(1)The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.

This bill, on and after January 1, 2017, would impose a surtax on every individual for each purchase of a cocktail from an on-sale licensee for consumption or other use on the licensed, in-state premises of that on-sale licensee at the rate of $0.05 per cocktail, as defined. This bill would require the surtax rate to be adjusted annually, as specified. This bill would require an on-sale licensee to separately state and collect the surtax from an individual, as specified.

This bill would require the State Board of Equalization to administer and collect the surtax in accordance with the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program. The bill would require an on-sale licensee to register with the board, to prepare and file with the board returns using electronic media in the form prescribed by the board, containing specified information, and to remit the fee quarterly. The bill would require that all revenues, less refunds, be remitted to the board and deposited in the Healthy California Special Fund for the funding of, among other things, developmental disability services, upon appropriation by the Legislature.

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.

(2)The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption of tangible personal property purchased from a retailer for the storage, use, or other consumption in this state measured by sales price. That law defines the terms gross receipts and sales price.

This bill would exclude from gross receipts subject to tax the amount of surtax imposed by this bill.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.

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 any local agencies for sales and use tax revenues lost by them pursuant to this bill.

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 XIIIA of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

(1)The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.

This bill, on and after January 1, 2016, 2017, would impose a surtax on every individual for each purchase of a cocktail from an on-sale licensee for consumption or other use on the licensed, in-state premises of that on-sale licensee at the rate of $0.05 per cocktail, as defined. This bill would require the surtax rate to be adjusted annually, as specified. This bill would require an on-sale licensee to separately state and collect the surtax from an individual, as specified.

This bill would require the State Board of Equalization to administer and collect the surtax in accordance with the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program. The bill would require an on-sale licensee to register with the board, to prepare and file with the board returns using electronic media in the form prescribed by the board, containing specified information, and to remit the fee quarterly. The bill would require that all revenues, less refunds, be remitted to the State Board of Equalization board and deposited in the Healthy California Special Fund for the funding of, among other things, developmental disability services, upon appropriation by the Legislature.

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.

(2)The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption of tangible personal property purchased from a retailer for the storage, use, or other consumption in this state measured by sales price. That law defines the terms gross receipts and sales price.

This bill would exclude from gross receipts subject to tax the amount of surtax imposed by this bill.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.

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 any local agencies for sales and use tax revenues lost by them pursuant to this bill.

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 XIIIA of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

(1)The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.

This bill, on and after January 1, 2016, would impose a surtax on every individual for each purchase of a cocktail from an on-sale licensee for consumption or other use on the licensed, in-state premises of that on-sale licensee at the rate of $0.05 per cocktail, as defined. This bill would require the surtax rate to be adjusted annually, as specified. This bill would require an on-sale licensee to separately state and collect the surtax from an individual, as specified.

This bill would require the State Board of Equalization to administer and collect the surtax in accordance with the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program. The bill would require an on-sale licensee to register with the board, to prepare and file with the board returns using electronic media in the form prescribed by the board, containing specified information, and to remit the fee quarterly. The bill would require that all revenues, less refunds, be remitted to the State Board of Equalization and deposited in the Healthy California Special Fund for the funding of, among other things, developmental disability services, upon appropriation by the Legislature.

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.

(2)The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption of tangible personal property purchased from a retailer for the storage, use, or other consumption in this state measured by sales price. That law defines the terms gross receipts and sales price.

This bill would exclude from gross receipts subject to tax the amount of surtax imposed by this bill.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.

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 any local agencies for sales and use tax revenues lost by them pursuant to this bill.

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 XIIIA of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

ASSEMBLY THIRD READING

ATR Bill Id:AB 18 X2

Author:(Bonilla)

As Amended Ver:September 10, 2015

2/3 vote. Tax levy

SUMMARY: Imposes a $0.05 per drink tax on all spirits-based cocktails purchased in restaurants, bars, and other venues in the state to fund developmental disability services and other health programs.

FISCAL EFFECT: According to the Assembly Finance Committee:

1. Board of Equalization (BOE) Costs. According to BOE, approximately $2 million is necessary for start-up costs to implement a new surtax program. The initial costs for this bill would be paid for by a one-time General Fund loan, to be reimbursed once revenues are generated. There are approximately 15,000-20,000 licensees that would need to register with BOE for the purposes of administering this new tax. According to BOE, the one-time implementation costs for this bill would include developing computer programs, developing forms and publications, creating registration for licensees, carrying out compliance and audit efforts, developing regulations, training staff, and answering surtax-related inquiries from taxpayers and licensees.

This bill would likely result in ongoing annual costs to the BOE of approximately $1 million for the continued support of this program. This cost would be funded by revenues generated from the surtax. The ongoing costs will support the ongoing maintenance and annual restructuring of this tax.

1. BOE Revenue. The BOE has estimated that this new tax will generate $22 million annually. This estimate is based upon data from the North American Industry Classification System (NAICS) codes related to food services and drinking places, as well as 2012 United States (U.S.) Census data specifically pertaining to specified NAICS codes. The methodology used for this revenue estimate is based upon available taxable sales data.

COMMENTS:

Under the current Alcoholic Beverage Tax Law, the following taxes and surcharges are assessed on the sale of beer, wine, and distilled spirits:

According to the author, this bill will help provide the necessary funding to ensure California's compliance with the Lanterman Developmental Disabilities Services Act (Lanterman Act), a California law passed in 1969, which provides people with developmental disabilities and their families the right to receive necessary services in their community. There have been significant reductions in the Department of Developmental Services (DDS) budget. One billion dollars has been lost since the Great Recession. This is about 25% of the entire DDS budget. According to information provided by the author, approximately $400 million is needed for DDS programs including in-home supportive services, community-based programs, and supportive living services. The current regional center caseload ratio is 1 worker/75 consumers. However, in statute the regional center caseload is required to be 1 worker/62 consumers. Given the current regional center caseload, the state is at risk for losing federal dollars if it does not come into compliance with the Lanterman Act. In order to meet caseworker ratios required under current statute, the state would need about 650 additional regional center workers. The author further states that the funding from a $0.05 charge on cocktails is needed for providers to deliver respite care, transportation, day treatment programs; and independent and supported living programs to our developmental disability community.

Alcohol Consumption and Public Health. According to the Centers for Disease Control and Prevention (CDC), excessive alcohol use, either in the form of heavy drinking (drinking 15 or more drinks per week for men or eight or more drinks per week for women), or binge drinking (drinking five or more drinks on an occasion for men or four or more drinks on an occasion for women), can lead to increased risk of health problems such as liver disease or unintentional injuries. Alcohol use contributes to illnesses as varied as liver cirrhosis, esophageal cancer, pancreatitis, and epilepsy. It also plays a role in violent crimes such as sexual assaults, domestic violence, and child abuse, while also causing serious injuries and traffic fatalities.

According to the CDC's Behavioral Risk Factor Surveillance System (BRFSS) survey, more than half of the adult U.S. population drank alcohol in the past 30 days. Approximately 5% of the total population drank heavily, while 17% of the population binge drank. The 2010 BRFSS notes that, compared to other states, Californians report relatively low rates of binge drinking. CDC states that excessive alcohol consumption cost the United States $223.5 billion in 2006. This amounts to about $1.90 per drink, or about $746 per person. The costs due to excessive drinking largely resulted from losses in workplace productivity (72% of the total cost), health care expenses (11%), and other costs due to a combination of criminal justice expenses, motor vehicle crash costs, and property damage.

While a relatively small percentage of drinkers report binge or heavy drinking, these drinkers accounts for a disproportionately high percentage of state costs. CDC estimates that binge drinking is responsible for more than 70% of the cost of excessive alcohol use in all states and the District of Columbia. Additionally, about $2 of every $5 of the economic costs of excessive alcohol use were paid by federal, state, and local governments. CDC found that the total state costs for excessive drinking were generally of the same order of magnitude as the costs for smoking and Medicaid.

California is the largest market for alcohol sales in the United States. It is estimated that in a single year, Californians consume almost 14 billion alcoholic drinks (including spirits, wine, and beer). The National Institute of Alcohol Abuse and Alcoholism Surveillance Report #102 estimated that, nationally, Americans consumed an average of 2.34 gallons of ethanol each in 2013. California was ranked with 30 other high consumption states that had over 2.31 gallons per person per year. According to the Distilled Spirits Council of the U.S., about one-third of alcohol consumed in California is spirts-based, while the remaining two-thirds are wine and beer.

A 2006 study published in the American Journal of Preventive Medicine calculated the cost of excessive alcohol consumption in California at $32 billion, with $13.7 billion coming from the state funds. A 2008 study published in the journal Alcoholism: Clinical and Experimental Research titled "The Cost of Alcohol in California" calculated the overall economic cost of excessive alcohol consumption – including costs such as health issues, injury, violent crime, property crime, and traffic collisions – at $38.5 billion. According to the California Department of Public Health, excessive alcohol consumption caused approximately 88,000 deaths and 2.5 million years of potential life lost annually in the U.S. during 2006 to 2010, making it the fourth leading preventable cause of death. In California, the rate of alcohol-attributable deaths (ADD/year/100,000 population, 2006 to 2010) is higher for males (43.9) and African Americans (36.6) in comparison with the total population (29.4).

The Lanterman Act. The Lanterman Act, which was enacted in 1977, guides the provision of services and supports for Californians with developmental disabilities. Each individual under the Act (typically referred to as a "consumer") is legally entitled to treatment and habilitation services and supports in the least restrictive environment possible. Lanterman Act services are designed to enable all consumers to live more independent and productive lives in the community. The term "developmental disability" is defined in statute as a disability that originates before an individual attains 18 years of age, continues, or can be expected to continue, indefinitely, and constitutes a substantial disability for that individual. It includes intellectual disabilities, cerebral palsy, epilepsy, and autism spectrum disorders. It also includes disabling conditions that are closely related to intellectual disabilities or require treatment, care, and management similar to what is required for individuals with an intellectual disability. These conditions must occur before age 18, result in a substantial handicap, be likely to continue indefinitely, and involve brain damage or dysfunction (conditions that are solely psychiatric or physical in nature are excluded).

Passage of the Lanterman Act marked the beginning of California's shift from a model of care that relied on institutional placement to one that focused on providing services and supports at home or in other community-based settings, and it was followed by a number of federal and state legal decisions, as well as administrative and legislative initiatives, which reinforced the new entitlement to services. Of particular note was the 1994 settlement agreement reached in the William Coffelt et. al. v. the California Department of Developmental Services, et. al. class-action lawsuit to develop additional community placement options and reduce the population of individuals in institutions by 2,000 within five years. Five years later, the U.S. Supreme Court ruled in Olmstead vs LC (527 U.S. 581 (1999)) that a lack of community supports was not legal grounds for denying people with disabilities a move from an institution into a community setting if they could benefit from community placement. The court ruled that such a denial constituted a violation of individual civil rights, as well as discrimination under the Americans with Disabilities Act. In California, 10 years after the Olmstead decision, Capitol People First et al. v DDS, et al. resulted in a settlement in which DDS and the regional centers agreed to develop additional community living options and establish new practices to ensure the Lanterman Act’s promise of services in the least-restrictive environment would be maintained.

Regional Center Rates. Current statute and regulations set forth rate requirements for regional centers to adhere to when contracting with vendors to provide services to consumers. There are different types of rates for services provided in different settings, many of which are negotiated between regional centers and vendors and are subject to a cap as a result of the state's cost-containment efforts over the past several years. July 1, 2008 marked the original implementation date for statewide and regional center median rates, with a requirement that regional centers do not negotiate rates higher than the lower of the two median rates for services. Each regional center is required to annually certify to DDS its median rate for each negotiated rate service, which DDS verifies during its biennial fiscal audit of the regional center. Despite the median rate cap, a regional center can obtain a rate increase from DDS under a "health and safety exemption" for a particular consumer if the regional center can demonstrate the exemption is necessary to maintain his or her health and safety. Most recently, Fiscal Years 2014-15 and 2015-16 Budget trailer bill provisions allowed for provider rate increases to address new state minimum wage requirements and sick leave benefits.

The California Medical Association (CMA) states that alcohol abuse is an issue that puts a significant cost burden on California's healthcare system. Alcohol-related deaths from car accidents still make up a third of all car accident fatalities. CMA further states that alcohol taxes reduce excessive drinking and alcohol-related problems; one estimate suggests that a nickel-per-drink increase in alcohol would reduce fatal traffic accidents by 7%. The California Supported Living Network and other supporters of this bill, state that it will provide an important funding source to keep individuals and families together, living independently, and getting the services that integrate them into communities.

Opponents, representing makers, carriers, and sellers of alcohol products, assert that there are no negative social costs associated with normal moderate consumption of alcoholic beverages and this bill unfairly penalizes 90% to 95% of responsible drinkers. They argue that this bill could make it even more difficult for businesses that are struggling to keep their doors open and retain employees during these difficult economic times by disproportionately targeting a specific category of products for fee increases. Opponents maintain that the alcohol industry already pays more than its fair share of revenue to the state, and that this bill would add new costs and reporting burdens on small businesses in California's hospitality industry.

Analysis Prepared by: Dharia McGrew / HEALTH / (916) 319-2097 FN: 0002437