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State Senate Votes 37-0 To Approve/Advance to Assembly Bill By State Senator Alan Lowenthal That Bd. of Equalization Says Could Cost State $92-137 Million Annually By Letting Shippers Continue To Avoid Paying CA's Sales/Use Tax On Part Of Marine Fuel They Buy


(May 30, 2012, updated 11:40 a.m.) -- Moments ago, the CA state Senate voted 37-0 to approve and advance to the Assembly SB 1243 by state Senator Alan Lowenthal (D, LB-Paramount), a measure that the state Board of Equalization says would cost the state of CA (including local entities) from $92 million to $137.5 million each year by letting shippers continue for the next twelve years to avoid paying CA's sales/use tax on a portion of the fuel they buy could be voted on in the state Senate today (May 30).

Sen. Lowenthal introduced his bill and advocated passage, not that there had been no opposition in any state Senate Committee. No other state Senator spoke. The measure was approved.

This morning's vote advances the measure to the Assembly where Assemblywoman Bonnie Lowenthal (D., LB) is the measure's co-author.

Proponents of the measure (full list of supporters below) say it will preserve jobs and keep the local maritime industry competitive.

To view the Senate's floor analysis of the measure, click here.

In a written legislative analysis, the State Board of Equalization states in pertinent part [bracketed material by us for clarity]:


The revenue loss [annually] from exempting from the sales and use tax maritime fuels sold to a water common carrier, for immediate shipment outside this state for consumption in the conduct of its business as a common carrier after the first out of state destination would be as follows:

[Based on total maritime fuel sales $ 1.047.6 billion and $ 1.571.5 billion]

General Fund loss (3.94%) between $ 41.3 million and 61.9 million

Fiscal Recovery loss (0.25%) between 2.6 million and 3.9 million

Local Revenue Fund 2011 loss (1.06%) between 11.1 million and 16.7 million

Local Tax loss (2.00%) between 21.0 million and 31.4 million

Special District loss (1.5%)* between 15.7 million and 23.6 million

Total between $ 91.7 million and $ 137.5 million

* Nearly all of the maritime fuels are sold in jurisdictions with a tax rate of 8.75%.

[The BOE routinely provides legislative analyses to address administrative, cost, revenue and policy issues of pending legislation and doesn't indicate a formal BOE position on the bill.]

To read the State Board of Equalization analysis in full, click here. To view the bill in full, click here

On May 24, the state Senate Appropriations Committee voted 7-0 -- with no dissent by any Committee Democrats or Republicans -- to advance SB 1243 to the Senate floor. On May 21, Sen. Lowenthal presented his bill at a hearing by the same Committee (which is supposed to focus on fiscal matetrs) at which Governor Brown's Dept. of Finance indicated it had "no position" on the bill...and no member of the Committee -- Democrat or Republican -- asked how much the measure might cost the state in revenue.

Sen. Lowenthal is running for Congress in a newly drawn LB-west OC Congressional seat...and the major Republican candidates in the June Congressional election -- LB City Councilman Gary DeLong and former Congressman/former Assemblyman Steve Kuykendall -- both support SB 1243.

The state legislature currently faces a looming state budget deficit (spending exceeding revenue) approaching $16 billion. Governor Brown has advocated a November ballot measure that would increase the state sales tax by a quarter percent and increase the state income tax for high income earners...and has threatened cuts to schools without it.

The staet Senate's legislative analysis listed the bills supporters/opponents as follows as of May 25:

Support: Alaska Tanker Company, LLC, American President Lines, American Waterways Operators, California Association of Port Authorities, California Taxpayers Association, California Trade Coalition, City of Carson Mayor, Jim Dear, CMA CGM America, LLC, Cruise Lines International Association, General Steamship Agencies, General Steamship Corporation, Harbor Association of Industry & Commerce, Horizon Lines, ILWU - Northern CA District Council, ILWU - Southern CA District Council, Inlandboatman's Union of the Pacific International, International Longshore and Warehouse Union, Maersk, Inc., Masters, Mates and Pilots Union, Matson Navigation Company, Inc., Mitchell and Mitchell Insurance Agency, MOL (America) Inc., OOCL Inc., Pacific Merchant Shipping Association, Port of Long Beach, Sailor's Union of the Pacific, Seafarers International Union, The Jankovich Company, Western Ocean Services, Yang Ming Corporation and 15 members of the Inlandboatmen's Union -Southern CA Region

The Senate floor analysis listed no opposition.

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