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Tire fee increase in California appears inevitable

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California appears on the verge of increasing the state-wide tire fee by 50 cents a tire.

AB 923 (Firebaugh, D-South Gate), which would, among other things, increase the fee on new tires sold in California to pay for air pollution prevention programs, recently passed the Senate and received concurrence from the Assembly on the last day of session.

Lobbiest Terry Leveille told www.moderntiredealer.com that tire dealers were not consulted about the potential legislation, which was slated to increase the current $1 fee on the sale of new tires to $1.50.

But amendments from a special hearing of the Senate Environmental Quality Committee added a quarter to the proposed tire fee increase. If the Governor signs the bill, as of January 1, 2005, customers will be charged $1.75 for every new tire purchased.

In his August 30 edition of the California Tire Report, Leveille writes that air pollution prevention programs will receive 75 cents and the California Integrated Waste Management Board (CIWMB) will continue to fund state tire programs with $1 from the fee.

Leveille sums up the possible results and ramifications as follows:

"The fee will remain at $1.50 until January 1, 2015, when it will again be lowered to 75-cents per tire, all of which will go to the CIWMB´s tire programs.

"Currently tire retailers can retain 3% (or three cents per tire) for the ´costs´ of collecting the fee. AB 923 would reduce that amount to 1.5% (or 2.25 cents per tire).

"Currently, the CIWMB is allowed to finance administrative overhead of its tire programs with up to 5% of the fee amount collected annually (about $1.7 million). AB 923 would allow the (CIWMB) to increase that administrative overhead to 6%.

"After January 1, 2015 -- when the air pollution prevention programs sunset -- AB 923 sets a new direction for the CIWMB´s tire programs. For those of us still around, the bill drops reference to the Five-Year Plan for Tire Programs, the CIWMB administrative overhead would revert to 5% of the funds collected, and the tire program would focus simply on regulatory enforcement of waste tire storage and clean up of illegal tire piles. Market development programs, research, the hauler manifest program, the $1 million emergency reserve, etc. are stricken from the authorized duties of the board."

There are two major discrepancies between the Senate Floor Analysis and the final amended version of AB 923, writes Leveille.

1. "The Floor Analysis contends that on January 1, 2007, the $1.50 tire fee is to be split evenly between the CIWMB and the air pollution prevention programs. The bill says otherwise."

2. "The Floor Analysis also erroneously reports that the Senate Environmental Quality Committee deleted the Board´s authority to use the Tire Fund for ´studies and research directed at promoting and developing alternatives to the disposal of waste tires in landfills, and to assist in developing markets and new technologies for used tires and waste tires.´ In the bill, that occurs only after January 1, 2015."

Leveille says opponents of the bill, including the California Tire Dealers Associations-North and South, California Motor Car Dealers Association, Automotive Repair Coalition, Automotive After-Market Association and the Rubber Manufacturers Association, will urge Governor Arnold Schwarzenegger to veto the bill, "banking their arguments on the questionable connection between the tire fee and air pollution prevention programs.

"The author of AB 923 contends that tire dust causes a measurable amount of air pollution and hence, the link. That link is important, however, since it allowed the legislature to pass the measure with a majority, rather than a two-thirds vote that is required for tax increases." (AB 923 passed the Senate on a 23 to 10 vote and the Assembly on a 52 to 21 vote.)

"With the proponents representing a veritable ´who´s who´ of environmental, health, agricultural and petroleum interests, and key among them, Cal/EPA, the prospect of a gubernatorial veto is doubtful, he adds.

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