Tag: AB 1963

Sales Tax on Services Legislation Turned into Study Bill

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sales tax, study bill, AB 1963, tax on professional services

AB 1963, the legislation to impose a sales tax on many services, including architectural services, has been amended by the author in response to overwhelming opposition into a study bill on a sales tax on services.

The AIACC was a part of the opposition coalition and is pleased with this outcome.

Every few years, there is a proposal to extend the sales tax to services, as that is seen as the remaining activity not taxed (this view overlooks income and business taxes paid by service providers and, for architects at least, the sales tax that is generated as a result of the services provided). The proposal usually is presented as an opportunity to tax an untaxed entity, to lower the overall sales tax rate, and to bring greater stability to the amount of tax revenues received (although architects will be first in line to say service providers are not immune to recessions).

AB 1963 now requires the Legislative Analyst’s Office to study a sales tax on services and report recommendations to the Legislature. Several similar studies have been conducted in the past, often recommending some type of a tax on services. The former opposition coalition is asking that the study also include a look at any negative impacts a sales tax on services would have on the economy.
The amendment to AB 1963 is a positive development, but it is certain that this issue will come up again another year.

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Nearly 2,000 New Bills Introduced by the Legislature this Year

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Reviewing the nearly 2,000 new bills introduced by California’s Legislature is like going through a huge pile of mail: is it a nice birthday card with a check, junk mail to be ignored, or, worse, a bill that can’t be ignored? The new bill introduction deadline of Friday, February 24 has come and gone, and the pile is huge: nearly 2,000 new bills have been introduced to address, arguably, more problems than there actually are.

Upon a quick review of some of the introduced bills, we have identified a few that we cannot ignore – and certainly, more will be identified in the coming days. Those of interest to the architectural profession include initiatives to:
1) Enact a sales tax on services
2) Create an Interior Design Practice Act
3) Create Building Standards to reduce vehicle miles traveled

The AIACC Advocacy Advisory Committee will review these three bills, among others, and recommend positions to the AIACC Board of Directors. Please let us know your thoughts in the Comments section below.

Sales Tax on Services
AB 1963, by Assembly Member Alyson Huber, would lower the state portion of the existing sales tax on tangible goods to 4%, and impose a new state sales tax of 4% on services. While the AIACC is still reviewing this bill, it strongly appears upon a quick read that the sales tax would apply to architectural services (there are exemptions for medical services, education services, automotive repair services, tax preparation services, legal services, and services relating to agriculture and livestock).

This bill faces an uphill battle to pass the Legislature for a variety of reasons. First, it requires Republican support to meet the 2/3 vote requirement, and Republicans have to date expressed strong, unified opposition to any tax increase. Second, it will compete with a variety of tax measures that are expected to be placed on the ballot, including one supported by the Governor. There already is a strong effort underway to reduce the number of tax proposals that will be placed on the ballot to one, to avoid voter confusion and the expected response of a confused electorate: a “No” votes on all tax measures. And finally, this bill was introduced at the same time a Field Poll was released on the sales tax (see page 5), which showed voters would prefer either no change in the sales tax, or an increase in the existing sales tax, to an expansion of the sales tax to services.

Regardless of the difficulties this bill faces, the AIACC has a standing position to oppose a sales tax on services and will actively lobby against this bill.

Interior Design Practice Act
Assembly Speaker Pro Tempore Fiona Ma has introduced AB 2482 to create a Practice Act for Interior Design. This is a proposal that is introduced in California every three to five years; it is part of a nationwide effort led by the American Society of Interior Designers and others who advocate providing interior designers the same legal recognition given to architects and engineers.

The AIACC has historically opposed Interior Design Practice Act efforts, and instead supports the existing state-sanctioned private certification program available to interior designers who meet the education, experience, and examination requirements spelled out in state law.

The AIACC is just beginning its detailed review of AB 2482 and will be working with other groups who in the past have expressed strong reservations to this type of proposal, including the large segment of interior designers who would be economically harmed by this proposal.

Vehicle Miles Traveled
AB 1627, by Assembly Member Roger Dickinson, proposes to require the California Energy Commission to adopt standards for some residential and non-residential buildings “to reduce the vehicle miles traveled by occupants of…buildings within the boundaries of a metropolitan planning organization.”

This bill allows the standards to affect “physical design factors of the proposed building or proposed modification of the building that impact walkability, bikeability, and transit access for the occupants of the building both onsite and offsite.”

AB 1627 proposes to place into building standards items that affect behavior outside of the building. This would appear to be a new direction for the building code. Do you have thoughts on this to help your colleagues on the AIACC Advocacy Advisory Committee and Board of Directors adopt a response to this bill? If yes, please share your thoughts in the Comments section.

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