 2012-13, FY 2013-14, and FY
2014-15
AB 1478, Additional Appropriations for Parks and Recreation
 Following passage of the 2012-13 budget, the administration reported
the discovery of tens of millions of dollars of additional moneys in special
fund accounts related to the Department of Parks and Recreation.
www.MuniServices.com
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Thursday, October 11, 2012
The politics and implementation of SB 1186
2012 Legislative
Review
SB 1186 places a fee on business license applications addressing compliance
and litigation issues with respect to the American with Disabilities Act lawsuits
(chaptered/ CMRTA bill)
Sales and Use Taxes/ District Taxes
AB 658 would have reversed a court decision that has not been reviewed
on appeal related to local place of sale rules (opposed)
The score
Signed: 876
Vetoed: 120
AB 1126 is a revenue enhancement measure that conforms to changes implemented by AB 686
(Chapter 176, Statutes of 2011) which decreased the rate at which a city or county may levy, increase,
or extend a transactions and use tax from 0.25 to a rate of 0.125 (chaptered and supported)
AB 1446 authorizes the LA MTA to extend an additional transactions and use tax
beyond its current duration, if approved by voters, and specifies that extra tax revenues must
be used for long-range transportation projects
Vehicle License Fees
AB 1098 would have restored VLF allocations to cities that were eliminated
by SB 89 (supported but vetoed)
SB 1492 allows San Francisco to impose a local VLF if voter-approved on some vehicles if
specified conditions are met
Economic development
SB 214 (Wolk), AB 2144 (Perez) and SB 1156 (Steinberg), are infrastructure
Related bills; the Governor indicated he wanted to see the dissolution of
redevelopment completed before considering expanded authority
(supported SB 214 but vetoed)
www.MuniServices.com
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Thursday, October 11, 2012
Underground economy
2012 Legislative
Review
AB 1185 would have established a collaborate effort of State agencies and other
parties to combating illegal underground operations program (supported but did not
reach the Governor’s desk / CMRTA bill)
Local operations
The score
Signed: 876
Vetoed: 120
AB 1616 regulates to “cottage kitchens” and the regulation of certain foods prepared
in a home kitchen. Includes permit and licensing requirements. (League opposed /
chaptered / CMRTA bill)
SB 1162 will authorize animal control officer to subdue stray/ abandoned animals;
background checks for officers will be a local responsibility (League supported and
chaptered)
SB 2231 would have made significant changes to the law and impose requirements
on cities and counties for sidewalk repairs (League opposed / CMRTA bill)
SB 1436 provides “Good Samaritan” protections for voluntary providers who acquire
automated electronic defibrillators (AED) (League supported/chaptered)
www.MuniServices.com
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Thursday, October 11, 2012
California Legislation
2012 Legislative
Review
Utility Users Taxes
AB 1050 (Ma) would have created a mechanism for collecting existing UUT from
prepaid wireless purchases (return as new bill number / future seminars)
SB 1161 (Padilla) addresses Voice over Internet Protocol (VoIP) technology and in its final
form protects UUT revenues derived from VOIP (worked with author for protective language
and supported chaptered)
Federal Legislation
S 543 Wireless Tax Fairness Act and S 971 Digital Goods and Services Tax Fairness
Act threatens local UUT revenues and how locals tax UUT’s (oppose)
HR 1002 Wireless Tax Fairness Act restricts how locals tax mobile phone service
(worked with stakeholders and author and had bill amended with protective
language for cities with voter approved modern ordinances)
Internet Tax Freedom Act efforts to make permanent the existing ban of local
taxes on Internet access (moratorium expires in 2014) (working with stakeholders to
amend bill with protective language for cities with voter approved modern ordinances)
Streamlined Sales Tax / UUT
HR 3179, Marketplace Equity Act and S 1832 Marketplace Fairness Act currently
drafted to recover taxes from remote sellers; current language goes beyond
sales and use tax collection and could harm UUT and TOT (working with authors)
www.MuniServices.com
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Thursday, October 11, 2012
Collection Requirements for Out-of-State Retailers
Trivia: What was the
year of the use tax
law?
Effective September 15, 2012
BOE Regulation 1684,
Collection of Use Tax by
Retailers
Engaged in business
Out-of-state retailers are required to register with the BOE to collect and remit California
use tax if the retailer has substantial nexus with California (Note: an on-line retailer
must meet dollar limitations of $10,000 and $1,000,000 (Section (c) (3)(A) and (B) of
Regulation 1684) to be required to be registered and collect the use tax.)
Substantial nexus
Has an affiliate connection in California and refers potential customers to the retailer
Is a members of a commonly controlled and combined reporting group
Use Tax: imposed on the
purchaser for transactions in
which the sales tax is not
collected.
Sales Tax: imposed on the
total retail price of any
tangible personal property
Is situated in California
Application of district tax
Online retailers would only be required to collect and remit district tax for those
cities/counties where they have physical nexus (i.e. San Bernardino Transit) may choose to
voluntarily collect and remit the district tax statewide but are not required to do so.
Some of the online retailers do automatically charge it across the board and others
just where it would be required based on where they are "engaged in business.”
www.MuniServices.com
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Thursday, October 11, 2012
November 2012
Propositions
Proposition 30: Temporary Taxes to Fund Education. Guaranteed Local
Public Safety Funding (“no position” taken by League during Annual
conference)
A YES vote on this measure means: The state would increase personal income taxes
on high-income taxpayers for seven years and sales taxes for four years. The new tax
revenues would be available to fund programs in the state budget. A NO vote on this
measure means: The state would not increase personal income taxes or sales taxes.
State spending reductions, primarily to education programs, would take effect in
2012-13
10 Statewide Ballot
Propositions November
2012
See Policy Update for
further detail
www.MuniServices.com
Comment: $6 billion “trigger” cuts to current budget should it fail/ possible special
session
Proposition 31: State Budget. State and Local Government (League voted
to not vote during Annual conference)
A YES vote on this measure means: Certain fiscal responsibilities of the Legislature
and Governor, including state and local budgeting and oversight procedures, would
change. Local governments that create plans to coordinate services would receive
funding from the state and could develop their own procedures for administering
state programs. A NO vote on this measure means: The fiscal responsibilities of the
Legislature and Governor, including state and local budgeting and oversight
procedures, would not change. Local governments would not be given (1) funding to
implement new plans that coordinate services or (2) authority to develop their own
procedures for administering state programs
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Thursday, October 11, 2012
Parking Citations
Revenues from
parking citations
AB 2366 would have increased fix-it tickets issued on a parking ticket from $10 to $25
(vetoed)
SB 1330 would have threatened technology used in collecting revenue from parking
Citations (worked with author and opposed)
Collaboration with 594 parking
agencies / $ 500 million
currently outstanding in
California
League Resolution
Audit authority for cities to audit the distribution of court imposed fines, fees, penalty
assessments and administrative costs for criminal and traffic violations.
Legislative changes in 2013 may be sought to the “Priority Distribution” statutory formula
so that cities receive the total cost of issuing, processing and testifying in court on criminal
cases and traffic violations. The current statutory formula allows reductions to the base fine
but maintains the same level of penalty assessments, based upon the full penalty charge.
Any reductions that may occur in fines, fees, assessments or costs determinations should
be equally distributed from the total fine imposed, not just from the city base fine.
www.MuniServices.com
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Thursday, October 11, 2012
Local “balloting” 101
Over 350 local
measures this
November
237 for taxes, bonds or
fees, including three
by initiative
35 proposals to extend
or increase
transactions and use
taxes
www.MuniServices.com
Business Tax Measures: Majority Vote General
Cities are exploring the option of implementing a modified
business tax program. Comparative analyses and surveys of
business tax fees and classifications are critical








Richmond: Sugared beverages
El Monte: Sugared beverages
Artesia: General increment
Rancho Cordova: Cardrooms
Needles: Tax on Marijuana
Rialto: Petroleum business
San Francisco: Gross receipts
Vacaville: “Excise tax" also is TOT, etc.
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Thursday, October 11, 2012
THE EASE PRINCIPLE: Evaluating the local revenue source
Local “balloting” 101
Equity: Equity if the tax burden falls equally across all
businesses and individuals.
Cities are exploring the
option of implementing
a modified business tax
program. Comparative
analyses and surveys of
business tax fees and
classifications are critical
Administrative: Involves minimizing the cost of
compliance on taxpayers, minimizing the cost to the
City of enforcing tax policy and maximizing taxpayer
compliance.
Stability: Focuses on how the tax in question would
affect the volatility of the revenue.
Economic Benefits: Economic efficiency,
promotion of the City’s economic objectives and
minimum disruption on taxpayer.
www.MuniServices.com
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Thursday, October 11, 2012
Sunrise or Sunset
The AB 63/ SB 1146 FTB
City Business Tax
Exchange Program
Expires January 1, 2014
What do we want the
2013 annual
conference message to
be?
www.MuniServices.com
Advocacy
 Establish CMRTA goals over the next 10 months
 Identify internal and external stakeholders
 Cities that utilize the program should contact lobbyist
 Will the CMRTA work with an advocate/ lobbyist
 Fact sheets and letters
 Quantifiable data should be easy to explain
 “Elevator speech”
 Analyze previous votes for returning legislators and future
votes – know where the votes come from
 Know the legislative history (next slide)
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Thursday, October 11, 2012

Sunrise or Sunset

The Next 10 Months
October 2012: Stakeholders
collaborate
December 2012: New
Legislature is sworn in
January 2013: Two-year
session begins
January 2013: Legislative
Counsel should receive
language from the author by
end of January 2013
February 2013: Author
introduces bill by third week
in February
August 2013: Recess
www.MuniServices.com



1984: The City Business Tax program (CBT) dates to 1984, when the FTB first
sponsored legislation mandating California cities to annually report information
obtained from businesses they licensed. The FTB “deputized” California’s
municipalities to identify new businesses subject to filing state income tax
returns.
1999: The program mandate was repealed by the Legislature in 1999. After the
elimination of the mandate, the Franchise Tax Board began contacting cities
directly in 2000-2001 to purchase the business tax data. Many cities sold their
data to the FTB, while many others could not because there was no longer a
state law requiring them to provide the data and confidentiality restrictions in
their own municipal code prohibited them from providing the State the
business tax data it wanted.
2000: Chapter 915, Statutes of 2001 (AB 63) and Chapter 345, Statutes of 2008
(SB 1146) authorized the Franchise Tax Board (FTB) to disclose to city tax
officials who execute an agreement with the FTB certain information regarding
local business taxpayers. California Municipal Revenue and Tax Association
(CMRTA) sponsored AB 63 that created the first opportunity for cities to obtain
data from the FTB. AB 63 obligated cities to pay the FTB’s costs in providing
their data and many cities desirous of the FTB’s data for their jurisdiction could
not afford to pay the FTB fees. AB 63 also had a December 2008 sunset
provision.
2008: SB 1146 extended the sunset for the program to January 1, 2014.
2010: SB 1036 (held in Committee) included provisions that would have
continued to allow city employees (or their authorized agents) to use this
information and bound by the same confidentiality requirements as FTB
employees. The measure was supported by the League of California Cities, the
California Municipal Revenue Tax Association and several cities.
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Thursday, October 11, 2012
Partnering with our
Government
Relations Team
MuniServices
League of California Cities
building
1400 K Street, Suite 301
Sacramento, CA 95814
Fran Mancia, VP of Government Relations
P: 800.800.8181 (5013)
E: [email protected]
Brenda Narayan, Director of Government Relations
P: 800.800.8181 (5014)
E: [email protected]
Christy Bouma and Meagan Brightwell, Legislative
Advocates
Capitol Connection
Glen Everroad, Consultant
P: 949.874.4786
E: [email protected]
League Partner since 1995
Ryder Smith, Consultant
Tripepi Smith
P: 626.536.2173
E: [email protected]
www.MuniServices.com
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Thursday, October 11, 2012