Leg analyses understate fiscal costs of gun control bills

Obama gun control violence down, CagleJune 18, 2013

By John Hrabe

From social issues to business regulations, Sacramento is considered a national leader in progressive politics. “Conservative” might be the last adjective used to describe the California Legislature — except when it comes to estimating the fiscal impacts of its legislative proposals.

A CalWatchdog.com analysis of several high-profile bills has identified a pattern: the state Legislature’s committee consultants routinely understate the fiscal effects of gun-related legislation. In some cases, the legislative analyses ignored, omitted or outright contradicted the opinions of other state agencies, including the Department of Finance and State Board of Equalization.

With thousands of bills introduced each session, state legislators lack the time and patience to independently review each bill. To expedite a legislator’s decision-making, caucus staff and committee consultants prepare bill analyses that examine the policy arguments, fiscal effects and opinions of major groups and industry associations.  These legislative “CliffNotes” wield tremendous power and influence over a legislator’s vote.

Given the state’s perpetual budget problems, the fiscal effects of a bill are a top concern of legislators — in some cases with the power to make or break a legislator’s vote. Bill analyses that routinely underestimate the costs to taxpayers, therefore, remove a major obstacle to a bill’s passage.

SB 475: Department of Finance objections ignored

Senate Bill 475, authored by Sen. Mark Leno, D-San Francisco, would give the county of San Mateo and the city and county of San Francisco the power to end gun shows at the Cow Palace, a state-owned Bay Area venue that has hosted multiple gun shows in its 72-year history.

On April 16, the Senate Public Safety Committee approved the bill on a party-line vote and referred it to the Senate Appropriations Committee. Under legislative rules, all bills that have a fiscal cost to the state must be reviewed by the Appropriations Committee. But on April 29, instead of being reviewed by the all-important fiscal oversight committee, the bill went directly to the Senate floor, pursuant to a special legislative rule. Senate Rule 28.8 allows the committee chair to waive hearings for bills that are “without significant fiscal impact.”

Not everyone agreed that the bill was “without significant fiscal impact” to the state. According to the Department of Finance’s bill analysis, the legislation would cost the state hundreds of thousands of dollars in revenue and jeopardize the budget of what has been a self-supported facility.

“Gun shows produce an estimated $150,000-$180,000 in rental fee revenue each year,” the governor’s fiscal experts wrote in their opposition to the bill. “This bill would likely decrease state and local tax revenue generated by gun shows held at the Cow Palace.”

Despite the Department of Finance’s objections, the measure passed the Senate on May 2, with two Democrats joining all Republicans in opposition.

AB 711: Non-lead ammo bill

Another controversial gun bill, AB 711 by Assemblyman Anthony Rendon, D-Lakewood, would require hunters to use only non-lead ammunition for shooting wildlife in California. In its analysis of the bill, the Assembly Appropriations Committee identified two fiscal effects:

“1) Minor costs, probably less than $50,000 for DFW (Department of Fish and Wildlife) to develop regulations to certify ammunition as nonlead and distribute educational materials.

“2) Extending current nonlead enforcement would result in minor, if any, additional costs for the law enforcement division of DFW.”

Those concerns ignored other concerns raised by the Department of Finance in its analysis of the bill—lost revenue from a decline in hunting licenses and ammunition sales.

“DFW notes that the department could experience a decrease in hunting licenses sold if hunters decide not to renew their licenses due to the restrictions of the new provisions, or if the non-lead alternatives become unavailable,” the Department of Finance wrote. “Additionally, a reduction in license sales may lead to a reduction in the excise tax collected from ammunition sales, which is a primary source of wildlife conservation funding.”

While the Department of Finance concluded these costs were “unknown,” its rough estimation showed a possible multi-million-dollar revenue loss to the state. “In 2013, the state issued 278,000 hunting licenses. Using the current resident rate for a hunting license of $44.85, and assuming a 75% decrease in license sales, DFW would realize approximately $9 million in decreased revenues,” the agency estimated.

In addition to a substantially different fiscal analysis, the Department of Finance gave greater attention to the bill’s potential conflict with federal regulations. Non-lead ammunition is classified by the Bureau of Alcohol, Tobacco, Firearms and Explosives under its armor-piercing ammunition prohibition. The legislative analysis quickly glossed over the issue at the end of the analysis, under a section about opponents’ concerns.

When the bill reached the Assembly floor, legislators received another bill analysis, which once again excluded any reference to the Department of Finance’s potential $9 million revenue loss. The measure passed on a 44-21 vote.

AB 187: New 10 percent bullet tax

Assembly Bill 187, by Assembly members Rob Bonta, D-Oakland, and Roger Dickinson, D-Sacramento, would impose a new 10 percent tax on all ammunition sales in the state. The bill tasks the state Board of Equalization with the responsibility of administering and collecting the new ammo tax.

Consequently, the Board of Equalization and its policy analysts reviewed the bill to estimate its fiscal effects and administrative burdens. It reached the conclusion that the state would “incur substantial costs” from the bill. The tax agency identified seven tasks that must be completed in order to administer the new tax, including the creation of a new tax return form, the development of new regulations and training agency staff on the new restrictions.

However, the Assembly Appropriations Committee analysis neglected any mention of the BOE’s cost concerns. That’s not for lack of awareness of the agency’s analysis. The Appropriations Committee analysis included the BOE’s estimations of the bill’s revenue upside.

“The BOE estimates that this bill would generate annual ammunition tax revenues of about $90 million,” the legislature’s analysis states.



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