Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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CONTENTS: |
Allows cosmetologists and associated practitioners to operate
out of a salon that is a mobile unit under certain conditions |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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General
Revenue Fund – Department of Taxation |
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Revenues |
Potential minimal gain |
Potential minimal gain |
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Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Occupational Licensing and
Regulatory Fund (Fund 4K90) – State Board of Cosmetology |
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Revenues |
- 0 - |
Potential minimal gain or
loss |
Potential minimal gain or
loss |
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Expenditures |
- 0 - |
Potential increase for GPS
tracking system |
Potential increase for GPS
tracking system |
Note: The state
fiscal year is July 1 through June 30.
For example, FY 2008 is July 1, 2007 – June 30, 2008.
·
License fee revenue effects. There is expected to be only a minimal effect on license fee
revenue to the Occupational Licensing and Regulatory Fund (Fund 4K90). The State Board of Cosmetology (COS) does
not expect a significant number of licensed mobile units.
·
Salon tracking system costs. To monitor the location of mobile salons, COS would need to obtain
a GPS vehicle tracking system, the cost of which would vary widely depending on
the system chosen and the extent to which mobile salons pay for GPS tracking
equipment and monthly fees. Given these
variables, LSC is uncertain of the net costs to COS for this system.
·
Transient vendor license fee revenue. Certain salons operating out of mobile units will need a
transient vendor’s license since all but hair design salons (which are only
licensed to provide hair care services) are required to collect sales taxes.
·
No
direct fiscal effect on political subdivisions.
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Overview
The bill allows
estheticians, hair designers, manicurists, natural hair stylists, and
cosmetologists to operate out of a salon that is a mobile unit under certain
circumstances. A mobile unit is defined
to be a movable unit the State Board of Cosmetology (COS) determines is appropriate
for use as a salon, including motor homes and trailers. These mobile units (1) must not operate
within 1,000 feet of the nearest existing salon that is housed in a permanent
structure, (2) must have an adequate dispensary to store chemicals and other
substances away from the general public, and (3) must install and maintain a
global positioning system. Under
current rules adopted by COS, salons in mobile units are prohibited.[1] As of the end of FY 2007, there were 10,799
actively licensed salons.
State fiscal effects
State Board of Cosmetology
License fee revenue
COS expects only a minimal
effect in permanent structure salon licensure if mobile salons were
permitted. This is because few
individuals would prefer to be served by a mobile salon rather than a permanent
salon. While COS does not expect a
significant number of licensed mobile salons, these units would pay the same
license fees as a permanent salon, which are $75 to initially obtain the
license and $60 for biennial renewal.
Additionally, to operate a mobile salon, an individual would need a
managing license (which also enables an individual to practice), which carries
a $45 fee for initial licensure and the same amount for biennial renewal. Overall, while there may be a loss in license
fee revenue from permanent structure salons, there may be an offsetting gain in
such revenue from mobile salons and individuals seeking a managing license (if
they are not already so licensed).
Whatever effect this might have on license revenue to the Occupational
Licensing and Regulatory Fund (Fund 4K9), COS's operating fund, is uncertain.
Potential GPS tracking costs
Because the bill
prohibits any mobile unit from operating within 1,000 feet of the nearest
permanent structure salon, each mobile unit is required to install and maintain
a global positioning system (GPS). To
monitor the location of these mobile units, COS would need to obtain a GPS
vehicle tracking system or something similar to ensure that mobile units do not
come within 1,000 feet of a permanent salon.
Existing staff should be able to monitor the salons.
Prices for these GPS systems
appear to vary widely. Depending on
whether the system is "real time" or "passive," costs
include GPS vehicle units ($350 to $600 each) and installation, activation fees
($10 to $25 per vehicle), monthly service fees ($25 to $35 per month per
vehicle), software or mapping costs, and so forth.[2] Presumably, mobile salon owners would bear
at least a portion of these costs, such as those for the vehicle units and/or
monthly service fees. COS may incur
costs for any information technology (IT) infrastructure and training that is
necessary to monitor the salons. Given
all of these variables, LSC is uncertain of the net costs to COS for a GPS
vehicle tracking system.
Department of Taxation
Transient vendor license fee
revenue
Certain salons operating out
of mobile units will need a transient vendor’s license since all but hair
design salons (which are only licensed to provide hair care services) are
required to collect sales taxes.[3] There is a $25 fee for the license, the
proceeds of which are deposited into the GRF.
LSC fiscal staff: Jason Phillips, Budget Analyst
[1] COS noted that there is at
least one mobile salon that has been given a waiver because the salon operates
for charity purposes only and travels to homeless shelters and battered women’s
centers. The salon’s services are free
and no chemicals are allowed.
[2] Real-time systems are able
to receive updated information on demand using wireless networks. The GPS vehicle units in these systems log
information at regular update intervals of a specified number of minutes. In passive systems, tracking data is logged
at certain intervals and downloaded on a daily basis at a specified time. Many passive systems carry no monthly
service or activation fees.
[3] The Department of Taxation
recommends that vendors that do not have a fixed location in Ohio or persons
providing personal care services at temporary locations or travel to customers'
locations to perform their services should obtain a transient vendor
license. The vendor is required to
collect tax at the rate in effect where the customer receives the service.