Learn the statuses of 2023 legislation related to business license, cannabis taxation and regulation, lodging tax, property tax, sales and use tax, and utility users tax that HdL is currently tracking.

--- Updated June 15, 2023

May 5th was the deadline for bills to be heard in policy committee in their “house of origin.” Bills that didn’t pass may resurface next year. Fiscal bills were then considered in Appropriations and on to their respective floors. Bills must have passed off their first house floor by June 2nd to continue in the process. Legislators have until July 14th to move bills through their respective policy committees before the month-long summer recess.

On May 12th, Governor Newsom announced his May Revise which largely calls for the state to pare back funding increase. The $306.5 billion plan relies on money raised from bonds, taps into $450 million from the state’s safety net reserves and renews a tax on manage care programs to support Medi-Cal while continuing plans to curtail increases for climate and transportation programs. Rather than use the term “cuts” in describing a decrease in funding, the Governor used the term “funding shifts.”

The following includes updates for 2023 statuses on legislation to watch and bills related to sales and use tax, medical and adult use cannabis taxation and regulation, property taxation and tax/fee administration that HdL is currently tracking.

Download this Legislative Update in PDF format.

 

Asset 9 LEGISLATION TO WATCH

THE CALIFORNIA TWO-THIRDS LEGISLATIVE VOTE AND VOTER APPROVAL FOR FEE AND CHARGE INCREASES INITIATIVE

This initiative (No. 21-0043) limits the ability of voters and state and local governments to raise revenues for government services. Under the amendment, new or increased taxes must be passed by a two-thirds legislative vote in each State chamber and approved by a simple majority of voters. Further, it increases the vote requirement for local taxes proposed by local government or citizens to a two-thirds vote of the local electorate. The increased vote requirements for new or higher taxes would not apply to citizen- initiated state ballot measures.

Status: The initiative measure is eligible for the 11/05/24 general election. HdL will be providing a special edition of our Legislative Update on this topic in September including steps your agency can take to minimize the impact this may have in your municipality.

 

Asset 17 Purple BUSINESS LICENSE LEGISLATION

AB 783 (JACKSON) NEW REQUIREMENTS FOR BUSINESSES WITH SINGLE-USER RESTROOM FACILITIES

This bill would require a city that licenses businesses within its jurisdiction to provide written notice to each applicant for a new or renewed business license of the requirement that all single-user toilet facilities in any business establishment, place of public accommodation, or government agency be identified as all- gender toilet facilities. By increasing the duties of local officials, this bill would impose a state-mandated local program.

Status: Referred to Committee on Governance and Finance, 5/3/23

AB 1334 (PELLERIN) EXEMPTION FOR MOBILE HOME PARKS ADDING ADDITIONAL SPACES

The Mobile Home Park Acts regulates various classifications of mobile home and related vehicle parts and imposes enforcement duties on the Department of Housing and Community Development. This bill would authorize an owner of an existing mobile home park that is subject to, or intends to qualify for, a valid permit to operate the park, to apply to the enforcement agency to add additional spaces to the mobile home park not to exceed 10% of the previously approved number of spaces in the mobile home park. The bill would exempt the additional spaces from any business tax, local registration fee, use permit fee, or other fee that does not apply to the existing spaces in the park. The bill would prohibit the city or county from requiring zoning approval and would exempt those projects from CEQA.

Status: Referred to Committees on Housing and Governance & Finance, 6/7/23

SB 451 (NGUYEN) – EXTENDING LICENSED MANICURIST EXEMPTION FOR INDEPENDENT CONTRACTORS

Existing law requires a 3-part test, commonly known as the “ABC” test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Existing law exempts specified occupations and business relationships from the application of the ABC test described above including licensed manicurists. This bill would delete the January 1, 2025 inoperative date, thereby making licensed manicurists subject to this exemption indefinitely.

Status: Hearing set for 4/26/23 but canceled at the request of the author.

 

Asset 23 CANNABIS LEGISLATION

AB 374 (HANEY) AND SB 285 (ALLEN) LOCAL CONTROL OF CANNABIS CONSUMPTION

Current law allows for the smoking, vaporizing, and ingesting of cannabis goods on the premises of a retailer or microbusiness. These bills would authorize local jurisdictions to allow retailers or microbusinesses to conduct other business activities on site, including selling food and nonalcoholic beverages. AB 374 would further allow for live musical events or other performances on site.

Status: AB 374 Read in Senate, Referred to Rules Committee for Assignment, 6/1/23

Status: SB 285 Referred to Committees on Business & Professions and Governmental Organization, 5/26/23

AB 1565 (JONES-SAWYER) EQUITY PROGRAM GRANTS FOR CANNABIS

The bill would require the Department of Cannabis Control to disburse $15,000,000 in annual funding to support local equity programs in eligible local jurisdictions to assist local equity applicants and licensees gaining entry into, and to successfully operate in, the state’s regulated cannabis marketplace, as specified beginning in the 2028-29 fiscal year.

Status: Referred to Committee on Business, Professions and Economic Development, 6/14/23

 

HOT Icon LODGING TAX LEGISLATION

AB 537 (BERMAN) ADVERTISING PROHIBITIONS FOR SHORT-TERM RENTALS

This bill would prohibit a place of short-term lodging from advertising (including website, application, or centralized online platform) or offering a room rate that does not include all taxes and fees required to book or reserve the lodging. The violation of those provisions will be subject to a specified civil penalty not to exceed $10,000 and would authorize an action to enforce those provisions to be brought by a city attorney, district attorney, or the Attorney General.

Status: Referred to Judiciary Committee, 6/7/23

SB 584 (LIMON) ADDITIONAL SHORT-TERM RENTAL TAXATION FOR LABORFORCE HOUSING

This bill would enact the Laborforce Housing Financing Act of 2023, and define “laborforce housing” as housing that, among other things, is owned and managed by specified entities solely for the benefit of residents and households unable to afford market rent, and whose residents enjoy certain protections. This bill would, beginning January 1, 2025, impose a tax on the occupancy of a short-term rental in this state at the rate of 15% of the rental price of the short-term rental. The bill would define “short-term rental” for this purpose to mean the occupancy of a home, house, a room in a home or house, or other lodging that is not a hotel, inn, motel, or bed and breakfast, in this state for a period of 30 days or less. It would require a short-term rental facilitator, as defined, to collect the tax in the case where the facilitator processes the payment for the rental. The bill would require the operator, as defined, to collect the tax where no facilitator processes payment for the rental. The bill would require all revenues, less refunds and reimbursement to the CDTFA of administration and collection costs, be deposited in the Laborforce Housing Fund.

Status: Read in Assembly, Held at Desk, 6/1/23

SB 683 (GLAZER) HOTEL AND SHORT-TERM RENTALS ADVERTISED AND MANDATORY FEE LISTINGS

Under The False Advertising Law and the Unfair Competition Law, false and misleading advertising practices are criminal. This bill would require a person that advertises a hotel room rate or short-term rental rate before the public in this state to include in the advertised rate all mandatory fees, as provided. The bill would require a hotel or a short-term rental to clearly and conspicuously disclose on its internet website a list of all mandatory fees and credit card surcharges imposed on consumers. The bill would authorize the Attorney General to bring an enforcement action and would require a court to impose a civil penalty of not more than $10,000 for each violation, depending on consideration of specified factors.

Status: Referred to Committees on Business & Professions and Judiciary, 6/1/23

SB 644 (GLAZER) REFUNDS FOR HOTEL AND PRIVATE RESIDENCE RENTAL RESERVATIONS

This bill would require a hotel, third-party booking service, hosting platform, and short-term rental to allow a reservation to be canceled without penalty if the cancellation is commenced within 24 hours of the reservation being finalized so long as the reservation is made 24 hours or more prior to the day of check-in. This bill would require the hotel, third-party booking service, hosting platform, and short-term rental to issue the refund to the customer for the full amount of the reservation, including fees, to the original form of payment within 30 days of the cancellation of the reservation. It would also authorize the Attorney General to bring an enforcement action and recommend a civil penalty for each violation.

Status: Passed Committee and Re-referred to Judiciary Committee, 6/14/23

 

Asset 20 PROPERTY TAX LEGISLATION

AB 84 (WARD) CHANGES TO REQUIREMENTS FOR WELFARE EXEMPTIONS FOR LOWER INCOME HOUSEHOLDS

Current property tax law provides for a welfare exemption for property used exclusively for religious, hospital, scientific, or charitable purposes and that is owned or operated by certain types of nonprofit entities, if certain qualifying criteria are met. This bill would remove the requirement that an eligible owner of property receive a low-income housing tax credit and would instead require that a unit continue to be treated as occupied by a lower income household if the property is subject to a legal restriction that provides that units designated for use by lower income households are continuously available to or occupied by lower income households, at rents not exceeding specified limits beginning with the 2024- 25 fiscal year.

Status: Referred to Committee on Governance and Finance, 6/7/23

ACA 1 (AGUIAR-CURRY) EXEMPTION AND CHANGES TO VOTER APPROVAL RATE FOR AD VALORUM TAX RATE ON REAL PROPERTY

The California Constitution prohibits the ad valorem tax rate on real property from exceeding 1% of the full cash value of the property, subject to certain exceptions. This measure would create an additional exception to the 1% limit that would authorize a city, county, city and county, or special district to levy an ad valorem tax to service bonded indebtedness incurred to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure, affordable housing, or permanent supportive housing, or the acquisition or lease of real property for those purposes, with a 55% voter approval instead of the existing 2/3 voter approval currently required.

Status: Re-referred to Committee on Local Government, 5/31/23

SB 320 (SKINNER) POSSESSORY INTERESTS FOR PUBLICLY OWNED HOUSING PROJECTS

Current property tax law requires that all property subject to tax be assessed at its full cash value and includes certain possessory interests among those property interests that are subject to tax. This bill would provide that there is no independent possession or use of land or improvements if the possession or use is for a tenancy in a residential unit in a publicly owned housing project is part of a governmental assistance program, and directly fulfills the governmental public purpose of providing the housing as described in the governmental assistance program.

Status: Referred to Committee on Governance and Finance, 02/15/23 

 

Asset 25 SALES AND USE TAX LEGISLATION 

AB 52 (GRAYSON) SALES AND USE TAX EXEMPTION FOR MANUFACTURING EQUIPMENT

The Sales and Use Tax Law imposes state taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. This bill would express the intent of the Legislature to expand the sales and use tax exemption for manufacturing and research and development equipment to preserve California’s status as a hub of innovation and technology and to encourage greater investment in California.

Status: Passed Committee and Re-referred to Committee on Appropriations, 6/14/23

AB 314 (PATTERSON) SALES AND USE TAX EXEMPTION EXTENSION FOR TRUCKS USED FOR INTERSTATE AND OUT-OF-STATE COMMERCE

Current Sales and Use Tax Law provides an exemption for the sale of, or the storage, use, or other consumption of, a new, used, or remanufactured truck, or a new or remanufactured trailer or semitrailer, with an unladen weight of 6,000 pounds or more that is purchased for use without this state and is delivered to the purchaser within this state, and the purchaser drives or moves the vehicle to any point outside this state within 30 or 75 days, as applicable, from and after the date of delivery, if the purchaser furnishes certain documents to the manufacturer or remanufacturer until January 1, 2024. This bill would extend that exemption until January 1, 2029, and would exempt a used trailer or semitrailer without any time limitation.

Status: Passed Committee and Re-referred to Committee on Appropriations, 6/7/23

AB 321 (WILSON) SALES AND USE TAX EXEMPTION FOR ZERO EMISSION PUBLIC TRANSPORTATION FERRIES

Sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state. This bill would exempt the gross receipts from those taxes from the sale in this state of, and the storage, use, or other consumption in this state of, zero-emission public transportation ferries and would specify that the exemption does not apply to local sales and use taxes or transactions taxes until January 1, 2028.

Status: In Committee, Held Under Submission, 5/18/23

AB 543 (GIPSON) SALES AND USE TAX EXEMPTION FOR PETROLEUM PRODUCTS SOLD TO WATER COMMON CARRIERS

The Sales and Use Tax Law currently provides an exemption for the sale of fuel and petroleum products 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, as defined. Current law repeals this exemption on January 1, 2024. This bill would delete the repeal date, thereby extending operation of this exemption indefinitely.

Status: Referred to Committee on Governance and Finance, 6/7/23

 

Utility icon Outline22 UTILITY USERS TAX LEGISLATION

AB 41 (HOLDEN) THE DIGITAL EQUITY IN VIDEO FRANCHISING ACT OF 2023

This act revises and recasts the Digital Infrastructure and Video Competition Act of 2006 to rename the act as the Digital Equity in Video Franchising Act of 2023 expanding the definition of video service to include video programming provided as part of, and via, a service that enables users to access content, information, email, or other services offered over the public internet. It provides that the act does not authorize the commission to regulate the rates of video services and authorizes the commission to exercise all authority, jurisdiction, and powers authorized to be exercised by a franchise authority pursuant to certain federal law. It requires a franchise applicant to submit a description of the households that are known to be unserved in the video service area footprint that is proposed by the applicant. The act revises the revenues excluded from the definition of “gross revenue” for purposes of calculating the franchise fee for a local jurisdiction and establishes a policy of the state that subscribers and potential subscribers of a state video franchise holder should benefit from equal access, as defined, to service within the service area, as specified.

Status: Read in Senate, Referred to Rules Committee for Assignment, 6/1/23

 

 

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