Existing law provides that every person who is honorably discharged or honorably relieved from the military, naval, or air service of the United States and is a resident of this state is entitled to obtain a license to distribute circulars and sell any goods, except alcohol, without payment of any state or local business license fees.

This bill would also exempt a veteran who is honorably discharged or honorably relieved from the Armed Forces of the United States and is a resident of this state from paying any local business license fees for a business that sells or provides services if the veteran is the sole proprietor of the business.

This bill would include findings that the changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 498

Author:(Weber)

As Amended Ver:June 10, 2019

Majority vote

SUMMARY:

Exempts a veteran of the U.S. Armed Forces from paying any local business license fees for a business that provides services if the veteran is the sole proprietor.

The Senate Amendments:

Find and declare that the changes proposed by this bill address a matter of statewide concern, rather than a municipal affair, and apply the exemption to all cities, including charter cities.

COMMENTS:

A business license is a type of license needed to lawfully conduct business within a specific jurisdiction or within the state. Business is any activity or enterprise performed by a person or business entity as a source of income or profit. As an extension of the police power of cities and counties, state law lets local governments require businesses operating in their jurisdictions to obtain a license and impose related licensing fees.

Currently, honorably discharged veterans are exempted from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol. This bill would also exempt those that offer or provide services from paying business license fees.

According to the Author:

"Service members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy."

Arguments in Support:

The American GI Forum of California, AMVETS-Department of California, California State Commanders Veterans Council, and the Vietnam Veterans of America-California State Council write, "Veterans, due to the unique challenges they face in the civilian workforce, are 45% more likely to be self-employed than non-veterans. Their military service requires them to be highly skilled in a number of disciplines. However, these skills are not transferable to most civilian jobs. This often leaves veterans to face unemployment or work in entry level positions despite their experience and expertise."

"[This bill] would continue California's tradition of veteran support by increasing employment opportunities for veteran business owners who offer services. Given that the veterans business license fee waiver was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

This bill is keyed non-fiscal by the Legislative Counsel.

VOTES:

ASM BUSINESS AND PROFESSIONS: 19-0-1

YES: Low, Brough, Bloom, Chen, Chiu, Cunningham, Dahle, Eggman, Gipson, Gloria, Grayson, Holden, Irwin, McCarty, Medina, Mullin, Obernolte, Quirk-Silva, Ting

ABS, ABST OR NV: Fong

ASM VETERANS AFFAIRS: 10-0-1

YES: Irwin, Voepel, Boerner Horvath, Brough, Daly, Frazier, Gloria, Mathis, Petrie-Norris, Salas

ABS, ABST OR NV: Muratsuchi

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Jones-Sawyer, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

ASSEMBLY FLOOR: 76-0-4

YES: Aguiar-Curry, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, O'Donnell, Obernolte, Patterson, Petrie‑Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

ABS, ABST OR NV: Arambula, Grayson, Mullin, Quirk

SENATE FLOOR: 39-0-1

YES: Allen, Archuleta, Atkins, Bates, Beall, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ABS, ABST OR NV: Borgeas

UPDATED:

VERSION: June 10, 2019

CONSULTANT: Vincent Chee / B. & P. / (916) 319-3301 FN: 0001276

 THIRD READING  

Bill No: AB 498

Author: Weber (D)

Amended: 6/10/19 in Senate

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 6/19/19

AYES: McGuire, Moorlach, Beall, Hurtado, Nielsen, Wiener

NO VOTE RECORDED: Hertzberg

SENATE VETERANS AFFAIRS COMMITTEE: 6-0, 6/25/19

AYES: Archuleta, Hurtado, Nielsen, Roth, Umberg, Wilk

NO VOTE RECORDED: Grove

ASSEMBLY FLOOR: 76-0, 5/2/19 (Consent) - See last page for vote

SUBJECT: Business licensing: fees: exemptions: veterans

SOURCE: Author

DIGEST:

This bill exempts a veteran of the U.S. Armed Forces from paying any local business license fees for a business that provides services if the veteran is the sole proprietor.

ANALYSIS:

Existing law:

1. Allows a city or county to make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws, known as the police power of cities.
2. Lets local governments require businesses operating in their jurisdictions to obtain a license and impose related licensing fees. If a business operates in multiple jurisdictions, the fees imposed by any one jurisdiction are supposed to fairly reflect the amount of business that goes on in that jurisdiction.
3. Requires certain businesses to apply for state licenses, such as a professional license, to ensure that the licensee has the minimum level of competence needed to avoid unnecessary harm to consumers.
4. Exempts honorably discharged veterans from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol.

This bill exempts a veteran of the U.S. Armed Forces who has been honorably discharged and is a California resident from paying any local business license fees to license a business that sells or provides services, if the veteran is the sole proprietor of the business.

Background

Local governments license businesses for lots of reasons: to identify individuals operating businesses in their jurisdictions, to ensure compliance with local laws, to facilitate contact in case a problem arises, and to raise money to support public services that support those businesses. While most cities and counties require businesses to operate under a business license, some counties do not require business licenses for businesses operating in unincorporated areas. For example, both Sonoma and San Diego counties do not require business licenses for businesses operating in these areas.

Since 1905, state law has provided some form of business license fee exemption for veterans selling goods. Current law exempts honorably discharged veterans from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol. However, veterans who provide services, rather than sell goods, are not included in this exemption and may have to pay business license fees if their city or county does not provide such an exemption of their own accord. For example, a veteran who sells paint would be exempt from paying a business license fee, but a veteran who provides painting services would not be exempt.

Comments

1. Purpose of the bill. According to the author, “Service members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy.”
2. Home rule. Local agencies have an interest in regulating who can do business in their community. To help perform their regulatory duty, local agencies typically charge businesses fees to obtain or renew their license to operate in that jurisdiction. Expanding exemptions to include veterans selling either goods or services would reduce the revenue collected from these fees. On the other hand, AB 498 only applies in cases where the veteran is the sole proprietor of the business, and does not extend to all veteran-owned businesses, limiting the potential revenue loss for local agencies.

Related/Prior Legislation

AB 994 (Mathis, 2019), which was held in Assembly Appropriations Committee, would have exempted any veteran who served in any branch of the United States Armed Forces, had been honorably discharged from active service, and owns a least 51% of the business, from paying local business license fees.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 6/27/19)

American GI Forum of California

AMVETS-Department of California

California State Commanders Veterans Council

Vietnam Veterans of America-California State Council

OPPOSITION: (Verified 6/27/19)

None received

ASSEMBLY FLOOR: 76-0, 5/2/19

AYES: Aguiar-Curry, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

NO VOTE RECORDED: Arambula, Grayson, Mullin, Quirk

Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119

6/28/19 12:04:45

**** END ****

SENATE COMMITTEE ON VETERANS AFFAIRS

Senator Bob Archuleta, Chair

2019 - 2020 Regular

Bill No: AB 498 Hearing Date: 6/25/19

Subject: Business licensing: fees: exemptions: veterans

DESCRIPTION

Summary:

This bill would exempt a veteran of the U.S. Armed Forces from paying any local business license fees for a business that provides services if the veteran is the sole proprietor.

Existing law:

1) Requires a city or county, before issuing a business license to a person to conduct business as a contractor, to verify that the person is licensed by the Contractors’ State License Board. (BPC § 16000(c), 16100(c))

2) Authorizes an incorporated city or a county to license any kind of lawful business that occurs within the limits of its jurisdiction and specifies the related powers and limitations. (BPC § 16000-16004, 16100-16105)

3) Provides that every person who is honorably discharged or honorably relieved from the military, naval, or air service of the United States and is a resident of this state is entitled to obtain a license to distribute circulars and sell any goods, except alcohol, without payment of any state or local business license fees. (BPC § 16001.7)

This bill:

1) Exempts a veteran who is honorably discharged or honorably relieved from the Armed Forces of the United States and is a resident of this state from paying any state or local business license fees for a business that sells or provides services if the veteran is the sole proprietor of the business.

2) Finds and declares that the changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

BACKGROUND

Business license fee exemptions for veterans. Since 1905, state law has provided some form of business license fee exemption for veterans selling goods. Current law exempts honorably discharged veterans from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol. However, veterans who provide services, rather than sell goods, are not included in this exemption and may have to pay business license fees if their city or county does not provide such an exemption of their own accord. For example, a veteran who sells paint would be exempt from paying a business license fee, but a veteran who provides painting services would not be exempt.

In order to encourage veterans to operate their own businesses, the author would like to encourage veterans to start their own businesses by expanding the business license fee exemption for veterans.

Business licensing. The California Constitution allows a city or county to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws, known as the police power of cities.” It is from this fundamental power that local governments derive their authority to regulate behaviors, business operations, and land uses. Local agencies also use this police power to abate nuisances and protect public health, safety, and welfare.

As an extension of the police power, state law lets local governments require businesses operating in their jurisdictions to obtain a license and impose related licensing fees. If a business operates in multiple jurisdictions, the fees imposed by any one jurisdiction are supposed to fairly reflect the amount of business that goes on in that jurisdiction. Local governments license businesses for lots of reasons: to identify individuals operating businesses in their jurisdictions, to ensure compliance with local laws, to facilitate contact in case a problem arises, and to raise money to support public services that support those businesses. While most cities and counties require businesses to operate under a business license, some counties do not require business licenses for businesses operating in unincorporated areas. For example, both Sonoma and San Diego counties do not require business licenses for businesses operating in these areas.

Double referred. This bill passed the Senate Governance and Finance Committee (6-0) on 6/19/19.

COMMENT

Author’s Statement. According to the Author, “Members of our military make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. Veterans face a variety of unique challenges in the civilian workforce. Military service provides highly specialized skills that may not be transferable to civilian jobs. Subsequently, U.S. veterans are 45% more likely to be self-employed than non-veterans. This bill would assist veterans who run service businesses by exempting them from local business license fees.”

Related/Previous Legislation. AB 994 (Mathis, 2019), which was held in Assembly Appropriations Committee, would have exempted any veteran who served in any branch of the United States Armed Forces, had been honorably discharged from active service, and owns a least 51% of the business, from paying local business license fees.

POSITIONS

Sponsor: Author.

Support: American GI Forum of California

AMVETS-Department of California

California State Commanders Veterans Council

Vietnam Veterans of America-California State Council

Oppose: None on file.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2019 - 2020 Regular

Business licensing: fees: exemptions: veterans

Exempts a veteran of the U.S. Armed Forces from paying any local business license fees for a business that provides services if the veteran is the sole proprietor.

Background

Business licensing. The California Constitution allows a city or county to “make and enforce within its limits, all local, police, sanitary and other ordinances and regulations not in conflict with general laws, known as the police power of cities.” It is from this fundamental power that local governments derive their authority to regulate behaviors, business operations, and land uses. Local agencies also use this police power to abate nuisances and protect public health, safety, and welfare.

As an extension of the police power, state law lets local governments require businesses operating in their jurisdictions to obtain a license and impose related licensing fees. If a business operates in multiple jurisdictions, the fees imposed by any one jurisdiction are supposed to fairly reflect the amount of business that goes on in that jurisdiction. Local governments license businesses for lots of reasons: to identify individuals operating businesses in their jurisdictions, to ensure compliance with local laws, to facilitate contact in case a problem arises, and to raise money to support public services that support those businesses. While most cities and counties require businesses to operate under a business license, some counties do not require business licenses for businesses operating in unincorporated areas. For example, both Sonoma and San Diego counties do not require business licenses for businesses operating in these areas.

In some cases, state law also requires businesses to apply for state licenses, such as a professional license. For example, prior to issuing a business license to conduct business as a contractor, a county must verify that the applicant has a license issued by the Contractors’ State License Board. These professional licenses ensure that the licensee has the minimum level of competence needed to avoid unnecessary harm to consumers, while a business license does not test for professional competence.

Business license fee exemptions for veterans. Since 1905, state law has provided some form of business license fee exemption for veterans selling goods. Current law exempts honorably discharged veterans from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol. However, veterans who provide services, rather than sell goods, are not included in this exemption and may have to pay business license fees if their city or county does not provide such an exemption of their own accord. For example, a veteran who sells paint would be exempt from paying a business license fee, but a veteran who provides painting services would not be exempt.

In order to encourage veterans to operate their own businesses, the author wants encourage veterans to start their own businesses by expanding the business license fee exemption for veterans.

Proposed Law

Assembly Bill 498 exempts a veteran of the U.S. Armed Forces who has been honorably discharged and is a California resident from paying any local business license fees to license a business that sells or provides services, if the veteran is the sole proprietor of the business.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “Service members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy.”

2. Home rule. Local agencies have an interest in regulating who can do business in their community. To help perform their regulatory duty, local agencies typically charge businesses fees to obtain or renew their license to operate in that jurisdiction. Expanding exemptions to include veterans selling either goods or services would reduce the revenue collected from these fees. On the other hand, AB 498 only applies in cases where the veteran is the sole proprietor of the business, and does not extend to all veteran-owned businesses, limiting the potential revenue loss for local agencies.

3. Sole proprietorships. AB 498 only applies to veterans who are the sole proprietor of the business applying for a license. A sole proprietorship is an unincorporated business owned and run by one individual. While a simple way to start a new business, the sole proprietor is personally liable for all debts and actions of the company. As businesses establish themselves, not many remain sole proprietorships because they lack the legal protection provided to other types of businesses, such as limited liability corporations, where the owners’ liability is limited to their financial investment in the company. Accordingly, the number of sole proprietorships owned by veterans that stand to benefit from AB 498 may be limited.

4. Which services? Current business license exemptions for veterans selling goods do not apply to certain goods, specifically selling alcohol. AB 498 applies to all services regardless of the activity. The Committee may wish to consider whether exemptions should apply to all services or whether specific services should be excluded from the business license fee exemption.

5. Professional licenses. AB 498 addresses the costs of local business licenses, but some veterans may have to pay other professional license fees. Since AB 498 only applies to local business license fees, and not professional license fees, licensing costs may still affect some veterans’ decisions to start a business. .

6. Charter cities. The California Constitution allows cities that adopt charters to control their own “municipal affairs.” In all other matters, charter cities must follow the general, statewide laws. Because the Constitution does not define "municipal affairs," the courts determine whether a topic is a municipal affair or whether it is an issue of statewide concern. AB 498 says that its statutory provisions apply to charter cities. To support this assertion, the bill includes a legislative finding that local business license fees for veterans are a matter of statewide concern.

7. Double-referred. The Senate Rules Committee has ordered a double-referral of AB 498—first to the Senate Governance & Finance Committee, which has jurisdiction over bills relating to local governments’ business licenses, and then to the Senate Veterans Affairs Committee, which has jurisdiction over bills relating to veterans.

8. Related Legislation. AB 994 (Mathis, 2019), which was held in Assembly Appropriations Committee, would have exempted any veteran who served in any branch of the United States Armed Forces, had been honorably discharged from active service, and owns a least 51% of the business, from paying local business license fees.

Assembly Actions

Assembly Business and Professions Committee 19-0

Assembly Veterans Affairs Committee 10-0

Assembly Appropriations Committee 18-0

Assembly Floor 76-0

Support and Opposition

(6/14/19)

Support: American GI Forum of California; AMVETS-Department of California; California State Commanders Veterans Council; Vietnam Veterans of America-California State Council.

Opposition: Unknown.

-- END --

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 498

Author:(Weber) – As Amended Ver:April 1, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill exempts a veteran of the U.S. Armed Forces who has been honorably discharged and is a California resident from paying any state or local business license fees to license a business that sells or provides services, provided the veteran is the sole proprietor of the business.

FISCAL EFFECT:

Minor revenue losses to cities and counties, not reimbursable by the state, to expand the business license fee exemption for veterans to include services.

COMMENTS:

1. Purpose. This bill intends to help veterans with employment by reducing their costs of starting a service business. According to the author:

Service members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy.

1. Background. A business license is a type of license needed to lawfully conduct business within a specific jurisdiction or within the state. Many business licenses are issued at the local level by cities and counties who typically charge a fee for granting a license. Business license fees are a significant source of revenue for local governments.

Existing law exempts honorably discharged veterans from business and other license fees and taxes to distribute circulars (advertisements) or sell goods other than alcohol. This bill would additionally exempt from business license fees those that sell or provide services.

1. Current Related Legislation. AB 994 (Mathis), of this legislative session, exempts all honorably discharged veterans who own a business by at least 51% from the payment of any license tax or fee. The bill is pending in the Assembly Local Government Committee.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 9, 2019

ASSEMBLY COMMITTEE ON VETERANS AFFAIRS

Jacqui Irwin, Chair

ABPCA Bill Id:AB 498 (

Author:Weber) – As Amended Ver:April 1, 2019

SUBJECT: Business licensing: fees: exemptions: veterans

SUMMARY: This bill exempts a veteran of the U.S. Armed Forces who has been honorably discharged and is a California resident from paying any state or local business license fees to license a business that sells or provides services, provided the veteran is the sole proprietor of the business.

EXISTING LAW:

1. Defines “license” as a license, certificate, registration, or other means to engage in a business or profession regulated under the Business and Professions Code (BPC) or related initiative acts, unless otherwise expressly provided. (BPC § 23.7)
2. Authorizes an incorporated city or a county to license any kind of lawful business that occurs within the limits of its jurisdiction and specifies the related powers and limitations. (BPC §§ 16000-16004, 16100-16105)
3. Requires a city or county, before issuing a business license to a person to conduct business as a contractor, to verify that the person is licensed by the Contractors’ State License Board. (BPC §§ 16000(c), 16100(c))
4. Establishes various license fee and tax exemptions, including an exemption for business license fees, for specified veterans who reside in state and conduct business distributing circulars or offering or selling goods other than alcohol. (BPC §§16001-16001.7, 16102)

FISCAL EFFECT: This bill has still to be heard by a fiscal committee.

COMMENTS:

Purpose: According to the author, “[s]ervice members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy.”

Background: In general, a license is authorization from the government to do a restricted activity. A business license is a type of license needed to lawfully conduct business within a specific jurisdiction or within the state. Business is any activity or enterprise performed by a person or business entity as a source of income or profit.

Business licenses are typically issued at the local level for purposes of regulation generally, such as zoning, consumer protection, taxation, or protection of the public health or welfare. The administration of business licensing programs is usually funded through fees, but may also have additional associated taxes that are not used to fund the program, such as sales and use taxes.

Currently, honorably discharged veterans are exempted from business and other license fees and taxes if their business is distributing circulars or advertising, and offering or selling goods other than alcohol. This bill would also exempt from business license fees those that offer or provide services. It would not change the provisions relating to other types of license fees.

Some businesses are required to apply for separate local state licenses or permits, such as a professional license. For example, prior to issuing a business license to conduct business as a contractor, a county must verify that the applicant has a license issued by the Contractors’ State License Board. That license is often referred to as a professional license because it is a license to practice a specific profession, not business generally. They are further distinguished in that a professional license ensures the licensee has the minimum level of competence needed to avoid unnecessary harm to consumers, while a business license does not test for professional competence.

In its analysis, the Assembly Committee on Business and Professions noted two matters of concern:

1. That the bill did not define the term “services.”
2. That by eliminating the revenue that would have been received from veterans paying business license fees, the bill would reduce the revenue available to those licensing programs and potentially result in an increase in fees to other businesses.

It is true that “services” is not defined in the bill. However, the existing exemption – broadly speaking, for businesses that sell goods – has been in place for some time, and does not provide a much more detailed definition of goods than this bill does of services. On the other hand, it does exclude certain goods: alcohol, for example. The author may wish to consider as the bill proceeds whether there are types of services that should be similarly excluded.

Current Related Legislation. Assembly Bill 994, Mathis, pending in the Assembly Local Government Committee, would exempt all honorably discharged veterans who own a business by at least 51 percent from the payment of any license tax or fee.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

None on file.

Analysis Prepared by: Christian Burkin / V.A. / (916) 319-3550

Date of Hearing: March 26, 2019

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Evan Low, Chair

ABPCA Bill Id:AB 498

Author:(Weber) – As Introduced Ver:February 13, 2019

NOTE: This bill is doubled referred, and if passed by this Committee, will be referred to the Assembly Committee on Veterans Affairs.

SUBJECT: Business licensing: fees: exemptions: veterans.

SUMMARY: Exempts veterans from having to pay fees when applying for a business license to provide services.

EXISTING LAW:

1. Defines “license” as a license, certificate, registration, or other means to engage in a business or profession regulated under the Business and Professions Code (BPC) or related initiative acts, unless otherwise expressly provided. (BPC § 23.7)
2. Authorizes an incorporated city or a county to license any kind of lawful business that occurs within the limits of its jurisdiction and specifies the related powers and limitations. (BPC §§ 16000-16004, 16100-16105)
3. Requires a city or county, before issuing a business license to a person to conduct business as a contractor, to verify that the person is licensed by the Contractors’ State License Board. (BPC §§ 16000(c), 16100(c))
4. Establishes various license fee and tax exemptions, including an exemption for business license fees, for specified veterans who reside in state and conduct business distributing circulars or offering or selling goods other than alcohol. (BPC §§16001-16001.7, 16102)

THIS BILL:

1. Adds “services” to the existing business license fee exemption for veterans who conduct business distributing circulars or offering or selling goods other than alcohol.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the author. According to the author, “[s]ervice members make countless sacrifices to ensure the safety and well-being of our nation, yet many military personnel struggle to support themselves and their families after their return to civilian life. This bill would assist veterans who start their own service businesses by exempting them from business license fees. Given that the original exemption was written nearly eighty years ago, this bill would modernize the law to reflect the service-oriented, twenty-first century economy.”

Background. In general, a license is authorization from the government to do a restricted activity. A business license is a type of license needed to lawfully conduct business within a specific jurisdiction or within the state. Business is any activity or enterprise performed by a person or business entity as a source of income or profit.

Business licenses are typically issued at the local level for purposes of regulation generally, such as zoning, consumer protection, taxation, or protection of the public health or welfare. The administration of business licensing programs are usually funded through fees, but may also have additional associated taxes that are not used to fund the program, such as sales and use taxes.

Currently, honorably discharged veterans are exempted from business and other license fees and taxes if their business is distributing circulars or advertising, offering, or selling goods other than alcohol. This bill would also exempt those that offer or provide services from paying business license fees. It would not change the provisions relating to other types of license fees.

Some businesses are required to apply for separate local state licenses or permits, such as a professional license. For example, prior to issuing a business license to conduct business as a contractor, a county must verify that the applicant has a license issued by the Contractors’ State License Board. That license is often referred to as a professional license because it is a license to practice a specific profession, not business generally. They are further distinguished in that a professional license ensures the licensee has the minimum level of competence needed to avoid unnecessary harm to consumers, while a business license does not test for professional competence.

Current Related Legislation. AB 994 Mathis, which is pending in the Assembly Local Government Committee, would exempt all honorably discharged veterans who own a business by at least 51 percent from the payment of any license tax or fee.

IMPLEMENTATION ISSUES:

1. Definition of services. This bill would add the term “services” but does not define it. If this bill passes this Committee, the author may wish to work with the affected local governments and state agencies to define the types of services included.
2. Revenues from fees. This bill would exempt all veterans whose business provides services from paying business license fees. However, this may reduce overall revenues of some business license programs and result in a fee increase for other businesses. If this bill passes this Committee, the author may wish to work with the affected local governments, state agencies, and business communities to ensure the sustainability of the impacted programs.

REGISTERED SUPPORT:

None on file

REGISTERED OPPOSITION:

None on file

Analysis Prepared by: Vincent Chee / B. & P. / (916) 319-3301