BILL NUMBER: SCA 4	CHAPTERED
	BILL TEXT

	RESOLUTION CHAPTER  133
	FILED WITH SECRETARY OF STATE  JULY 30, 2004
	ADOPTED IN SENATE  JULY 29, 2004
	ADOPTED IN ASSEMBLY  JULY 28, 2004
	AMENDED IN ASSEMBLY  JULY 27, 2004

INTRODUCED BY   Senator Torlakson

                        FEBRUARY 6, 2003

   Senate Constitutional Amendment No. 4--A resolution to propose to
the people of the State of California an amendment to the
Constitution of the State, by amending Section 15 of Article XI
thereof, by adding Section 25.5 to Article XIII thereof, and by
amending Section 6 of Article XIII B thereof, relating to local
government finance.


	LEGISLATIVE COUNSEL'S DIGEST


   SCA 4, Torlakson.  Local government finance.
   (1) The California Constitution requires that specified revenues
derived under the Vehicle License Fee (VLF) Law be allocated among
the counties and cities of the state according to statute.  Existing
statute requires that a specified percentage of the revenues derived
under the VLF Law be deposited in the Local Revenue Fund in the State
Treasury for allocation among counties and cities for specified
purposes.
   This measure would require those revenues derived under the VLF
Law from that portion of the vehicle license fee rate that does not
exceed 0.65% of the market value of a vehicle to be deposited in an
amount specified by that law in the Local Revenue Fund for allocation
to cities, counties, and cities and counties, and the balance of
that portion to be allocated among those entities as otherwise
provided by law.  This measure would also require that compensating
allocations be made if a statute reduces the annual vehicle license
fee below 0.65% of the market value of a vehicle.
   (2) Existing property tax law requires the county auditor, in each
fiscal year, to allocate property tax revenue among local
jurisdictions in accordance with specified formulas and procedures,
and generally requires that each jurisdiction be allocated an amount
equal to the total of the amount of revenue allocated to that
jurisdiction in the prior fiscal year, subject to certain
modifications, and that jurisdiction's portion of the annual tax
increment, as defined.
   This measure would prohibit the Legislature from enacting a
statute that modifies the manner of apportioning ad valorem property
tax revenues so as to reduce the percentage of the total amount of ad
valorem property tax revenues that are collected countywide and
allocated among all local agencies, as defined, in a county below the
percentage that these agencies would receive under the law in effect
on the operative date of this measure.  This measure would authorize
the suspension of this prohibition for a fiscal year, if certain
conditions are met.  This measure would, except as otherwise provided
by another provision of this measure, also prohibit the Legislature
from enacting a statute that changes for any fiscal year the pro rata
shares in which ad valorem property tax revenues are allocated among
local agencies in a county, other than by a bill approved by a 2/3
vote of the membership of each house of the Legislature.
   (3) The Bradley-Burns Uniform Local Sales and Use Tax Law
authorizes a county to impose a local sales and use tax at a rate of
1.25%, and similarly authorizes a city, located within a county
imposing such a tax rate, to impose a local sales tax rate of 1% that
is credited against the county rate.  Beginning on July 1, 2004, and
continuing through the revenue exchange period, as defined, existing
law partially suspends the authority of a city or a county to impose
a sales and use tax rate under the Bradley-Burns Law.  Existing law
also authorizes various local governmental entities to impose
transaction and use taxes at various rates for various purposes.
   This measure would prohibit the Legislature, except as otherwise
provided by this measure, from restricting the tax rate authority of
local governments under the laws described above, and from changing
the method of distributing revenues derived under those laws.  This
measure would also prohibit the Legislature from extending beyond the
revenue exchange period the partial suspension of the Bradley-Burns
Law tax rate authority, and from reducing certain property tax
revenue allocations related to that suspension.
   This measure would also allow the Legislature, by statute, to
authorize 2 or more local agencies, with the approval of the
governing body of each of those agencies, to enter into a contract
for the exchange of property tax revenue allocations for revenues
derived under the Bradley-Burns Law.
   (4) Under the California Constitution, whenever the Legislature or
a state agency mandates a new program or higher level of service on
any local government, the state is required to provide a subvention
of funds to reimburse the local government, with specified
exceptions.  Existing statutory law establishes a procedure for local
government agencies to file claims for reimbursement of these costs
with the Commission on State Mandates and the Controller.
   This measure would provide that for the 2005-06 fiscal year and
every subsequent fiscal year, with respect to a mandate for which the
costs of a city, county, city and county, or special district claim
previously have been determined to be payable by the state pursuant
to law, the Legislature shall either appropriate, in the annual
Budget Act, the full payable amount that has not been previously
paid, or suspend the operation of the mandate in the current fiscal
year.  The measure would also provide that payable claims for costs
incurred prior to the 2004-05 fiscal year that have not been paid
prior to the 2005-06 fiscal year may be paid over a term of years, as
prescribed by law.
   The measure would also specify that a new program or higher level
of service includes a transfer by the Legislature of complete or
partial financial responsibility for a required program from the
state to cities, counties, cities and counties, or special districts.
  This measure would also state that ad valorem property tax revenues
may not be used to reimburse a local government for the costs of a
new program or higher level of service.
   (5) This measure would also declare that this measure supersedes
Proposition 65 on the November 2, 2004, general election ballot, if
both measures are approved and this measure receives a higher number
of affirmative votes.




   Resolved by the Senate, the Assembly concurring, That the
Legislature of the State of California at its 2003-04 Regular Session
commencing on the second day of December 2002, two-thirds of the
membership of each house concurring, hereby proposes to the people of
the State of California that the Constitution of the State be
amended as follows:
  First--That Section 15 of Article XI thereof is amended to read:
      SEC. 15.  (a) From the revenues derived from taxes imposed
pursuant to the Vehicle License Fee Law (Part 5 (commencing with
Section 10701) of Division 2 of the Revenue and Taxation Code), or
its successor, other than fees on trailer coaches and mobilehomes,
over and above the costs of collection and any refunds authorized by
law, those revenues derived from that portion of the vehicle license
fee rate that does not exceed 0.65 percent of the market value of the
vehicle shall be allocated as follows:
   (1) An amount shall be specified in the Vehicle License Fee Law,
or the successor to that law, for deposit in the State Treasury to
the credit of the Local Revenue Fund established in Chapter 6
(commencing with Section 17600) of Part 5 of Division 9 of the
Welfare and Institutions Code, or its successor, if any, for
allocation to cities, counties, and cities and counties as otherwise
provided by law.
   (2) The balance shall be allocated to cities, counties, and cities
and counties as otherwise provided by law.
   (b) If a statute enacted by the Legislature reduces the annual
vehicle license fee below 0.65 percent of the market value of a
vehicle, the Legislature shall, for each fiscal year for which that
reduced fee applies, provide by statute for the allocation of an
additional amount of money that is equal to the decrease, resulting
from the fee reduction, in the total amount of revenues that are
otherwise required to be deposited and allocated under subdivision
(a) for that same fiscal year.  That amount shall be allocated to
cities, counties, and cities and counties in the same pro rata
amounts and for the same purposes as are revenues subject to
subdivision (a).
  Second--That Section 25.5 is added to Article XIII thereof, to
read:
      SEC. 25.5.  (a) On or after November 3, 2004, the Legislature
shall not enact a statute to do any of the following:
   (1) (A) Except as otherwise provided in subparagraph (B), modify
the manner in which ad valorem property tax revenues are allocated in
accordance with subdivision (a) of Section 1 of Article XIII A so as
to reduce for any fiscal year the percentage of the total amount of
ad valorem property tax revenues in a county that is allocated among
all of the local agencies in that county below the percentage of the
total amount of those revenues that would be allocated among those
agencies for the same fiscal year under the statutes in effect on
November 3, 2004. For purposes of this subparagraph, "percentage"
does not include any property tax revenues referenced in paragraph
(2).
   (B) Beginning with the 2008-09 fiscal year and except as otherwise
provided in subparagraph (C), subparagraph (A) may be suspended for
a fiscal year if all of the following conditions are met:
   (i) The Governor issues a proclamation that declares that, due to
a severe state fiscal hardship, the suspension of subparagraph (A) is
necessary.
   (ii) The Legislature enacts an urgency statute, pursuant to a bill
passed in each house of the Legislature by rollcall vote entered in
the journal, two-thirds of the membership concurring, that contains a
suspension of subparagraph (A) for that fiscal year and does not
contain any other provision.
   (iii) No later than the effective date of the statute described in
clause (ii), a statute is enacted that provides for the full
repayment to local agencies of the total amount of revenue losses,
including interest as provided by law, resulting from the
modification of ad valorem property tax revenue allocations to local
agencies. This full repayment shall be made not later than the end of
the third fiscal year immediately following the fiscal year to which
the modification applies.
   (C) (i) Subparagraph (A) shall not be suspended for more than two
fiscal years during any period of 10 consecutive fiscal years, which
period begins with the first fiscal year for which subparagraph (A)
is suspended.
   (ii) Subparagraph (A) shall not be suspended during any fiscal
year if the full repayment required by a statute enacted in
accordance with clause (iii) of subparagraph (B) has not yet been
completed.
   (iii) Subparagraph (A) shall not be suspended during any fiscal
year if the amount that was required to be paid to cities, counties,
and cities and counties under Section 10754.11 of the Revenue and
Taxation Code, as that section read on November 3, 2004, has not been
paid in full prior to the effective date of the statute providing
for that suspension as described in clause (ii) of subparagraph (B).

   (iv) A suspension of subparagraph (A) shall not result in a total
ad valorem property tax revenue loss to all local agencies within a
county that exceeds 8 percent of the total amount of ad valorem
property tax revenues that were allocated among all local agencies
within that county for the fiscal year immediately preceding the
fiscal year for which subparagraph (A) is suspended.
   (2) (A) Except as otherwise provided in subparagraphs (B) and (C),
restrict the authority of a city, county, or city and county to
impose a tax rate under, or change the method of distributing
revenues derived under, the Bradley-Burns Uniform Local Sales and Use
Tax Law set forth in Part 1.5 (commencing with Section 7200) of
Division 2 of the Revenue and Taxation Code, as that law read on
November 3, 2004.  The restriction imposed by this subparagraph also
applies to the entitlement of a city, county, or city and county to
the change in tax rate resulting from the end of the revenue exchange
period, as defined in Section 7203.1 of the Revenue and Taxation
Code as that section read on November 3, 2004.
   (B) The Legislature may change by statute the method of
distributing the revenues derived under a use tax imposed pursuant to
the Bradley-Burns Uniform Local Sales and Use Tax Law to allow the
State to participate in an interstate compact or to comply with
federal law.
   (C) The Legislature may authorize by statute two or more
specifically identified local agencies within a county, with the
approval of the governing body of each of those agencies, to enter
into a contract to exchange allocations of ad valorem property tax
revenues for revenues derived from a tax rate imposed under the
Bradley-Burns Uniform Local Sales and Use Tax Law.  The exchange
under this subparagraph of revenues derived from a tax rate imposed
under that law shall not require voter approval for the continued
imposition of any portion of an existing tax rate from which those
revenues are derived.
   (3) Except as otherwise provided in subparagraph (C) of paragraph
(2), change for any fiscal year the pro rata shares in which ad
valorem property tax revenues are allocated among local agencies in a
county other than pursuant to a bill passed in each house of the
Legislature by rollcall vote entered in the journal, two-thirds of
the membership concurring.
   (4) Extend beyond the revenue exchange period, as defined in
Section 7203.1 of the Revenue and Taxation Code as that section read
on November 3, 2004, the suspension of the authority, set forth in
that section on that date, of a city, county, or city and county to
impose a sales and use tax rate under the Bradley-Burns Uniform Local
Sales and Use Tax Law.
   (5) Reduce, during any period in which the rate authority
suspension described in paragraph (4) is operative, the payments to a
city, county, or city and county that are required by Section 97.68
of the Revenue and Taxation Code, as that section read on November 3,
2004.
   (6) Restrict the authority of a local entity to impose a
transactions and use tax rate in accordance with the Transactions and
Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2
of the Revenue and Taxation Code), or change the method for
distributing revenues derived under a transaction and use tax rate
imposed under that law, as it read on November 3, 2004.
   (b) For purposes of this section, the following definitions apply:

   (1) "Ad valorem property tax revenues" means all revenues derived
from the tax collected by a county under subdivision (a) of Section 1
of Article XIII A, regardless of any of this revenue being otherwise
classified by statute.
   (2) "Local agency" has the same meaning as specified in Section 95
of the Revenue and Taxation Code as that section read on November 3,
2004.
  Third--That Section 6 of Article XIII B thereof, is amended to
read:
      SEC. 6.  (a) Whenever the Legislature or any state agency
mandates a new program or higher level of service on any local
government, the State shall provide a subvention of funds to
reimburse that local government for the costs of the program or
increased level of service, except that the Legislature may, but need
not, provide a subvention of funds for the following mandates:
   (1) Legislative mandates requested by the local agency affected.
   (2) Legislation defining a new crime or changing an existing
definition of a crime.
   (3) Legislative mandates enacted prior to January 1, 1975, or
executive orders or regulations initially implementing legislation
enacted prior to January 1, 1975.
   (b) (1) Except as provided in paragraph (2), for the 2005-06
fiscal year and every subsequent fiscal year, for a mandate for which
the costs of a local government claimant have been determined in a
preceding fiscal year to be payable by the State pursuant to law, the
Legislature shall either appropriate, in the annual Budget Act, the
full payable amount that has not been previously paid, or suspend the
operation of the mandate for the fiscal year for which the annual
Budget Act is applicable in a manner prescribed by law.
   (2) Payable claims for costs incurred prior to the 2004-05 fiscal
year that have not been paid prior to the 2005-06 fiscal year may be
paid over a term of years, as prescribed by law.
   (3) Ad valorem property tax revenues shall not be used to
reimburse a local government for the costs of a new program or higher
level of service.
   (4) This subdivision applies to a mandate only as it affects a
city, county, city and county, or special district.
   (5) This subdivision shall not apply to a requirement to provide
or recognize any procedural or substantive protection, right,
benefit, or employment status of any local government employee or
retiree, or of any local government employee organization, that
arises from, affects, or directly relates to future, current, or past
local government employment and that constitutes a mandate subject
to this section.
   (c) A mandated new program or higher level of service includes a
transfer by the Legislature from the State to cities, counties,
cities and counties, or special districts of complete or partial
financial responsibility for a required program for which the State
previously had complete or partial financial responsibility.
  Fourth--That the people find and declare that this measure and the
Taxpayers and Public Safety Protection Act, which appears as
Proposition 65 on the November 2, 2004, general election ballot
(hereafter Proposition 65) both relate to local government, including
matters concerning tax revenues and reimbursement for the cost of
state mandates, in a comprehensive and substantively conflicting
manner. Because this measure is intended to be a comprehensive and
competing alternative to Proposition 65, it is the intent of the
people that this measure supersede in its entirety Proposition 65, if
this measure and Proposition 65 both are approved and this measure
receives a higher number of affirmative votes than Proposition 65.
Therefore, in the event that this measure and Proposition 65 both are
approved and this measure receives a higher number of affirmative
votes, none of the provisions of Proposition 65 shall take effect.