HomeMy WebLinkAboutAB 1523 - Tax Levies CITY OF PALM DESERT
COMMUNITY SERVICES DEPARTMENT
STAFF REPORT
REQUEST: CONSIDERATION OF LEGISLATIVE REVIEW COMMITTEE ACTION
ON AB 1523 (C. CALDERON)AT ITS MEETING OF MARCH 24, 2009.
DATE: April 9, 2009
CONTENTS: AB1523 Language
RECOMMENDATION:
By Minute Motion, concur with the action taken by the Legislative Review Committee at its
meeting of March 24, 2009, and direct staff to prepare a letter of opposition for the Mayor's
signature with regard to AB 1523 (C. Calderon) relative to tax levies.
BACKGROUND:
Existing law imposes a sales and use tax for the storage, use and other consumption of
personal property of tangible personal property in this State at a rate of 6 %% of the gross
receipts. If passed, AB 1523 would, during the period of the 1% sales and use tax increase
above the rate of 6'/%, exclude from that 1%tax rate hike the gross receipts that are subject to
a fixed price pursuant to a contract entered into prior to the operative date of the tax increase.
The City of Palm Desert opposes any bill which would remove funds that are used to provide
services and facilities for its residents and guests.
Therefore the Legislative Review Committee recommends that the City Council oppose AB 1523
and direct staff to prepare a letter stating that position to appropriate legislators and committees
for the Mayor's signature.
PATRICIA SCULLY, CFE P L GIBSON
SENIOR MANAGEMENT ALYST DIRECTOR OF FINANCE/CITY TREASURER
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r HEILA R. N M. WOHLMUTH
ACM/COMMUNITY SER ES CI Y MANAGER
CITY COUNCILACTtON
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Original on File with City Cler 's Of�ce
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2009 CA A 1523
AUTHOR: Calderon C
VERSION: Introduced
VERSION DATE: 02/27/2009
ASSEMBLY BILL No. 1523
INTRODUCED BY Assembly Member Charles Calderon
FEBRUARY 27, 2009
An act to add Section 6376.3 to the Revenue and Taxation Code, relating to taxation, to take effect
immediately,tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1523, as introduced, Charles Calderon. Sales and use taxes: exemption: fixed price contract.
Existing law imposes a state sales and use tax on retailers and on the storage, use, or other
consumption of tangible personal property in this state at the rate of 61/4% of the gross receipts from the
retail sale of tangible personal property in this state and of the sales price of tangible personal property
purchased from any retailer for storage, use, or other consumption in this state.
This bill would, during the period of a 1% sales and use tax increase above the rate of 61/4%, exclude
from that 1%rate of tax, the gross receipts from certain sales and uses of tangible personal property that
are subject to a fixed price pursuant to a contract entered into prior to the operative date of the sales and
use tax increase.
Counties and cities are authorized to impose local sales and use taxes in conformity with state sales
and use taxes. Exemptions from state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.
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 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.
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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
AB 1523, as introduced, Charles Calderon. Sales and use taxes: exemption: fixed price contract.
Existing law imposes a state sales and use tax on retailers and on the storage, use, or other
consumption of tangible personal property in this state at the rate of 61/4% of the gross receipts from the
retail sale of tangible personal property in this state and of the sales price of tangible personal property
purchased from any retailer for storage, use, or other consumption in this state.
This bill would, during the period of a 1% sales and use tax increase above the rate of 61/4%, exclude
from that 1%rate of tax, the gross receipts from certain sales and uses of tangible personal property that
are subject to a fixed price pursuant to a contract entered into prior to the operative date of the sales and
use tax increase.
Counties and cities are authorized to impose local sales and use taxes in conformity with state sales
and use taxes. Exemptions from state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.
Section 2230 of the Revenue and T�ation 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 T�ation Code,no
appropriation is made and the state shall not reimburse 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.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6376.3 is added to the Revenue and Taxation Code, to read:
6376.3. From the operative date of the act adding Sections 6051.7 and 6201.7, to the date on which
the taxes imposed by Sections 6051.7 and 6201.7 cease to be operative,there is exempted from the taxes
imposed by this part an amount equal to an amount that is attributable to a 1 percent rate of tax with
respect to the following:
(a) The gross receipts from the sale of, and the storage, use, or other consumption in this state of, the
following:
(1) Tangible personal property, if the seller is obligated to furnish or the purchaser is obligated to
purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of
the act adding Sections 6051.7 and 6201.7.
(2) Materials and fixtures obligated pursuant to an engineering construction contract or a building
construction contract entered into for a fixed price prior to the operative date of the act adding Sections
6051.7 and 6201.7.
For purposes of this subdivision, tangible personal property shall not be deemed obligated pursuant to
a contract for any period of time for which any party to the contract has the right to terminate the
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contract upon notice, whether or not the right is exercised.
(b)A lease of tangible personal properiy that is a continuing sale of the property for any period of
time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the
operative date of the act adding Sections 6051.7 and 6201.7. For purposes of this subdivision,the sale or
lease of tangible personal properiy shall be deemed not to be obligated pursuant to a contract or lease for
any period of time for which any party to the contract or lease has the unconditional right to terminate
the contract or lease upon notice, whether or not that right is exercised.
(c) The possession of, or the exercise of, any right or power over tangible personal property pursuant
to a lease that is a continuing purchase of the property for any period of time for which the lessee is
obligated to lease the property for an amount fixed by a lease entered into prior to the operative date of
the act adding Sections 6051.7 and 6201.7. For purposes of this subdivision, the storage, use, or other
consumption of, or possession of, or exercise of any right or�ower over, tangible personal property shall
be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party
to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether
or not the right is exercised.
SEC. 2.
Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this
act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under
this act.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall
go into immediate effect.
SECTION 1. Section 6376.3 is added to the Revenue and Taxation Code, to read:
6376.3. From the operative date of the act adding Sections 6051.7 and 6201.7, to the date on which
the t�es imposed by Sections 6051.7 and 6201.7 cease to be operative, there is exempted from the taxes
imposed by this part an amount equal to an amount that is attributable to a 1 percent rate of tax with
respect to the following:
(a) The gross receipts from the sale of, and the storage, use, or other consumption in this state of,the
following:
(1) Tangible personal property, if the seller is obligated to furnish or the purchaser is obligated to
purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of
the act adding Sections 6051.7 and 6201.7.
(2) Materials and fixtures obligated pursuant to an engineering construction contract or a building
construction contract entered into for a fixed price prior to the operative date of the act adding Sections
6051.7 and 6201.7.
For purposes of this subdivision, tangible personal property shall not be deemed obligated pursuant to
a contract for any period of time for which any party to the contract has the right to terminate the
contract upon notice, whether or not the right is exercised.
(b) A lease of tangible personal property that is a continuing sale of the property for any period of
time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the
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operative date of the act adding Sections 6051.7 and 6201.7. For purposes of this subdivision, the sale or
lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for
any period of time for which any party to the contract or lease has the unconditional right to terminate
the contract or lease upon notice, whether or not that right is exercised.
(c) The possession of, or the exercise of, any right or power over tangible personal property pursuant
to a lease that is a continuing purchase of the property for any period of time for which the lessee is
obligated to lease the property for an amount fixed by a lease entered into prior to the operative date of
the act adding Sections 6051.7 and 6201.7. For purposes of this subdivision, the storage, use, or other
consumption of, or possession of, or exercise of any right or power over, tangible personal property shall
be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party
to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether
or not the right is exercised.
SEC. 2.
Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this
act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under
this act.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall
go into immediate effect.
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