1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MAY 24, 2016 10 11 12 13 14 15 LEGISLATIVE COMMITTEE 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Fiona Ma, CPA 4 Chair 5 Diane L. Harkey Member 6 Jerome E. Horton 7 Member 8 Sen. George Runner (Ret.) Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 13 Joann Richmond Chief 14 Board Proceedings Division 15 For Board of Equalization Staff: Michele Pielsticker 16 Chief, Legislative and Research Division 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 INDEX OF SPEAKERS 2 SPEAKER PAGE 3 Mike A. Gipson 6 4 Adam C. Gray 17 5 Steve Chambers 18 6 Paul Smith 20 7 ---oOo--- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 24, 2016 4 ---oOo--- 5 MS. MA: Okay. Madam clerk, please call 6 the next item. 7 MS. RICHMOND: The next item on our agenda 8 is the Legislative Committee. Ms. Ma is the Chair 9 of that committee. 10 Ms. Ma. 11 MS. MA: Thank you. 12 We are going to take items out of order 13 since we have members here who would like to present 14 and speak on behalf of their own bills. 15 So the first item we're going to take up is 16 AB 567 by Mr. Gipson, cannabis tax amnesty. And Mr. 17 Gipson and his assistant would like to come up to 18 the front, that would be great. 19 And Ms. Pielsticker, if you could read the 20 presentation on the bill. 21 MS. PIELSTICKER: Good morning, Madam 22 Chair, Members of the Board. 23 AB 567 relates to medical cannabis 24 retailers and tax amnesty. 25 The Board voted to support the bill on 26 January 26, 2016. And at the meeting, staff agreed 27 to bring the bill back for an update when it is 28 amended. 4 1 In this case it is proposed to be amended 2 and will go through Policy Committee next month. So 3 there are additional amendments beyond the ones that 4 the Board considered at the last hearing. 5 So existing law imposes sales tax on retail 6 sales of marijuana, including medical marijuana, to 7 the same extent as any other retail sale of tangible 8 personal property. This bill requires the BOE to 9 develop and administer a tax penalty amnesty program 10 for sellers in a medical cannabis related business. 11 Since the last Legislative Committee, the 12 following amendments have been proposed and will be 13 going into the bill very soon: 14 First, is to remove revisions to the 15 Uniform Controlled Substances Act related to license 16 suspension for a dispensary that employs any person 17 under 21 years of age or allows a qualified patient 18 to arrange for third-party deliveries; 19 Removing all references to the Franchise 20 Tax Board and just have the bill be about EDD and 21 BOE; 22 Specify that the Department of Consumer 23 Affairs is the appropriate licensing authority for 24 license issuance restatement and renewal; 25 Remove references to local licensing; 26 Revise the amnesty period to a three-month 27 period beginning July 1, 2017, ending September 28 30th, 2017; 5 1 And to apply to qualified tax liabilities 2 due and payable for tax reporting periods prior to 3 January 1, 2015. 4 The fiscal impact of the bill remains the 5 same. Revenues would be based on participation 6 rates. And the BOE revenue impact is at a 7 participation rate of 50 percent would be 52.8 8 million; at a participation rate of 75 percent, 79.2 9 million; and at 100 percent it would be about 10 $105.6 million with substantial computer programming 11 costs to revoke or refuse a seller's permit. 12 That concludes my presentation. 13 MS. MA: Okay, thank you. 14 Mr. Gipson. Welcome. 15 ---oOo--- 16 MIKE A. GIPSON 17 ---oOo--- 18 MR. GIPSON: Thank you very much. 19 I just respectfully ask for aye votes. She 20 did my report already. 21 No. 22 Thank you very much, and good afternoon, 23 Madam Chair and Board Members. Thank you for your 24 consideration of Assembly Bill 567 which seeks to 25 increase the tax revenue by providing a tax amnesty 26 period for medical cannabis businesses that fail to 27 pay their taxes historically and are now looking to 28 be in compliance. 6 1 As you may recall, I presented this bill 2 earlier in January of this year and received full 3 support by the Board. I am now here to ask for 4 reconsideration given substantial amendments that 5 you -- that have been taken. 6 I want to pause there. When I came in 7 January, this body asked that any amendments be 8 brought back and you be made informed of those 9 amendments. And today I sit here to share with your 10 staff, as well as yourselves, those particular such 11 amendments that I have taken in this bill 567. So 12 I'm standing by my commitment by providing you with 13 this presentation today. 14 Amendments are as follows: 15 Removing Section 1 of the bill, which would 16 have been adding regulations to the way dispensaries 17 operate. The reason this was removed, in order to 18 ensure a clear focus on the amnesty program to 19 refrain from doing too much in this one measure. 20 Removing the Franchise Tax Board from the 21 bill. The reason, the FTB conducted an analysis 22 showing an estimate loss of at least $500,000. 23 Their analysis assumed full compliance using the 24 number of dispensaries from the Board of 25 Equalization's estimates. 26 Amendment 3, the sunset date -- Amendment 27 3, sunset date from a six-month period ending no 28 later than January 31st, 2016 to be a three-month 7 1 period between -- between July and September of 2 2017. The reason, the current amnesty period in 3 this bill was based on an assumption that the 4 bill -- that this bill would pass in 2015. Being 5 that this measure carried over into the year, the 6 amnesty period needed to be updated. 7 I respectfully ask for your aye vote, 8 consideration of all the amendments to Assembly Bill 9 567, and stand ready to answer any questions that 10 you may have. 11 MS. MA: Ms. Harkey. 12 MS. HARKEY: I have a question. The 13 Franchise Tax Board wanted to be exempted from this. 14 Are they going to be pursuing income tax with no 15 amnesty and we're -- what -- what -- what's their 16 reason? 17 MS. PIELSTICKER: I can -- 18 MS. HARKEY: Yes, okay. 19 MS. PIELSTICKER: Yes. I had a 20 conversation with the Franchise Tax Board, and their 21 intent would just be to have this bill be about 22 sales tax amnesty. 23 What they're finding is that under -- under 24 current law most collectives and cooperatives that 25 are dispensaries operate not for profit. Which 26 means that they would only be subject to minimum 27 franchise tax under current law, so that the revenue 28 derived from an amnesty program would be not very 8 1 large and the costs to administer it would be quite 2 substantial. 3 So given that analysis, they -- 4 MS. HARKEY: As a matter of fact, what 5 they're saying is it doesn't pay them to pursue the 6 tax because they're nonprofit. 7 MS. PIELSTICKER: Well, that the amounts 8 that would come into amnesty would just be $800 per 9 dispensary. 10 MS. HARKEY: Right, because they're 11 operating as nonprofit. 12 MS. PIELSTICKER: Yeah. 13 MS. HARKEY: So, that's interesting. That 14 was -- that was something I hadn't heard before. 15 MS. PIELSTICKER: Well, because under 16 current law they're required to, um -- to operate 17 not for profit. But with the new regulations going 18 in, in a couple of years, they will be converting to 19 for profit. 20 MS. HARKEY: Okay. 21 MS. MA: Okay. Mr. Horton. 22 MR. HORTON: Okay. I think that did it. 23 I do want to share with the body that -- or 24 the Board that the other inherent challenge that the 25 FTB has is that under current federal law it is -- 26 it treats the -- treats these cannabis operators a 27 little bit different. So there is inconsistency 28 with the federal law as it applies to the state law. 9 1 So until such time that all of this -- 2 until such time that the State establishes, you 3 know, an income tax consistent with federal law, 4 which is going to be inherently challenging -- 5 MR. GIPSON: Yeah. 6 MR. HORTON: -- is where we have the issue 7 of revenue. And to some degree it's still being 8 treated as an illegal product being sold, and 9 therefore the lack of acknowledgement of it being a 10 income tax transaction in some of the areas of the 11 law wherein there would be a larger revenue 12 generated if such was the case. 13 MS. STOWERS: Chairwoman? 14 MS. MA: Mr. Runner. 15 MR. RUNNER: Yeah, just real quick. 16 The -- the amnesty period -- and let me -- 17 I think this is more of a BOE question than it is to 18 the -- to the member. 19 Since these businesses sometimes are hard 20 to find, hard to locate at -- I guess, unless you go 21 to -- unless you go to the Internet and ask for 'em, 22 I guess. 23 MS. HARKEY: Weed maps. 24 MR. RUNNER: Weed map. 25 But sometimes it just -- it is -- it is 26 just more difficult at times to chase down the 27 process. 28 I'm -- my only concern is whether or not we 10 1 will be prepared in terms of the education and the 2 outreach effort that I think needs to be set up in 3 order to be ready for then that limited, what, July 4 1st to September, right? 5 MS. PIELSTICKER: Mm-hmm. 6 MR. RUNNER: Three-month period, you know. 7 And that's what my concern would be. Not -- again, 8 not in terms of the content of the bill or the 9 other, but whether we will be able to then do an 10 effective outreach effort in order to make sure that 11 everybody's fully aware of and what the process is 12 to come in under the amnesty. 13 So, that's my only concern. I just would 14 like to know that we are at least really evaluating 15 that well. Because I would assume -- let me go to 16 Mr. Gipson -- that you didn't come up with those 17 dates. I don't know if the committee came up with 18 those dates or whatever, but I assume that was kind 19 of driven by us. 20 MR. GIPSON: Yes. 21 MR. RUNNER: Okay. So I just want to 22 ensure that we are actually secure about those 23 dates. 24 That's all. 25 MS. MA: Ms. Stowers. 26 MS. STOWERS: Yes, thank you. 27 Thank you, Mr. Gipson. I appreciate you 28 removed the Franchise Tax Board from the bill. I 11 1 should have had my pre-briefing. 2 Anyway, I was under the impression the 3 Franchise Tax Board was still there, so I'm not 4 going to be participating on this item. I just 5 wanted to let know. 6 MS. MA: Okay, great. 7 Ms. Harkey. 8 MS. HARKEY: I'd just like to say I think 9 we are -- we do have a sufficient database, it's 10 just getting the people to go out and ensure that 11 everybody's licensed and whatnot and are informed. 12 Because I think they -- the industry is on the web, 13 not that tough to find. 14 And so -- but I do have a problem with the 15 state of -- and this is not related to Mr. Gipson's 16 bill because I think the amnesty is a good idea. 17 It's -- it's an incentive to get on board, get 18 permitted and get aboveboard. 19 But I do have a problem if we're going to 20 be doing this at the State, that the Franchise Tax 21 Board is not participating because either we're 22 taxing as a State or we're not. And we are already 23 in violation of federal law anyway by virtue of the 24 industry and the banking relationships we're having 25 trouble with. 26 So I would think that would bear some 27 exploration. I -- I think if -- you know, if one's 28 in the pond, we all need to be. And, you know, I -- 12 1 I don't know of any other industry that we exempt 2 from income taxes just because we're confused. 3 So I just -- I think -- I think that's 4 probably not something to be resolved here, but it 5 is something for us to continue to explore. That, 6 you know, I understand they're nonprofit and they're 7 supposed to go to profit, but we need to be sure 8 that we're treating all taxpayers fairly. And 9 especially when we've got an industry like this 10 that's definitely going to be costly for us to 11 implement, we need to be sure that, you know, people 12 are assuming they're paying taxes. People in my 13 district assume we're going to collect taxes, so 14 income taxes should be part of that. 15 So, you know, I appreciate you bringing 16 this forward. I'm disappointed the FTB's not on it, 17 but I do like the simplification of the measure. 18 Thank you. 19 MS. MA: Mr. Runner. 20 MR. RUNNER: I was going to say, I -- I 21 also have a concern with the FTB issues in regards 22 to cannabis. In fact, we had a meeting in my office 23 a couple -- a week or so ago where I've asked FTB 24 leadership to come in, along with BOE, to ensure 25 that we were exchanging information well enough in 26 terms of making sure that the FTB -- because I was 27 feeling like FTB is not as aggressive as they need 28 to be in regards to brining in -- 13 1 MS. HARKEY: They're not, at all. 2 MR. RUNNER: -- these taxpayers. 3 So, I believe that started a series of 4 meetings between Mr. Gau and -- and the FTB in 5 regards to exchange of information in order -- that 6 we have. Because at the end of the day it was 7 determined that we had much better information than 8 they do. And so we opened the door at least for 9 that to take place because I am concerned about 10 that. 11 To me, I'm not sure it's an issue of the 12 fact that they don't want to be taxed as much as it 13 is the cost of implementing the program doesn't have 14 a big enough payoff that they get to collect because 15 they're nonprofits. 16 But I do believe and agree that we need to 17 make sure that California has a consistent policy 18 when it comes to the issue of taxation of -- of -- 19 of the cannabis industry. And I know at least 20 there's some kind of conversations going on and I 21 encourage those to continue. 22 MS. MA: Mr. Horton. 23 MR. HORTON: I believe this is -- in that 24 this is a waiver of the penalty, it has a dual 25 benefit in that we're -- we're going to be in the 26 process of collecting the tax from these 27 individuals. There is a huge benefit of having the 28 administration in place and the revenue is there on 14 1 a return on investment cost benefit analysis, 2 significant amount of revenue if in fact folks 3 comply and participate, and the huge benefit to the 4 industry for them to participate as well. 5 And so the upside is to use child or young 6 folk's statement, through the roof, you know. 7 So, thank you, Mr. Gipson, for bringing the 8 measure forward. 9 MR. GIPSON: Thank you. 10 MR. HORTON: Members, I don't know that we 11 need to make a motion. We've already supported it, 12 but support as amended. 13 MS. MA: I think -- 14 MR. HORTON: So I would so move. 15 MS. MA: Support as amended, Mr. Horton 16 moves, Mr. Runner seconds, with Ms. Stowers not 17 voting. 18 MR. GIPSON: Thank you very much. 19 MS. MA: Thank you, Mr. Gipson. 20 Okay. Our next bill, Assemblymember Gray 21 is here. So we will hear AB 2678 related to the 22 State-Designated Fairgrounds. 23 We also have one speaker on this item, if 24 he would like to come up as well, Mr. Steven 25 Chambers. Thank you. 26 MR. RUNNER: Two. 27 MS. MA: Oh, two speakers. 28 We're going to have Ms. Pielsticker present 15 1 the item, and then we'll have you all speak after. 2 Ms. Pielsticker. 3 MS. PIELSTICKER: Thank you. 4 AB 2678 currently is in the Assembly 5 Appropriations Committee suspense file. 6 Existing law imposes the sales tax on all 7 retailers for the privileges of selling tangible 8 personal property at retail and the use tax on 9 storage use or consumption in this state of tangible 10 personal property purchased from a retailer, except 11 where the law provides a specific exemption or 12 exclusion. 13 This proposed law would require that 14 taxable sales and purchases within a 15 State-designated fair area is -- are to be 16 segregated on the sales and use tax return. It also 17 mandates that 30 percent of the State's General Fund 18 sales and use tax revenues derived from those 19 segregated sales and purchases be deposited into the 20 Fair and Exposition Fund, and it excludes fairs 21 located within Los Angeles County. 22 The measure would sunset January 1st, 2022. 23 The fiscal impact is an annual General Fund 24 revenue loss of $17 million with moderate 25 administrative costs to modify tax returns, program 26 computers, and notify affected retailers. 27 MS. MA: Thank you. 28 Mr. Gray, welcome. 16 1 ---oOo--- 2 ADAM C. GRAY 3 ---oOo--- 4 MR. GRAY: Good afternoon, Members, and 5 thank you for the opportunity to present my bill, 6 AB 2678. 7 As all of you are aware, for over 75 years 8 our fair networks here in California enjoyed a 9 stable source of funding. That source of funding 10 was, for many, many years, tied closely to the horse 11 racing industry. With the decline in those revenues 12 and over the course of a very difficult decade for 13 the State budget, we saw that funding eliminated 14 altogether finally in the 2011-2012 budget. 15 In an effort to restore some funding -- 16 again, a stable reliable source going forward -- we 17 looked at taking a portion of the State's sales tax 18 expenditures collected at those facilities, 19 facilities that support schools and FFA programs and 20 young people and a lot of great activities, 21 community members seeing increased fees and other 22 challenges in order to try to stay relevant and 23 funded. 24 You know, these sites also serve as areas 25 for emergency disasters, community centers. And so 26 what we did is dedicate a portion of that State 27 sales tax to create that funding going forward. It 28 will not restore, at one time, I think almost 17 1 $30 million that we dedicated to the fairs. But by 2 our estimates will in fact restore somewhere in the 3 neighborhood of 12 to $15 million, which is a 4 significant investment, would provide much needed 5 relief, and certainly would enjoy your support here 6 today. 7 And with that, I'll let our speakers put in 8 their two cents. 9 ---oOo--- 10 STEVE CHAMBERS 11 ---oOo--- 12 MR. CHAMBERS: Thank you. Steve Chambers, 13 Western Fairs Association. Madam Chair, Members, 14 we're very appreciative of this legislation that 15 Assemblymember Gray has introduced. 16 As he pointed out, we had this great model 17 for 75-plus years that funded fairs from horse 18 racing. And looking back in our history, of course 19 when we legalized racing in 1933, we had to build 20 all the administrative agencies to implement it. So 21 it was kind of exciting for me to sit here today and 22 to read the, you know, the scenario. And we're not 23 super familiar tax agent. 24 We are pretty familiar with fairs and where 25 they are and what they do. And we've always thought 26 of fairs as local governments. In many ways they 27 act just like local governments. They've got 28 infrastructure issues. They've got, you know, all 18 1 the same challenges that the cities and counties 2 have before them. They're in this difficult 3 recession that we're coming out of. But they're the 4 only local government that doesn't participate in 5 someway with the sales taxes generated on their 6 property. 7 And so we think that it makes a lot of 8 sense to try and tie fairs not only to the revenue 9 that they're helping generate, but also gives them 10 an incentive to have more activities and things like 11 that on their fairgrounds. 12 Our association not only represents the 76 13 fairgrounds, the facilities, the 78 fairs in 14 California, but we also represent over 500 15 fair-related businesses. And, of course, any time 16 you have a bill in your newsletter that talks about 17 sales tax, you get a lot of calls from your 18 businesses. 19 And you know what, I will tell you they 20 support this 100 percent because they are the only 21 businesses where -- that are collecting. We realize 22 they're not paying the sales tax. They're 23 collecting it on behalf of the State, turning it 24 over, with no hope of any of that money ever coming 25 back to support their infrastructure or their 26 business operation. 27 You can't say that about any other business 28 that's collecting sales tax in a city or county. 19 1 They know that some of that is being held locally, 2 and it goes to things like underground electrical, 3 sewer systems, and all that stuff that's not real 4 exciting but necessary for those businesses to 5 operate. 6 So we know it's -- you know, a lot of it's 7 an area that we're not familiar with. But we feel 8 like the Board of Equalization, you know, kind of 9 you're already in this business of trying to 10 identify where taxes are generated, where they're 11 supposed to go, and certainly I can tell by sitting 12 in here for an hour and a half you have a very 13 supportive culture as an agency. And so we really 14 look forward to hopefully working with you. 15 We realize that that's still up to 16 Assemblymember Gray and 119 other legislators and a 17 Governor, but we'd like to have your support now if 18 possible. 19 Thank you. 20 MS. MA: Thank you. 21 Mr. Smith. 22 ---oOo--- 23 PAUL SMITH 24 ---oOo--- 25 MR. SMITH: Thank you, Madam Chair. Paul 26 Smith with the Rural Counties Association RCRC. We 27 are in strong support of this bill. It's one of our 28 top priorities. I can't really go to an the RCRC 20 1 Board of Directors meeting without hearing about the 2 plight of our fairs, our fairgrounds, our fair 3 network. 4 In rural counties, fairs are very much like 5 a local government, as Mr. Chambers talked about. 6 And with counties they're very much a partnership, 7 particularly on public safety issues. 8 I remind folks that fairs aren't just about 9 corndogs and ferris wheels, that they are also not 10 just about doll shows or, you know, after -- 11 after-fair parties or gatherings. They are really a 12 public safety component for local communities and 13 nowhere is that more important than the rural areas. 14 You only have to look at the Rim Fire in 15 Tuolumne County, look at the fires in Lake and 16 nearby Napa; those fairgrounds were a vital 17 component in housing people, in staging first 18 responders, etcetera, etcetera. 19 So we believe it's very important that this 20 State come in with a better funding scheme than what 21 we've had in place in recent years, which is 22 virtually minimal redirection in light of General 23 Fund loss and horse racing proceeds loss. 24 We believe this is an appropriate way to 25 permanently and long-term help out the fairgrounds, 26 each and every one of them. We encourage this bill 27 to move forward. We would really appreciate the 28 support of the Board of Equalization. And let's get 21 1 our fairs back to where they should be and can be. 2 So we implore the bodies to support this effort. 3 MS. MA: Thank you very much. 4 You all know that I've been a big supporter 5 of fairs. And we saw firsthand in Lake County that 6 the fairground was used for probably six months 7 straight for emergency services and aid and also 8 other related agencies to come and actually be on 9 site to handle all the fires as well as the 10 aftermath of the fires. 11 So my question to Mr. Chambers is, the 12 infrastructure, obviously there's never going to be 13 enough money for infrastructure. And perhaps you 14 can tell us how much it would cost to renovate and 15 update all of the existing 76 fairgrounds and their 16 facilities. You know, I've visited all of mine in 17 my district and some, you know, are in better shape 18 than others. Number one. 19 And, number two, if you could also share 20 with us the economic structures? Not all of them 21 are owned by the State of California. Some of them 22 are jointly -- it's like the county-owned and 23 managed, and if you could just explain that because 24 I think the audience also needs to know how each 25 fairground operates. 26 MR. CHAMBERS: Thank you. 27 Let me just start with your second question 28 which is governance structure. You know 22 1 California's kind of unusual. Our 78 fairgrounds, 2 54 of them are District Ag. Associations, a title 3 that actually precedes the current legal definition. 4 We had District Ag. Associations as early 5 as 1869. Currently, they're set up as quasi-state 6 agencies. They have boards appointed by the 7 Governor, most of them legislators sitting on this 8 Board of Equalization, or former legislators, it 9 seems like almost all of you, so you know what 10 that's like. You have people who want to serve on 11 fair boards in your district, so they're calling you 12 to see if you'll call the Governor on their behalf. 13 And we also have 24 county fairs; those are 14 run a variety of different ways. They're usually at 15 arm's length in association where the county 16 supervisors appoint some of the board members, but 17 they operate as a -- sometimes it's called an 18 instrumentality of the county or they're not 19 necessarily directly affiliated with the county. 20 Their employees aren't county employees. That's the 21 traditional model or the typical model these days. 22 We also have two citrus fruit fairs; I 23 think I'd have to go to law school to understand 24 quite what they are. But there's the Cloverdale 25 Citrus Fruit Fair and the National Orange Show in 26 San Bernardino. Then we have the California State 27 Fair here in Sacramento. 28 But all of them, fortunately, in stature 23 1 defined as the network of fairs. And that's 2 actually, you know, set in code long ago by Senator 3 Ken Maddy who got tired of leaving fairs out in 4 various bills that he was carrying. Every now and 5 then he would accidentally, like, leave out all the 6 county fairs because he only mentioned the District 7 Ag. Associations or he'd leave out the State fair 8 because it wasn't named. So hopefully that solves 9 it. 10 But we see the fairs as all in the same 11 business. They're all governmental or nonprofit. 12 They're all on public land in some way. Even some 13 of the State agencies are on land that they lease 14 from the county or city. But the infrastructures 15 involved and the creation of those fairs has been 16 something that the State's been the lead on since 17 their inception in the 1800s. 18 As far as infrastructure and cost, I'm not 19 an engineer and I know one of the things I hear from 20 the people who work in that field is that, that's 21 very scary for us, is that as the economy seems to 22 come back, cost of construction is going up 23 exponentially it seems like. 24 So we know that we did a study of -- the 25 Department of Food and Ag. led a study of just 26 emergency or urgent infrastructure repairs. These 27 aren't renovations or anything. This is just fixing 28 stuff for public safety. And that was close to 24 1 $300 million, and that was two years ago. 2 And at the same time we recognize that 3 fairs generate money locally. I mean we do, you 4 know, fair time as you talked about, you know fair 5 time can be successful. We also rent buildings and 6 we also do a lot of things that don't generate 7 money, like you know junior live stock auctions and 8 all those other -- you know, being emergency 9 evacuation centers for Red Cross. 10 So, we're not expecting to see $300 million 11 fall out of the sky for fair infrastructure. But 12 the current State budget has $4 million in funding 13 for infrastructure. From our perspective, that's 14 the other end of the spectrum. That's so -- such a 15 small amount that we create winners and losers 16 amongst our own members because it's so far from 17 being able to do anything -- to do what's necessary. 18 So we really appreciate Assemblymember Gray's bill 19 which we would hope over time would -- would start 20 to generate amounts of money and enable us to really 21 start catching up on a lot of these projects. 22 I hope that answers your question. 23 MS. MA: Yeah. And the funding would just 24 go to the General Exposition Fund, so it could be 25 used for operations or infrastructure? 26 MR. CHAMBERS: Right now the, uh -- the 27 bill, I believe as amended, is -- focuses on 28 infrastructure. It does -- does allow -- we would 25 1 appreciate the Department of Food and Agriculture 2 having the, uh -- you know, the flexibility to work 3 with the fairs and determine what the priorities 4 are. Any time you've got less than the total amount 5 of money necessary, it gets difficult and sometimes 6 those issues change. 7 For example, the Napa County Fair had 8 submitted projects for urgent health and safety 9 prior to being used as an evacuation center for the 10 Napa fires. That use as an evacuation center put a 11 tremendous strain on the facility. 12 Now they have different issues. And so 13 we -- we -- that's one of the reasons we have a -- 14 we appreciate working with the Department of Food 15 and Ag. on -- on essentially funding strategies for 16 all funds available. 17 MS. MA: So we need more money. 18 Okay. Mr. Runner. 19 MR. RUNNER: Yeah, just to -- just to -- 20 first of all, give me the background on the LA 21 County? 22 MS. HARKEY: Yeah, why LA? 23 MR. RUNNER: They're not giving up any 24 money. 25 MR. GRAY: They're not giving up. There 26 was a perspective from some Members of Legislature 27 that they wanted to be out of this particular 28 effort. 26 1 MR. RUNNER: Those LA County fairs wanted 2 to be out? 3 MR. GRAY: No. They were -- they were 4 silent. 5 MR. SMITH: You want me to take it? 6 I'll be a little more direct -- 7 MR. RUNNER: Yeah. 8 MR. SMITH: -- Mr. Runner. 9 I think you've read in the media over the 10 last six months some questionable activities in the 11 management of that fair. It is not a State Fair. 12 It's not even a County Fair. It's a nonprofit 13 fair. 14 MR. RUNNER: Which fair is that? 15 MR. SMITH: This is the Los Angeles County 16 Fair -- 17 MR. RUNNER: Los Angeles. 18 MR. SMITH: -- I belive is its official 19 title. 20 MR. RUNNER: But the exemption is for every 21 fair in -- in LA County. 22 MR. SMITH: I don't believe -- I believe 23 that is the only one within Los Angeles -- 24 MR. CHAMBERS: No. 25 MR. SMITH: No, it's not. 26 MR. RUNNER: No, it's not. 27 MR. SMITH: But there's -- but that is the 28 count -- that is the focal of the conversation is 27 1 that there shouldn't be State monies going to that 2 entity which has, for lack of a better term, 3 suffered some bad press in terms of its financial 4 management. 5 MR. GRAY: There's some discussion going 6 forward. 7 MR. RUNNER: Yeah. For instance, it would 8 be very difficult for me to support a bill that, for 9 instance -- and I'm closely associated with the 10 fairs. I have an -- we have something going on that 11 I think all fairs ought to look at, and that's a 12 joint powers which then is long-term survival for 13 fairs between the city and the Antelope Valley -- 14 Cities in the Antelope Valley and the Antelope 15 Valley Fairgrounds, which is the 50th, which isn't 16 even listed in here. 17 So I'm not sure exactly how it got 18 overlooked, but it's a very vital operational fair, 19 self -- you know, self-sustaining. And -- and I'm 20 perplexed as to what got them out of the deal. 21 MR. GRAY: As introduced, it was inclusive 22 of all fairs. 23 MR. RUNNER: Uh-huh. 24 MR. GRAY: And the Assembly Rev. and Tax 25 Committee saw fit to put that exemption in. 26 I'm certainly open to narrowing the 27 exemption going forward. 28 MR. RUNNER: Yeah. I mean, again -- okay. 28 1 MR. CHAMBERS: Well, let me clarify the 2 Antelope Valley Fair, which I know you're quite 3 familiar with -- 4 MR. RUNNER: Right. 5 MR. CHAMBERS: -- is part of the fair 6 network and is in Los Angeles County. 7 MR. RUNNER: Right. 8 MR. CHAMBERS: That's just an error in -- 9 MR. RUNNER: Yeah. 10 MR. CHAMBERS: -- in the report there. 11 MR. RUNNER: Okay. That would be my 12 concern. 13 MR. CHAMBERS: Believe me, I -- I got a 14 call right away from them saying, "Why are we out of 15 this?" 16 MR. RUNNER: Yeah, I suppose you did. 17 MR. CHAMBERS: And -- and we've said, 18 "Well, we'll work with the author." And of course 19 it's a long way from the Governor's desk. 20 MR. GRAY: Right. And I actually think 21 that's resolvable. 22 MR. RUNNER: Yeah. Okay. That would be my 23 concern in regards to that. 24 And, you know, there's another opinion in 25 regards to trying to conform behavior by trying to 26 put people in and out, you know, to try to solve the 27 problem. 28 MS. MA: Can I just piggyback on that? 29 1 Is the LA County Fair part of the fair 2 network or not part? 3 MR. CHAMBERS: Yes, it is. 4 MS. MA: They are. 5 And the property is owned by who? 6 MR. CHAMBERS: County of Los Angeles. 7 MS. MA: Well, it seems like they're just 8 like every other fair in the fair network. They're 9 still owned by the public, either -- 10 MR. CHAMBERS: Yeah. 11 MS. MA: -- the county or the state and 12 they should probably be included in the bill, but -- 13 Ms. Harkey. 14 MS. HARKEY: Well, that was one of my 15 concerns is LA's out; I need to know why, okay. And 16 I think you've kind of explained it. There's 17 some -- something that's perceived, if not actually 18 going on, with the funding and so they don't want to 19 fund it anymore, or it's a political hassle. 20 Somebody's -- somebody's throwing rocks. 21 I, as a rule, because we've got -- being in 22 the Legislature and going through budgets like we 23 always do, I'm getting much more involved in the 24 Legislature here, I think, than I wanted to. But I 25 will tell you that I'm very concerned with 26 segmenting portions of revenue for certain issues. 27 Because it seems like when we get into budget 28 negotiations, the pie becomes more limited and 30 1 limited, because we have to fund certain things. We 2 get matched funding from federal government for 3 certain things. We have to fund the education, we 4 have to fund -- I mean there's just these priorities 5 that just eat up the budget. 6 So I'm not really strong on taking a 7 certain percentage and putting it into another fund. 8 And so I'm probably not going to support this. I 9 don't know that I'll oppose, I'm just going to stay 10 away from it because it's not something I'd be 11 naturally inclined to want to do. 12 And so I wish you luck, but I'm not -- 13 doesn't matter for me. You need the other votes. 14 MR. GRAY: Thank you for your comments. 15 MR. HORTON: Madam Chair? 16 MS. MA: Mr. Horton. 17 MR. HORTON: Generally speaking, a tax 18 exemption is always a good thing. So there is some 19 concerns about LA, and this is my first time sort of 20 hearing about it. More than willing to work with 21 you, Assemblyman Gray, in that regard. 22 LA is -- the ground -- the fair itself is 23 owned by the county, it's managed by -- 24 MR. CHAMBERS: It's managed by a nonprofit 25 and they contract with the county to run the fair 26 and the property on behalf of the county. And they 27 do that -- I'm not an expert on this area. You 28 might know more about it than me. But that's not an 31 1 uncommon model for some of the county fairs because 2 a long time ago, in the 60s, a lot of the county 3 fairs no longer wanted to have the liability of -- 4 of a fairgrounds and the activities that took place 5 there. So they -- they created nonprofits to run 6 them, kind of at arms's length. 7 So Sonoma County is that way; it's a Sonoma 8 County Fair Association. Alameda County. 9 LA County is the only model I'm aware of 10 where the supervisors themselves don't hold board 11 appointments. They allow, instead, a nonprofit to 12 elect essentially a board that then oversees the 13 operation. 14 MR. HORTON: And the funding would go to 15 the nonprofit or to the county for distribution to 16 the nonprofit, providing them some control over 17 those funds. Is that -- 18 MR. CHAMBERS: Yes. The allocations in 19 the -- in the past have -- for county fairs, it's 20 dependent on the contractual arrangement between the 21 association and the county. 22 So I know that there are some counties 23 where, when the Department of Food and Ag. had 24 funding available, they send it to the county to 25 administer on behalf of -- with the fair. But there 26 are others where if it's in the county's agreement, 27 they'll send it directly to the fair. And I'm not 28 familiar enough with LA County, but they've been 32 1 part of the network since their inception and then 2 they received -- I know the Department of Food and 3 Ag., you know, helped build the grandstand at the LA 4 County Fair in the 1930s with money from horse 5 racing. 6 So that -- that relationship has always 7 been there and I'm sure it's going to change or 8 evolve as new management takes place there. That's 9 just -- they're in that situation right now. 10 MR. HORTON: Yeah. This is one of those 11 situations where I'm supportive of the bill, 12 supportive of the measure. This is one of those 13 situations where it's really sort of in the 14 Legislature's purview. 15 From the Board of Equalization's 16 perspective I'm supportive of the measure because 17 our efforts to administer this is not that 18 significant and the overall benefit, I believe, to 19 the State can be significant. If the fair is shut 20 down, you end up losing income tax, you end up 21 losing all of the tax increments associated with the 22 fair, and that's inherently dangerous to all the 23 parties involved. 24 So when you have something as simple as 25 this, it turns out being simple at the end of the 26 day. But going through the legislative process 27 often requires a level -- a higher level of 28 education in order just to bring some clarification 33 1 to those issues. 2 Let me suggest, for consideration only, and 3 I do this only with the caveat of deferring to the 4 Member and the Legislature. Not being party of that 5 esteemed body anymore, we certainly want to respect 6 that process. 7 The -- if in fact the legislation provided 8 that the funding went to the county and there was 9 some element of control over that where there were 10 some checks and balances that they could implement, 11 possibly LA might be a little more comfortable given 12 the concern about the nonprofit and the funding 13 going directly to the nonprofit, it's just no 14 control on their part. 15 The other thing on the overall funding, I 16 concur with Member Runner, Joint Powers Agreement. 17 The other is to take a look at the bonding capacity 18 of the local agency. If they have that bonding 19 capacity, then issuing or going to the voters who 20 benefit from this as well and seeking a bond allows 21 the fair to pay off the bond so you get the 22 immediate cash flow in order to do the 23 rehabilitation that you need and the incremental 24 payoff over a period of time, which could be 25 accomplished with the sales tax increments. And so 26 you end up with a joint participation on everyone's 27 part and preserving the income tax, the property tax 28 increments, maybe not so much with the utility taxes 34 1 and all the other things that go along with that. 2 MS. MA: Ms. Stowers. 3 MS. STOWERS: Thank you. 4 Because this bill is a tax expenditure that 5 should be evaluated during a comprehensive review of 6 tax reform of our tax structure, the Controller's 7 office is not participating on this item. 8 MS. MA: Okay. 9 Mr. Runner. 10 MR. RUNNER: Let me tell you where I kind 11 of am. Conceptually I think it's an interesting 12 idea. I personally would probably support the bill. 13 I'm not sure it's in the best interest -- I'm not 14 sure where the interest of the BOE is in this bill. 15 I do believe it's -- you know, I think it's kind of 16 a -- you know, I just don't know what our total 17 interest is. 18 Individually, I would support the idea. I 19 think it's an -- I think it's the -- an important 20 kind of revenue source for these fairs. I 21 understand the culture and the importance of them in 22 the communities that they're in. However, I 23 certainly couldn't do it until we resolve the -- 24 personally couldn't support it until we resolve the 25 issue with -- with -- with the plan for LA County. 26 You know, my friends at home would not be able to 27 understand why I would do that. 28 MS. MA: Okay. So it seems like we don't 35 1 have, you know, majority support based on some of 2 the concerns here. I don't know if you're going to 3 work on the bill as it moves to the next house. 4 MR. GRAY: Yeah. We're absolutely going to 5 work on the bill. 6 And the LA County issue, frankly, from the 7 perspective of the rest of us and those of us out in 8 rural California, we'd love for LA County to be in 9 because that's a big revenue generator. 10 MS. HARKEY: All the more reason they're 11 not. 12 MS. MA: Right. 13 MR. GRAY: In fact, those of you down in 14 the LA county that -- in the Legislature that seem 15 to have the -- 16 MR. RUNNER: Hopefully good policy would be 17 able to float above any kind of issues that may be 18 amongst the background of that, huh? 19 MR. GRAY: Mr. Runner, I believe you used 20 to be in the Legislature, didn't you? 21 MR. RUNNER: That was rhetorical, I 22 believe. 23 MR. GRAY: I certainly appreciate all the 24 comments I hear today, Madam Chair, and would be 25 happy to commit to all of you to work on these 26 issues. I know Member Horton had some good 27 suggestions that I could take back to discuss with 28 some of the other members. And we'd be happy to 36 1 perhaps reach out for your support at a later 2 date. 3 MS. MA: Okay. Mr. Horton? 4 MR. HORTON: Just a quick question, a 5 clarification. Are the funds pooled, you know? 6 They are. 7 MR. GRAY: Yeah. 8 MR RUNNER: And competitive then? 9 MR. HORTON: And then are they distributed 10 based on some proportionate -- I mean, would LA 11 County all of a sudden lose anything -- 12 MR. GRAY: No. 13 MR. HORTON: -- if the funds -- sales tax 14 collected by LA County went into a pool and let's 15 say LA County makes up 40, 30 percent of the -- of 16 that, they in turn would receive 30 percent of the 17 revenue back. Or is it allocated some other way? 18 MR. GRAY: So the -- the revenue would be 19 taken from the State General Fund portion so that 20 the county would stand to lose nothing. It would 21 then be deposited into the Fair and Exposition Fund, 22 at which point that money could be granted out to 23 deal with infrastructure projects at any of the 24 included fairs. 25 So certainly from a local perspective, 26 nothing's lost. But perhaps from the State General 27 Fund perspective, something's lost. 28 MR. SMITH: Mr. Horton, if I may, to 37 1 elaborate on Assemblymember Gray's point. The issue 2 here is preserving a network of fairs. So the 3 insurance policy that LA County buys is -- is 4 directly related to the health of all of the fairs. 5 The vendors that travel to LA County in 6 September have to go and service the fairs in 7 October and in July. And so if you don't have a 8 healthy infrastructure of a network, the costs would 9 come back to LA County or any other participating 10 fair in the form of higher vendor costs or less 11 quality, insurance products, all of the things that 12 need to be purchased and acquired to run a fair 13 day-to-day, month-to-month, etcetera, throughout the 14 state. 15 MR. HORTON: Yeah, we had similar, as 16 Mr. Gray may remember, similar legislation proposed 17 by then Assemblyman Steinberg and had the inherent 18 challenges on the distribution of the funds where LA 19 or any other major county that's a huge revenue 20 generator had a sense of not being -- having a 21 benefit. 22 One of the ways that we looked at dealing 23 with that is to establish a baseline that assures 24 them that they would have a reserve that would be 25 pooled out, that would be there and available for 26 them. 27 At some point, depending on the sunset, 28 depending on the use of these funds, something like 38 1 Social Security may just -- funds might not be there 2 and available when they -- when they need 'em if 3 they're being used by other counties. 4 So if you're pulling funds from LA being 5 used elsewhere, without some element of security, 6 you know, you're going to have those concerns. That 7 may be another reason or another issue that you may 8 want to try to fix in the process. But, again, I'm 9 supportive. 10 MR. GRAY: Thank you. 11 MR. HORTON: Hey, Eric. How're you doing? 12 Just had to shout out to Eric. 13 MS. MA: Okay. So two of us are 14 supportive. I personally signed a letter. I think 15 anything is better than nothing when it comes to the 16 fairs. I'm glad you're carrying the bill, Mr. Gray, 17 and raising the awareness because some people that 18 don't go or frequent the fairs that much aren't 19 aware of the needs. 20 The Fair Board Members, you know, need to 21 get a little bit more engaged and lobby their 22 legislators, which I have asked them to do. So I'm 23 hoping that, you know, we are going to have a 24 fairgrounds, you know, legislative day and I'll come 25 up to Sacramento and I'll go and lobby all the 26 members in the next appropriate time. 27 So, I thank you for carrying. I thank you 28 all for coming today, and we will stay tuned in 39 1 terms of the bill moving forward. 2 MR. CHAMBERS: Thank you. The only thing 3 we would ask is we really appreciated the, uh -- the 4 staff analysis. Because, again, this is new ground 5 for us as the trade association. And we certainly 6 expected there to be -- should this bill be moving 7 forward -- administrative costs, and we'd love to be 8 able to, you know, know what those are and want 9 to -- we want to support that element. 10 We realize we're asking an agency -- I mean 11 it was asked earlier why -- you know, why the Board 12 of Equalization's discussing this? Well, one reason 13 from our perspective is the bill asks you to do 14 something and asks you to perform tasks for us. And 15 so hopefully your staff will share that with 16 Assemblymember Gray as we get closer because we 17 wouldn't want to miss the opportunity to make sure 18 we do right there. 19 Thank you. 20 MS. MA: Yeah. So that's one of the 21 reasons we're hearing the bill is the bills that 22 have nexus to us which ask for an analysis from, you 23 know, Michele Pielsticker's unit and also a cost 24 analysis is obviously very important to the 25 legislators moving forward, because without a cost 26 analysis, well, the bill can't keep continuing to 27 move. 28 And so I want to thank the Legislative Unit 40 1 for performing a very, very important task for us. 2 And, you know, thank you for recognizing, you know, 3 the reason you're all here and we're also trying to 4 weigh in early to give our input and also our 5 support, either as a board or as individual 6 members. 7 MR. RUNNER: Yeah. And I was going to say, 8 if you -- also, if you have any issues in regards to 9 the cost of analysis or the cost of implementation 10 or anything, we'll be glad to discuss that also as 11 individual members with you and our staff in that 12 regard, too. 13 MR. GRAY: Okay. 14 MR. RUNNER: Be glad to do that. 15 MS. HARKEY: As long as we have the 16 legislative staff to perform that function. That 17 just got cut today -- 18 MS. MA: Yes. 19 MS. HARKEY: -- from Assembly budget. 20 MS. MA: Hence my additional comments. 21 MS. HARKEY: You know, I just tell you how 22 it is. I knew she was hinting, but -- 23 MR. CHAMBERS: Oh, okay. 24 MS. MA: Okay. So thank you very much for 25 your time. Thank you for coming, Mr. Gray. 26 MR. GRAY: Thank you, Board Members. 27 MS. MA: Thank you. 28 Okay. The next bill is AB 717 by Ms. 41 1 Gonzalez. Sales tax exemption on diapers. I 2 believe -- 3 MS. HARKEY: Is she here? 4 MS. MA: -- Miss San Miguel from the Office 5 of Assemblywoman Gonzalez. 6 Tim? Tim, is she here, the next bill? Ms. 7 Gonzalez's office? No? 8 Okay. Why don't we move to the next one. 9 MR. HORTON: Members, if -- Madam Chair, if 10 you like, I'd move support of the bill. I think 11 it's similar to a measure we've heard before. 12 MS. HARKEY: I second. 13 MS. MA: And I think she has narrowed the 14 bill. 15 Oh, you probably can just read the 16 amendments, right, Ms. Pielsticker? 17 MS. PIELSTICKER: I can tell you what the 18 bill does now. I don't -- 19 MS. MA: Okay, fine. Why don't you make 20 the presentation. 21 MS. PIELSTICKER: The bill exempts from the 22 sales and use tax diapers designed, manufactured, 23 processed, fabricated or packaged for use by infants 24 and toddlers, designated size three or under. And 25 there's also a sunset. 26 MS. MA: And the cost estimate now has 27 significantly gone down? 28 MS. PIELSTICKER: Annual state and local 42 1 revenue loss of 36.2 million. 2 MS. MA: And before it was 200-something, 3 right? 4 MS. PIELSTICKER: Uh -- 5 MR. RUNNER: For diapers. 6 MS. HARKEY: Yeah. 7 MS. MA: Just diapers. 8 MS. PIELSTICKER: I don't have the 9 information before me. 10 MS. MA: Yeah, so it was like, I don't 11 know, 300 million if I recall. And so now it's 12 narrowed to diapers for toddlers under three -- 13 MS. PIELSTICKER: Yes. 14 MS. MA: -- only. 15 MS. PIELSTICKER: Correct. 16 MS. STOWERS: Chairwoman? 17 MS. MA: I'm sorry. Tim is -- 70 million. 18 I apologize. So 70 to 20 -- 19 Thirty-six. Okay, so about half. 20 Ms. Stowers. 21 MS. STOWERS: Because this bill is a tax 22 expenditure that should be evaluated during a 23 comprehensive review and tax reform of our tax 24 structure, the Controller's office is abstaining 25 from this item. 26 MR. HORTON: I want to make a -- 27 MS. MA: Mr. Horton. 28 MR. HORTON: Mr. Runner may be saying this 43 1 as well, but I support the bill personally, and from 2 the BOE perspective. But this is another one of 3 those measures that is much more of a legislative 4 issue than the BOE and probably should be determined 5 by the Legislature. 6 But I'm supportive of it conceptually 7 because it helps poor people, and I understand the 8 complexity of the process that -- the budget process 9 and how you pull all that stuff out and deal with 10 that is more of a legislative sort of issue. 11 So this is one of those that I sort of 12 pause as to why it's before us, but I'm supportive. 13 MS. HARKEY: Yeah. I support. 14 MS. MA: Ms. Harkey? 15 MS. HARKEY: I support it. 16 MS. MA: Okay. 17 MS. HARKEY: I think it's fine. 18 MS. MA: Mr. Runner? 19 MR. RUNNER: I'm good. 20 MS. MA: Okay. Mr. Horton makes a motion 21 to support the bill as a Board, minus Ms. Stowers, 22 support or abstention on the bill. Ms. Harkey 23 seconds. So -- 24 MS. HARKEY: So be it. 25 MS. MA: -- by a vote of 4 to 1, State 26 Board of Equalization will be supporting this bill 27 as a Board. 28 MS. STOWERS: Isn't that 4 to 0? I'm 44 1 abstaining. 2 MS. MA: 4 to 0. Okay, 4 to 0. 3 Okay. AB 1642 by Mr. Obernolte, Fire 4 Prevention Fee Due Date. 5 MS. PIELSTICKER: Okay. The Board heard 6 AB 1642 at its meeting on March 30th, 2016 without 7 taking a position. 8 Last year the Board supported AB 203, which 9 was identical to this bill. The Board agreed to put 10 this bill over to the May meeting to allow time for 11 staff to provide details about Fire Fee payments 12 made in the 31- to 60-day period after receiving a 13 Notice of Determination. 14 And currently the bill is on the Assembly 15 Appropriations Committee suspense file. The bill 16 would extend from 30 to 60 days the time in which 17 the annual Fire Prevention Fee assessment is due and 18 payable as well as the time period in which to file 19 a Petition for Redetermination. And the fiscal 20 impact is an estimated $548,000 revenue loss in 21 foregone interest and penalties with minor costs. 22 MS. MA: Okay. Thank you. 23 I believe we have Mr. John Thompson and 24 Mr. Josh Hoover from the Office of Assemblymember 25 Obernolte. Welcome. 26 ---oOo--- 27 JOSH HOOVER 28 ---oOo--- 45 1 MR. HOOVER: Thank you, Madam Chair and 2 Board Members. My name is Josh Hoover. I'm the 3 Legislative Director for Assemblyman Obernolte. 4 He wanted to extend his apologies for not 5 being able to make it today, but thank you for 6 allowing me to present on his behalf. 7 Despite a lot of effort by CalFire and BOE 8 to educate payers of the Fire Prevention Fee, there 9 are a number of our constituents and constituents in 10 other rural Assembly Districts that feel that the 11 30-day period to pay or protest the Fire Fee is 12 insufficient due to a number of issues, including 13 mail delays in rural areas and insufficient time to 14 obtain assistance to -- to learn about the fee and 15 to take action. 16 So that is why the Assemblyman has brought 17 forward AB 1642. We really believe that it 18 allows -- that extra 30 days will really allow 19 sufficient time for these residents to review those 20 assessments and account for any delays to 21 incentivize compliance of the Fire Prevention Fee. 22 So I want to thank Mr. Runner for his 23 sponsorship of the legislation and would 24 respectfully request support from the Board on the 25 bill. 26 MR. HORTON: Move support, Madam Chair. 27 MS. HARKEY: Second. 28 MR. HORTON: I think the logic, from my 46 1 perspective, this is somewhat of a Member's bill and 2 to the extent that he's far more familiar with the 3 issues in his district in that particular area that 4 is concerning his constituency. And so it would be 5 in a better position to quantify the necessity, 6 although the concerns relative to the process 7 appears to be -- of education -- appears to be 8 happening, but there also appears to be some level 9 of penalties that are occurring. And to the extent 10 that this alleviates that, may in fact be some 11 benefit being supportive. 12 MR. HOOVER: Thank you. 13 MS. MA: Are you going to support? 14 MS. STOWERS: Yes. 15 MR. HORTON: Just say "ditto." 16 MS. MA: Okay. 17 MR. RUNNER: This is okay. 18 MS. MA: All right. This is okay. So -- 19 MS. HARKEY: This is okay. 20 MS. MA: -- Mr. Horton moves, Mr. Runner -- 21 Ms. Harkey seconds, to support by unanimous consent. 22 Thank you very much for coming, and good 23 luck on the bill. 24 MR. HOOVER: Thank you, Madam Chair. I 25 appreciate it. 26 MS. MA: Okay. And our last bill on the 27 agenda -- 28 MS. HARKEY: Private railroad. 47 1 MS. MA: -- is SB 1394 by Senator Hall, 2 Private Railroad Car Tax Mileage Basis. 3 We have one speaker on this issue, Mr. Dave 4 Ackerman. 5 Ms. Pielsticker, please -- 6 MR. HORTON: Madam Chair, I move support of 7 the bill. 8 MR. RUNNER: Second. 9 MS. MA: Okay. Mr. Horton moves to support 10 the bill. Mr. Runner seconds. 11 Do we still want to hear -- do we need to 12 hear? 13 MR. HORTON: I don't. 14 MS. MA: No. Unless, Mr. Ackerman, you -- 15 MR. ACKERMAN: Respectfully ask for an aye 16 vote. 17 MS. MA: There we go. Okay. 18 MR. RUNNER: He's been around for a 19 while. 20 MS. MA: There you go. By unanimous 21 support -- thank you very much -- the Board will be 22 sponsoring the bill. Thank you very much. 23 Support, yeah. By unanimous support. 24 Supporting the bill, yes. Thank you. Okay. This 25 concludes the Legislative Committee. 26 ---oOo--- 27 28 48 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on May 24, 2016 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 48 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: July 8, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 49