If General Fund revenues for any fiscal year, as determined by the State Controller at the close of the fiscal year following the end of that fiscal year, exceed those of the previous fiscal year by 8% 5% or more, on a base-to-base comparison excluding one-time revenue gains and losses, the tax on the sale of those tangible personal property and taxable services taxed at a rate of 6% 5 1/2% on the effective date of this paragraph shall January 1, 1999 must fall by 0.5% on the subsequent October 1st, unless the Legislature takes action to prevent the reduction.

Rental or lease of an automobile for one year or more must be taxed at the time of the lease or rental transaction at 6% 5 1/2% of the following: the total monthly lease payment multiplied by the number of payments in the lease or rental, the amount of equity involved in any trade-in and the value of any cash down payment. Collection and remittance of the tax is the responsibility of the person that negotiates the lease transaction with the lessee.

SUMMARY

This bill changes the trigger for a 1/2% reduction in the sales tax from an 8% increase in General Fund revenues on a base- to-base comparison to 5% of General Fund revenues on a base-to- base comparison. The bill also makes changes to reflect the reduction of the sales tax from 6% to 5 1/2% on October 1, 1998.