from Kevin Pedrotti, Legislative Advocate for the Golden State Builders Exchanges
Legislation
The policy committee deadline for fiscal bills has passed. There are a few non-fiscal bills we are active on that will be considered prior to the May 18 non-fiscal policy deadline.
AB 1941 (Ma) will be heard soon in the Assembly Revenue and Taxation Committee. The bill would levy a 1.25% state tax on persons leasing or renting heavy equipment in lieu of the local personal property tax that is currently paid by the owner of the equipment. We have had several meetings with the author and told the purpose is to address inconsistent assessments of similar heavy equipment among counties and to relieve equipment leasing companies of the burden of appealing assessments. The author said they intend to amend bill, but the bill in print raises concerns. Currently, the costs of personal property taxes paid by the heavy equipment owner are embedded in the rental charge. Depending on the competitiveness of the local market, those taxes may be wholly passed along to the person renting the equipment or partially absorbed by the equipment owner. The practical effect of the bill would be to allocate the entire incidence of the tax to those persons, mostly licensed contractors, who frequently lease or rent backhoes, excavators, graders, and other heavy construction and earth moving equipment. In addition, this change will result in higher costs to contractors renting construction equipment, but could give equipment owners a windfall profit if the rental fees they charge are not reduced to reflect the tax savings on the equipment they already own.
The Senate Transportation and Housing Committee will hear SB 1396 next week. The bill would cap the state excise tax on gasoline at 35.7 cents and limit sales tax to the first $4.00 per gallon of gasoline. It would also cap diesel taxes at their current levels. Transportation and construction interests have fought for many years to preserve the retention of transportation funding. The recently re-authorized Fuel Tax Swap (2011) finally stabilized the state and local transportation funding picture, so that work can be done on maintaining highways and roads. This bill would reduce road funding.
We had a meeting this week with Assembly Member Bonnie Lowenthal on her AB 1514. The bill increases civil penalties for violations of excavation laws and authorizes the Public Utilities Commission (PUC) to prescribe rules for public utilities that are conduct subsurface operations and provide information to the State Attorney General or local district attorney on matters involving excavation violations. The construction industry and some utilities opposed the bill because of the PUC’s involvement with CSLB jurisdictional issues, excessive fines for what could be ministerial issues, and the fact that DA’s already have the ability to bring charges should a contractor knowingly circumvent excavation protocols. We are continuing to work on bill language that does not bring financial harm to contractors for minor omissions.
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