BILL ANALYSIS
AB 2858
Page 1
Date of Hearing: April 13, 2004
Counsel: Heather Hopkins
ASSEMBLY COMMITTEE ON PUBLIC SAFETY
Mark Leno, Chair
AB 2858 (Ridley-Thomas) - As Introduced: February 20, 2004
As Proposed to be Amended in Committee
SUMMARY : Imposes fees upon retailers of munitions and
handguns. Specifically, this bill :
1)Beginning January 1, 2006, imposes a fee upon the retailer of
all munitions at the rate of 10% of the retail price for each
munition sold at retail in California.
2)Provides that the fee shall be imposed upon and paid by the
purchaser of munitions for munitions purchased outside
California and intended to be stored or used in California.
3)Beginning January 1, 2005, imposes a fee upon the retailer of
all handguns at the rate of 5% of the retail sale price for
each handgun sold at retail in this California.
4)Provides that the fees imposed by this bill shall not exceed
the costs authorized for expenditure pursuant to specified
subdivisions.
5)Provides that the fees imposed by this bill shall be
administered and enforced by the Board of Equalization (BOE).
6)Defines "munition" as either a finished munition product
consisting of a projectile with its fuse, propelling charge,
or primer, or a primer component, as applicable.
7)Provides that "munition'' does not include a BB or a pellet
commonly used in an air rifle or pistol or ''blank'' munitions
which lack a projectile.
8)Defines "handgun" as defined in Penal Code Section 12001 and
on the approved list pursuant to Penal Code Section 12131.
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9)Provides that peace officers required to carry a firearm on
duty, governmental agencies that employ those officers, or any
government agency purchasing on behalf of a law enforcement
agency are exempt from the fees on munition or primer
component.
10)Provides that the fee provided for in this bill shall not be
imposed upon purchasers who have a valid California hunting
license and are purchasing ammunition intended to be used in a
rifle or shotgun, as those terms are defined in Penal Code
Section 12020.
11)Provides that the fee imposed pursuant to this bill shall not
be imposed on specified transactions.
12)Provides that all amounts required to be paid to the state
under this bill shall be paid to the BOE in the form of
remittances payable to the BOE and are separate from the
remittance of any other fee.
13)Provides that BOE shall transmit the payments to the
Treasurer to be deposited in the State Treasury to the credit
of the Firearm Victims' Reimbursement (FVR) Fund.
14)Creates a FVR Fund which may be used, upon appropriation, for
the following purposes:
a) To pay the BOE for the BOE's cost of implementation and
administration of this bill, which cost in any fiscal year
may not exceed 10% of the total amount of moneys deposited
in the FVR Fund in that fiscal year.
b) To pay the California Victims Compensation and
Government Claims (VCGC) Board for the VCGC Board's cost of
implementation and administration of this bill, which cost
in any fiscal year may not exceed 5% of the total moneys
deposited in the FVR Fund in that fiscal year.
c) To compensate those persons injured by firearms and who
suffer uncompensated pecuniary loss under the guidelines of
the federal Victims of Crime Act.
15)The FVR Fund shall be administered by the VCGC Board in a
similar manner and for similar purposes as the VCGC Board
administers the Restitution Fund.
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16)If the amount credited to the FVR Fund exceeds the amount
necessary to fully cover reimbursable costs, the BOE shall
temporarily adjust, for the following one-year period, the fee
to be charged pursuant to the 10% munition fee to an amount
estimated to deplete any surplus in the FVR Fund during the
next calendar year.
17)Except as provided in subdivision (h) of this bill, the BOE
shall, on an annual basis beginning on January 1, 2006, adjust
the fee imposed pursuant to the 10% munition fee for inflation
based upon the California Consumer Price Index (CPI) provided
by the California Department of Industrial Relations, rounded
to the nearest whole cent. Calculation of the adjustment
using the CPI shall be done by comparison of the cumulative
change in the CPI since January 1, 2005.
18)Provides that the BOE and the VCGC Board shall adopt
regulations necessary to implement this chapter.
19)Provides that for purposes of Chapter 2.8 of the Penal Code,
the BOE may collect the fees pursuant to the Fee Collection
Procedures Law [Part 30 (commencing with Section 55001)] of
Division 2 of the Revenue and Taxation Code.
20)Provides that the fees imposed by Chapter 2.8 of the Penal
Code and the amounts thereof required to be collected by
munition retailers are due quarterly on or before the last day
of the month next succeeding each calendar quarter.
21)Provides that on or before the last day of the month
following each calendar quarter, a return for the preceding
quarterly period shall be filed with the BOE in such form as
the BOE may prescribe. A return shall be filed by every
person subject to the fee pursuant to Penal Code Section
12330. The return shall be signed by the person required to
file the return or by his or her duly authorized agent.
EXISTING LAW :
1)Imposes a sales and use tax on the sale or use of tangible
personal property in California, including munitions.
Currently, the total combined sales and use tax rate is
between seven and one-quarter and eight and one-half percent,
depending on the location in which the merchandise is sold.
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Certain cities and counties impose a transaction and use tax.
(Revenue and Taxation Code, Division II, Parts 1, 1.5 and
1.6.)
2)Authorizes counties to create a Maddy Emergency Medical
Services Fund to reimburse physicians, hospitals and other
providers for otherwise unreimbursed emergency medical
services delivered by these entities. (Health and Safety Code
Section 1797.98a.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement : According to the author, "This bill will
provide for the partial reimbursement for the financial burden
placed on victims of firearm violence and, as a result, state
and healthcare resources. As has been done in this state and
many others around the country, this fee will create a nexus
between the source of a specific problem and the ultimate
financial burden it imposes upon individuals and society.
This bill will allow the state to move forward in creating
additional resources for victims of gun violence while
establishing a share of the responsibility for handgun and
munition users."
2)Background : Under existing law in California, ammunition is
subject to a combined sales and use tax rate of seven and
one-quarter percent to eight and one-half percent, depending
on the location in which the merchandise is sold.
Additionally, a Federal excise tax of 11% is applied to
ammunition sales. The BOE does not impose any other fee or
tax on the sale or use of munitions. According to the
National Sporting Goods Association in 2000 nationwide, there
was a total expenditure of $806.5 million for munitions.
3)Financial Costs of Acute Medical Care for Gunshot Victims :
Several studies have attempted to quantify the financial costs
of acute medical care for gunshot victims.
a) $87,113,580 total hospitalization costs to serve 4,613
gunshot victims in California in 2000. (California Office
of Statewide Health Planning and Development, Hospital
Discharge Data and Quarterly Financial and Utilization
Reports, 2000.)
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b) $285 million total medical costs (emergency services,
physical, hospital, rehabilitation, prescription and
related treatment costs) for gunshot victims in California
based on 1997 incidences. (Children's Safety Network
Economics and Insurance Resource Center, 2002.)
c) Approximately $17,000 average acute care medical costs
for gunshot victims. (Journal of American Medical
Association, August 1999.)
d) According to the author's office, based on preliminary
figures provided by the BOE, this bill would generate
approximately $4 million in revenues annually for victims'
compensation.
4)Fee versus Tax : In 2003, AB 992 (Ridley-Thomas), was similar
to this bill, and died on the Assembly Inactive File. The
analysis of AB 992 raised the issue of whether AB 992 created
a fee or a tax. This bill has some different language from AB
992 and the author's office reports that "after a thorough
review of the relevant legal issues, the Legislative Counsel
of California issued an opinion on March 28 (Request #8098)
that held that the ammunition fee in this bill 'would be a fee
and not a tax.'"
5)California Firearm Injuries : According to the Department of
Health Services, in 2000 there were 3,799 nonfatal hospital
injuries due to the unintentional use of a firearm.
(California Office of Statewide Health Planning and
Development, Patient Discharge Data, February 28, 2003.) Of
those victims, 1,921 were either uninsured or used Medi-Cal
insurance coverage. During the same reporting period, there
were 3,058 nonfatal hospitalized victims whose injuries
resulted from assault or attempted homicide. Of that number,
2,671 were either uninsured or used Medi-Cal insurance
coverage. Finally, there were 115 nonfatal hospitalized
victims whose injures were self-inflicted, 35 of which were
either uninsured or used Medi-Cal insurance coverage.
6)Effect of Exemptions : This bill exempts from the munition and
handgun fees peace officers required to carry a firearm while
on duty, by any governmental law enforcement agency employing
that officer for use in the normal course of employment, and
those who have a valid California hunting license and are
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purchasing ammunition intended to be used in a rifle or
shotgun as those terms are defined in Penal Code Section
12020. Exempting peace officers and hunters eliminates a
large portion of those who buy munition. Eliminating so much
of the market may limit the author's ability to meet his
objective of reimbursing those injured by firearms and
suffering uncompensated losses.
7)Related Legislation :
a) AB 992 (Ridley-Thomas), died on the Assembly Inactive
File, imposed a fee of $0.10 on every munition, as defined,
sold at retail. The fees would be paid to the BOE and
deposited in the FVR Fund. The FVR Fund would be used,
upon appropriation, to pay firearm-injury victims for
uncompensated pecuniary losses and to pay for related
administrative costs, as specified. AB 992 required the
BOE, on an annual basis beginning January 1, 2005, to
adjust the fee for inflation.
b) AB 602 (Koretz) was never heard by this Committee and
imposed a fee of $0.10 on every munition, as defined, sold
at retail. The fees would be paid to BOE and deposited in
the Trauma Center Fund, a continuously appropriated fund
that would be established by AB 602. The Trauma Center
Fund would be used to reimburse emergency services
providers for the costs of treating gunshot wounds and
injuries, as specified. The funds in the Trauma Center
Fund would be allocated by the Emergency Medical Services
Authority to the medical providers by a specified formula.
By establishing a continuously appropriated fund, AB 602
would make an appropriation.
8)Prior Legislation :
a) SCA 12 (Perata), of the 2001-02 Legislative Session,
imposed a tax upon retailers at the rate of $0.05 for each
munition, as defined, imposed a comparable excise tax on
the storage, use, or other consumption in California of
each munition for which the tax was not paid by a retailer.
The tax would be collected, administered, and enforced in
the same manner as the tax imposed under the Sales and Use
Tax Law, to the extent that the tax imposed by SCA 12 is
not inconsistent with that law. SCA 12 would require that
revenues collected pursuant to the additional tax be
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deposited in the Trauma Center Fund, which the SCA 12 would
create. Moneys in the fund would be continuously
appropriated to the BOE to pay specified costs of the BOE
and for purposes of making refunds, and to the Emergency
Medical Services Authority for allocation to local
emergency medical service agencies to support hospital
emergency departments and certified trauma centers in
delivering trauma care, as provided. SCA 12 was never
heard by the Senate Revenue and Taxation Committee.
b) ABx1 24 (Eastin), of the 1993-94 Legislative Session,
provided for a one-time fee of $50 be assessed for each
firearm owned in California, except for firearms held as
inventory by a firearms dealer. In the case of a sale,
loan, or transfer of a firearm on and after July 1, 1995, a
fee of $50 would be assessed, collected, and remitted by
the firearms dealer to the DOJ. ABx1 24 would also require
the BOE to collect a fee of $0.05 per round from every
retail distributor of ammunition for each round of
ammunition distributed by the retail distributor in
California. ABx1 24 would provide an exemption from these
fees for specified governmental agencies and peace
officers, as specified. The fees would be deposited in
the Safe Schools Account that is established by ABx1 24.
Upon appropriation by the Legislature, the funds in the
account would be available to the Office of Criminal
Justice Planning to fund a grant program for school
districts and county offices of education to undertake
activities, as specified, to discourage unlawful possession
or use of firearms and prevent the possession or use of
firearms on school campuses and other locations where the
use or possession of firearms is unlawful. ABx1 24 would
require that 5% of each grant be given to the county
district attorney of the county in which the school
district or office of education is located for specified
purposes. ABx1 24 would specify that a firearms dealer or
retail seller of ammunition who fails to collect and remit
the fee required by ABx1 24 would be guilty of a
misdemeanor, thus imposing a state-mandated local program
by creating a new crime. ABx1 24 failed passage in the
Assembly Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
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The Brady Campaign to Prevent Gun Violence
Legal Community Against Violence
Los Angeles County Sheriff's Department
Mayor of City of Los Angeles
Trauma Foundation
Opposition
California Rifle and Pistol Association, Inc.
California Waterfowl Association
Citizens Committee for the Right to Keep and Bear Arms
National Rifle Association of America
National Shooting Sports Foundation, Inc.
Sporting Arms and Ammunition Manufacturers' Institute Inc.
Analysis Prepared by : Heather Hopkins / PUB. S. / (916)
319-3744