An act to amend Sections 7360 and 60050 of the Revenue and Taxation Code, relating to taxation.

The people of the State of California do enact as follows:


SECTION 1.
Section 7360 of the Revenue and Taxation Code is amended to read:
7360.
(a) (1) A tax of eighteen cents ($0.18) is hereby imposed upon each gallon of fuel subject to the tax in Sections 7362, 7363, and 7364.
(2) If the federal fuel tax is reduced below the rate of nine cents ($0.09) per gallon and federal financial allocations to this state for highway and exclusive public mass transit guideway purposes are reduced or eliminated correspondingly, the tax rate imposed by paragraph (1), on and after the date of the reduction, shall be recalculated by an amount so that the combined state rate under paragraph (1) and the federal tax rate per gallon equal twenty-seven cents ($0.27).
(3) If any person or entity is exempt or partially exempt from the federal fuel tax at the time of a reduction, the person or entity shall continue to be so exempt under this section.
(b) (1) On and after July 1, 2010, in addition to the tax imposed by subdivision (a), a tax is hereby imposed upon each gallon of motor vehicle fuel, other than aviation gasoline, subject to the tax in Sections 7362, 7363, and 7364 in an amount equal to seventeen and three-tenths cents ($0.173) per gallon.
(2) (A) For the 2011–12 fiscal year to the 2015–16 fiscal year, inclusive,
and for the 2021
–22 fiscal year and each fiscal year thereafter,
the board shall, on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, adjust the rate in paragraph (1) in that manner as to generate an amount of revenue that will equal the amount of revenue loss attributable to the exemption provided by Section 6357.7, based on estimates made by the board, and that rate shall be effective during the state’s next fiscal year.
(B) For the 2016–17 fiscal year
and each fiscal year thereafter
to the 2020
–21 fiscal year, inclusive
, the Department of Finance shall, on or before
March 1
May 15
of the fiscal year immediately preceding the applicable fiscal year, adjust the rate in paragraph (1) in that manner as to generate an amount of revenue that will equal the amount of revenue loss attributable to the exemption provided by Section 6357.7, based on estimates made by the Department of Finance, and that rate shall be effective during the state’s next fiscal year.
(3) In order to maintain revenue neutrality for each year, beginning with the rate adjustment on or before March 1, 2012, the adjustment under paragraph (2) shall also take into account the extent to which the actual amount of revenues derived pursuant to this subdivision and, as applicable, Section 7361.1, the revenue loss attributable to the exemption provided by Section 6357.7 resulted in a net revenue gain or loss for the fiscal year ending prior to the rate adjustment date on or before March 1
or May 15, as applicable
.
(4) The intent of paragraphs (2) and (3) is to ensure that Chapter 6 of the Statutes of 2011, which added this subdivision and Section 6357.7, does not produce a net revenue gain in state taxes.
(5) No later than
March 10
May 15
, 2016, and each
March 10
May 15
thereafter
to May 15, 2020
, the Department of Finance shall notify the board of the rate adjustment effective for the state’s next fiscal year.
SEC. 2.
Section 60050 of the Revenue and Taxation Code is amended to read:
60050.
(a) (1) A tax of eighteen cents ($0.18) is hereby imposed upon each gallon of diesel fuel subject to the tax in Sections 60051, 60052, and 60058.
(2) If the federal fuel tax is reduced below the rate of fifteen cents ($0.15) per gallon and federal financial allocations to this state for highway and exclusive public mass transit guideway purposes are reduced or eliminated correspondingly, the tax rate imposed by paragraph (1), including any reduction or adjustment pursuant to subdivision (b), on and after the date of the reduction, shall be increased by an amount so that the combined state rate under paragraph (1) and the federal tax rate per gallon equal what it would have been in the absence of the federal reduction.
(3) If any person or entity is exempt or partially exempt from the federal fuel tax at the time of a reduction, the person or entity shall continue to be exempt under this section.
(b) (1) On July 1, 2011, the tax rate specified in paragraph (1) of subdivision (a) shall be reduced to thirteen cents ($0.13) and every July 1 thereafter shall be adjusted pursuant to paragraphs (2) and (3).
(2) (A) For the 2012–13 fiscal year to the 2015–16 fiscal year, inclusive,
and for the 2021
–22 fiscal year and each fiscal year thereafter,
the board shall, on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, adjust the rate reduction in paragraph (1) in that manner as to result in a revenue loss attributable to paragraph (1) that will equal the amount of revenue gain attributable to Sections 6051.8 and 6201.8, based on estimates made by the board, and that rate shall be effective during the state’s next fiscal year.
(B) For the 2016–17 fiscal year
and each fiscal year thereafter
to the 2020
–21 fiscal year, inclusive
, the Department of Finance shall, on or before
March 1
May 15
of the fiscal year immediately preceding the applicable fiscal year, adjust the rate reduction in paragraph (1) in that manner as to result in a revenue loss attributable to paragraph (1) that will equal the amount of revenue gain attributable to Sections 6051.8 and 6201.8, based on estimates made by the Department of Finance, and that rate shall be effective during the state’s next fiscal year.
(3) In order to maintain revenue neutrality for each year, beginning with the rate adjustment on or before March 1, 2013, the adjustment under paragraph (2) shall take into account the extent to which the actual amount of revenues derived pursuant to Sections 6051.8 and 6201.8 and the revenue loss attributable to this subdivision resulted in a net revenue gain or loss for the fiscal year ending prior to the rate adjustment date on or before March 1
or May 15, as applicable
.
(4) The intent of paragraphs (2) and (3) is to ensure that Chapter 6 of the Statutes of 2011, which added this subdivision and Sections 6051.8 and 6201.8, does not produce a net revenue gain in state taxes.
(5) No later than
March 10
May 15
, 2016, and each
March 10
May 15
thereafter
to May 15, 2020
, the Department of Finance shall notify the board of the rate adjustment effective for the state’s next fiscal year

Summary: Existing law, as of July 1, 2010, exempts the sale of, and the storage, use, or other consumption of, motor vehicle fuel from specified sales and use taxes and increases the excise tax on motor vehicle fuel, as provided.
Existing law requires the State Board of Equalization, for the 2011–12 fiscal year and each fiscal year thereafter, on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, to adjust the motor vehicle fuel tax rate in that manner as to generate an amount of revenue equal to the amount of revenue loss attributable to the sales and use tax exemption on motor vehicle fuel, based on estimates made by the board. Existing law also requires, in order to maintain revenue neutrality, the board to take into account actual net revenue gain or loss for the fiscal year ending prior to the rate adjustment date. Existing law requires this determined rate to be effective during the state’s next fiscal year.
This bill would, for the 2016–17 fiscal year
and each fiscal year thereafter
to the 2020
–21 fiscal year, inclusive, on or before May 15 of the fiscal year immediately preceding the applicable fiscal year
, instead require the Department of Finance to adjust the motor vehicle fuel tax rate as described above, and would require the department to notify the board of the rate adjustment effective for the state’s next fiscal year, as provided.
Existing law, as of July 1, 2011, increases the taxes on the sale of, and the storage, use, or other consumption of, diesel fuel, and reduces the excise tax on diesel fuel.
Existing law requires the board, for the 2012–13 fiscal year and each fiscal year thereafter, on or before March 1 of the fiscal year immediately preceding the applicable fiscal year, to adjust the diesel fuel tax rate by reducing it in that manner as to result in a revenue loss that will equal the amount of revenue gain attributable to the increase in the sales and use tax rate, based on estimates made by the board. Existing law also requires, in order to maintain revenue neutrality, the board to take into account actual net revenue gain or loss for the fiscal year ending prior to the rate adjustment date. Existing law requires this determined rate to be effective during the state’s next fiscal year.
This bill would, for the 2016–17 fiscal year
and each fiscal year thereafter
to the 2020
–21 fiscal year, inclusive, on or before May 15 of the fiscal year immediately preceding the applicable fiscal year
, instead require the Department of Finance to adjust the diesel fuel excise tax rate as described above, and would require the department to notify the board of the rate adjustment effective for the state’s next fiscal year, as provided.