State Board of Equalization

Member Jerome E. Horton

Third District – Los Angeles County

Board of Equalization Sets Utility Property Values for Fiscal Year 2016-17

Local governments will receive $1.412 billion in tax revenue in the upcoming fiscal year because of the California State Board of Equalization’s (BOE) assessment of privately owned public utilities and railroads. The values for these properties for Fiscal Year 2016-17 were set at $102.7 billion by the BOE at its May 24, 2016, meeting in Sacramento by unanimous vote.

Total values are $2.6 billion more than the $100.1 billion adopted by the Board last year, and will generate approximately $36 million more in taxes for local governments than in the current fiscal year. Values were set for 400 companies with property in California. They include telephone (long distance, local, and wireless), gas and electric companies, railroads, and inter-county pipelines.

“Local governments desperately need this revenue,” said Board Member Jerome E. Horton. “I am pleased to be in a position to provide and protect it for our schools, public safety, road repairs, and other badly needed services throughout the State of California.”

While most properties are assessed by county officials, privately held public utilities are assessed by the BOE statewide. These properties are not subject to Proposition 13, and are reappraised annually at their market value.

A “unitary value” includes improvements, personal property, and land. A unitary valuation applies to properties owned or used by public utilities and railroads which are considered necessary to their operation.

The BOE determines the fair market value on January 1st of each year by considering market conditions, use of the property, income generated by the property, replacement costs and investments in the property, regulatory climate, depreciation, and other factors.

The values set by the BOE are used by county governments to levy local property taxes, which help support county governments, cities, special districts, and schools. Penalties are assessed for late or incomplete filings, or failure to file with the BOE.

More information on the BOE’s State-Assessed Properties Program is available at www.boe.ca.gov/proptaxes/sappcont.htm.

New Law Raises Licensing Fees for Cigarettes and Tobacco Products

Sellers of cigarettes and tobacco products will see their licensing fees increase starting June 9, 2016. The increased fees are a result of Assembly Bill x2 11, which was signed into law on May 4 and increases the Cigarette and Tobacco Products License application and renewal fees for retailers, wholesalers, and distributors to provide additional funding for cigarette and tobacco products tax compliance. This new law is effective the same day that the age for purchasing cigarettes and tobacco products raises from 18 to 21 years old. License applications can be submitted through the Board of Equalization’s (BOE) online registration system.

The BOE administers a statewide program to license cigarette and tobacco products manufacturers, importers, distributors, wholesalers, and retailers (Cigarette and Tobacco Products Licensing Act of 2003). Currently, retailers pay a one-time licensing fee of $100 per location where these products are sold. The new law will require them to pay $265 annually for each location. Distributors and wholesalers currently pay $1,000 per calendar year per location. The new law will require them to pay $1,200 per calendar year per location.

Listed below are the fees that go into effect on June 9, 2016 for all new licenses.

Beginning January 1, 2017, the new law also imposes an annual renewal fee of $265 for retailer licenses and increases the wholesaler and distributor license annual renewal fee to $1,200. The new renewal fee amounts are shown below.

The five-member California State Board of Equalization (BOE) is a publicly elected tax board. The BOE collects $60.5 billion annually in taxes and fees, supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes.  For more information on other taxes and fees in California, visit www.taxes.ca.gov.