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AB-398 COVID-19 Local Government and School Recovery and Relief Act.(2019-2020)

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Date Published: 06/17/2020 09:00 PM
AB398:v94#DOCUMENT

Amended  IN  Senate  June 17, 2020
Amended  IN  Senate  May 27, 2020
Amended  IN  Assembly  April 11, 2019
Amended  IN  Assembly  April 01, 2019
Amended  IN  Assembly  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 398

Introduced by Assembly Member Chu

February 06, 2019

An act to add Part 1.5 (commencing with Section 16555) to Division 7 of the Business and Professions Code and to add and repeal Part 25.5 (commencing with Section 47100) of Division 2 of the Revenue and Taxation Code, relating to local government finance, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 398, as amended, Chu. COVID-19 Local Government and School Recovery and Relief Act.
Existing law imposes various taxes, including taxes on the privilege of engaging in certain activities. The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges. Existing law establishes the California Department of Tax and Fee Administration in the Government Operations Agency to administer various statutory taxes and fees, as provided. Existing law provides that the Controller shall superintend the fiscal concerns of the state.
This bill would, on and after January 1, 2021, but before January 1, 2026, impose a tax on a large business, defined as an a for-profit, private entity that has more than 500 employees that perform any part of their duties within the state, at the rate of $275 per employee. The bill would require the California Department of Tax and Fee Administration to administer the tax and collect the tax pursuant to the Fee Collection Procedures Law. The bill would require the department to deposit all tax revenues, penalties, and interest collected pursuant to these provisions, less refunds and costs of administration, into the COVID-19 Local Government and School Recovery and Relief Fund, which the bill would establish. The bill would continuously appropriate the fund to the Controller for allocation and distribution to counties, cities, and K-12 school districts, as specified.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
By expanding the scope of the Fee Collection Procedures Law, the violation of which is a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The COVID-19 pandemic has had a widespread impact across the globe.
(b) The COVID-19 pandemic has led to loss of life. The pandemic will continue to have a negative impact on people who have the virus and those around them.
(c) Governor Newsom issued an Executive Order declaring a state of emergency on March 4, 2020.
(d) On March 19, 2020, the Governor issued a statewide stay-at-home order.
(e) In addition to the health impacts of the pandemic, the measures the state and local governments took to protect public health including shelter-in-place and school closures have already had economic impacts on state, local, and personal finances.
(f) According to the Department of Finance, the economic disruption from the pandemic is expected to result in a recession and have significant negative effects on state revenues.
(g) This impact is expected to be immediate and ongoing, affecting the 2019–20 fiscal and continuing into the 2020–21 fiscal year and beyond.
(h) According to analysis by the League of California Cities, California cities are projecting a nearly $7 billion general revenue shortfall over the next two fiscal years.
(i) This shortfall will grow by billions if stay-at-home orders extend into the summer and beyond.
(j) According to the League of California Cities, 90 percent of cities projected that these shortfalls will impact core city services, including police, fire service, emergency management and planning and housing, and a majority of the cities surveyed anticipate lay-offs or furloughs, which will further impact core city services for residents, as well as local government employees.
(k) California cities need funding to continue to provide services to their residents and adapt to the impacts of the COVID-19 pandemic.

SEC. 2.

 Part 1.5 (commencing with Section 16555) is added to Division 7 of the Business and Professions Code, to read:

PART 1.5. COVID-19 Local Government and School Recovery and Relief Act

16555.
 This part shall be known, and may be cited, as the COVID-19 Local Government and School Recovery and Relief Act.

16555.2.
 (a) There is hereby established in the State Treasury the COVID-19 Local Government and School Recovery and Relief Act Fund. Notwithstanding Section 13340 of the Government Code, moneys in the fund are hereby continuously appropriated to the Controller without regard to fiscal years for allocation pursuant to this section and Section 16555.3.
(b) The Controller may use up to 5 percent of the moneys deposited in the fund to cover its costs to administer this article.

16555.3.
 (a) (1) The Controller shall allocate moneys in the fund, less administrative costs pursuant to subdivision (b) of Section 16555.2, among counties in proportion to that share of the total number of employees counted for purposes of Section 47100.2 of the Revenue and Taxation Code that are reported to perform the majority of their duties in each county.
(2) The Controller shall provide written notice to each county that receives funds regarding the allocation and distribution schedule to be used for purposes of subdivision (b).
(b) A county that receives moneys pursuant to subdivision (a) shall distribute the moneys according to the following schedule:
(1) Twenty percent shall be distributed to the county.
(2) Thirty percent shall be distributed among the cities in the county in proportion to that share of the total number of employees counted for purposes of Section 47100.2 of the Revenue and Taxation Code for cities in the county that are reported to perform the majority of their duties in each of those cities.
(3) Fifty percent shall be distributed among regions in the county based on city boundaries in the proportions used in paragraph (2), and each city shall then distribute the funds in equal shares among the K-12 school districts that operate in the city’s jurisdiction.
(c) A county that receives moneys pursuant to subdivision (a) may use its portion of the distribution to cover its costs of administering this section.
(d) The Controller may use reports provided by the California Department of Tax and Fee Administration pursuant to subdivision (d) of Section 47100.4 of the Revenue and Taxation Code for purposes of determining the distribution schedule under this section.

SEC. 3.

 Part 25.5 (commencing with Section 47100) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 25.5. COVID-19 Local Government and School Recovery and Relief Tax

47100.
 This part shall be known, and may be cited, as the COVID-19 Local Government and School Recovery and Relief Tax.

47100.1.
 For purposes of this part, all of the following definitions shall apply:
(a) “Department” means the California Department of Tax and Fee Administration.
(b) “Employee” means any person who performs work, labor, or services for a large business, is on the large business’s payroll, and performs any part of their duties within the state.
(c) “Large business” means an a for-profit, private entity, including, but not limited to, a limited liability company, corporation, or limited liability partnership, that has more than 500 employees that perform any part of their duties within the state.
(d) “Payroll” means the remuneration paid by a large business to the employees who perform work, labor, services, or make other similar contributions for the large business. “Payroll” includes, but is not limited to, salaries, wages, tips, or other draws or distributions made to employees, officers, partners, or members of the large business as compensation for their labor and services.

47100.2.
 (a) For taxable years beginning on or after January 1, 2021, but before January 1, 2026, a tax is hereby imposed on a large business at the rate of two hundred seventy-five dollars ($275) per employee.
(b) The tax imposed by this part shall be in addition to any other taxes imposed by law, including, without limitation, any ad valorem or excise taxes imposed by the state, or any political subdivision of the state, or any local business license taxes that may be incurred for the privilege of doing business in a city, county, or city and county.

47100.3.
 (a) The department shall administer and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part and references to “fee payer” shall include any person liable for the payment of the tax imposed by this part.
(b) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, provisions governing collections, reporting, refunds, and appeals.

47100.4.
 (a) Each large business subject to the tax imposed by this section shall prepare and file, under penalty of perjury, with the department a quarterly return in the form prescribed by the department containing information as the department deems necessary or appropriate for the proper administration of this part.
(b) Each large business subject to the tax imposed by this section shall additionally prepare and file, under penalty of perjury, a quarterly report detailing the number of employees that perform the majority of their duties in each city and each county in the state.
(c) The return required by subdivision (a) and the report required by subdivision (b) shall be filed on or before the last day of the calendar month following the calendar quarter to which it relates, together with a remittance payable to the board for the amount of tax due for that period.
(d) The department shall provide the report described in subdivision (b) to the Controller for purposes of the allocation and distribution of funds pursuant to Part 1.5 (commencing with Section 16555) of Division 7 of the Business and Professions Code.

47100.5.
 All taxes, interest, penalties, and other amounts collected pursuant to this part, less refunds and costs of administration, shall be deposited into the COVID-19 Local Government and School Recovery and Relief Act Fund established in Section 16555.2 of the Business and Professions Code.

47100.6.
 This part shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.