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Bill would clarify fuel tax exemption to include county-run transit systems
Summary
Sen. Nilo presented SB 359 to explicitly extend existing sales-and-use tax exemptions for transit fuels to county-run transit services; committee referred the bill to its suspense file after testimony from county and transit representatives.
Sen. Sandra Nilo asked the Assembly Committee on Revenue and Taxation to support SB 359, a bill that would make clear that existing sales-and-use tax exemptions for diesel and compressed natural gas used by public transit operators apply to counties that directly operate transit services.
The bill matters because, Nilo said, ambiguity in current law has led some counties that run transit through county departments (rather than independent transit districts) to face unexpected tax assessments on transit fuel. “These counties have never budgeted for this tax because historically, they haven't had to consistently pay for it,” Nilo said.
Joel Joyce, identified in testimony as “Legislative and Government Affairs coordinator and county executive officer for the County of Placer,” described Placer County’s experience: after a transition to the California Department of Tax and Fee Administration (CDTFA), Placer was audited and advised it did not qualify for the exemption because the word “county” is not in the statutory language. Joyce said the change would not create a new state revenue loss because the state has not been consistently collecting the tax from counties.
Michael Pimentel of the California Transit Association and Mark Neuberger of the California State Association of Counties offered support from transit and county interests. There was no testimony in opposition.
The committee chair announced the bill would be sent to the committee’s suspense file, a procedural step the committee used for most bills on the agenda that have fiscal impacts or need additional review. No roll-call vote on final passage was recorded on the floor of this committee.
SB 359 would amend sections 60039 and 8655 of the Revenue and Taxation Code to explicitly include county-run transit systems in existing fuel exemptions, according to the bill description presented to the committee. Supporters said the bill is intended to correct an administrative inequity so county-run services are treated like cities and transit districts.
The committee paused discussion for quorum during the hearing before resuming and receiving the presentations on SB 359. The chair concluded by referring the bill to the committee’s suspense file.
