Proposition 26 FAQ Updated

In the wake of Proposition 26, which requires voter approval for some fees that local agency legislative bodies could previously approve, city attorneys wrote a document in consultation with county counsels to answer common questions about the measure. You can find the helpful FAQhere.

Reporting Audit Findings

AB 162 (Smyth) – Request for Comment
As Introduced on January 19, 2011

AB 162, by Assembly Member Cameron Smyth, would require a local agency to send any audit findings of “possible deficiencies” immediately to the Controller, who would then prepare a report on the matter and send it to the Senate and Assembly Local Government Committees. Under current law, the Controller simply receives audit reports prepared in compliance with the federal Single Audit Act of 1984 and ascertains the its compliance with that Act.

CSAC is very interested in hearing counties’ reaction to this bill, either formal or informal. Please send them to Geoffrey Neill.

Collecting Sales and Use Taxes

AB 153 (Skinner) – Support
As Introduced on January 18, 2011

AB 153, by Assembly Member Nancy Skinner, would change the definition of the retailers that are required to collect sales and use taxes from their customers, to include out-of-state retailers with commission-based associates in the state. It only applies to retailers whose sales related to their associates’ referrals exceed $10,000.

The bill aims specifically at companies like Amazon.com. Similar bills in recent years have navigated the Legislative process with varying degrees of success, but none has become law. The bill only requires a majority vote because it changes the mechanism for collecting an existing tax liability instead of imposing a higher burden on a taxpayer. Under current law, the liability for remitting these transactions rests with the consumers, who are supposed to announce their liabilities on their personal income tax filings, but who rarely do.

AB 155 (Calderon) – Support
As Introduced on January 18, 2011

AB 155, by Assembly Member Charles Calderon, would make three changes to improve collections of use tax owed on purchases made from out-of-state retailers.

The first change would be to the definition of “retailer engaged in business in this state,” to mean all retailers that the commerce clause of the US Constitution allows the state to impose a use tax collection duty. It would specifically include members of commonly controlled groups where at least one of the members of the group is engaged in business in California. The second change would require retailers that do not fit that category to nevertheless remind consumers that they owe a use tax on their purchases. The final change would require anyone who sells at least $500,000 worth of property subject to the use tax, but who is not required to register with the Board of Equalization, to report to the Board the names and sales amounts of the purchasers.

As with AB 153, these changes aim to reduce the use tax gap caused by the increasing use of internet sales by Californians. Assembly Member Calderon carried a similar bill last year, which did not pass off the Senate floor.

State Mandates

SB 113 (Liu) – Pending
As Introduced on January 19, 2011

SB 113, by Senator Carol Liu, would specify that changes to the “boilerplate” language included in the documents that describe exactly which activities are reimbursable do not reopen the filing deadline for local agencies to claim reimbursement.

Generally, any amendment to these documents — called “Parameters and Guidelines” — reopen the window for local agencies to file claims for past years. But SB 113 would state that if an amendment only changes the boilerplate language and does not increase or decrease the reimbursable costs, that window would not reopen. In the past, these types of changes have led to agencies that missed previous deadlines filing for past years. One open question is whether the changes SB 113 would implement would only apply prospectively, or also retroactively.