BILL NUMBER: AB 1602 CHAPTERED
BILL TEXT
CHAPTER 556
FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2006
APPROVED BY GOVERNOR SEPTEMBER 28, 2006
PASSED THE ASSEMBLY AUGUST 21, 2006
PASSED THE SENATE AUGUST 16, 2006
AMENDED IN SENATE AUGUST 7, 2006
AMENDED IN SENATE JUNE 27, 2006
AMENDED IN SENATE JUNE 14, 2006
AMENDED IN SENATE AUGUST 23, 2005
INTRODUCED BY Assembly Member Laird
(Coauthors: Assembly Members Benoit, Bogh, Cogdill, Haynes,
Leslie, and Nakanishi)
(Coauthors: Senators Alquist, Battin, Cox, Hollingsworth, and
Maldonado)
FEBRUARY 22, 2005
An act to amend Sections 7104, 11005, and 11005.3 of the Revenue
and Taxation Code, and to amend Section 2107 of the Streets and
Highways Code, relating to local government finance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1602, Laird Local government finance.
The Vehicle License Fee (VLF) Law establishes, in lieu of any ad
valorem property tax upon vehicles, an annual license fee for any
vehicle subject to registration in this state. Under existing law,
the Controller is required to allocate vehicle license fee revenues
in the Motor Vehicle License Fee Account (MVLFA) first to the County
of Orange, then to cities for which the population was computed under
a specified statute on August 5, 2004, and then to all cities and
cities and counties on a monthly basis in the amounts determined
under specified formulas. Existing law requires that these VLF Law
allocations to cities and cities and counties be based upon
population, as provided. Existing law also requires that a portion
of the revenues derived under the Motor Vehicle Fuel Tax (MVFT) Law,
the Use Fuel Tax (UFT) Law, and the Diesel Fuel Tax (DFT) Law be
allocated to cities and cities and counties based upon population.
For purposes of allocating these VLF, MVFT, UFT, and DFT Law
revenues to cities and cities and counties and for purposes of
certain revenue allocations from the Transportation Investment Fund,
existing law requires for specified time periods that the population
of cities that meet certain criteria be the greater of either the
city's actual population or an amount equal to 300% of the city's
registered voters, as specified.
This bill would change the manner in which the population of a
city or a city and county that meets certain criteria is determined
for purposes of each of these allocations, but would require that the
allocations from the Transportation Tax Fund be based upon
population determined in the manner required under existing law. This
bill would specify that a population determination based upon 300%
of a city's registered voters would be available only to cities that
were incorporated before August 5, 2004. This bill would specify that
the population of a city that is incorporated on or after August 5,
2004, and before July 1, 2009, is that city's actual population, as
defined, increased by specified percentages for the first 60 months
following the city's incorporation. This bill would specify that the
population of a city that incorporates on or after July 1, 2009, is
that city's actual population, as defined.
This bill would also change the manner in which allocations are
made from the MVLFA. This bill would specify that additional
allocations be made first to cities that are incorporated after
August 5, 2004, before July 1, 2009, and then to cities that were
incorporated before August 5, 2004, and that annex new territory
after August 5, 2004, and before July 1, 2009, as specified. This
bill would also make conforming changes to related provisions.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7104 of the Revenue and Taxation Code is
amended to read:
7104. (a) The Transportation Investment Fund (hereafter the fund)
is hereby created in the State Treasury. Notwithstanding Section
13340 of the Government Code, the money in the fund is continuously
appropriated without regard to fiscal years for disbursement in the
manner and for the purposes set forth in this section.
(b) All of the following shall occur on a quarterly basis:
(1) The State Board of Equalization, in consultation with the
Department of Finance, shall estimate the amount that is transferred
to the General Fund under subdivision (b) of Section 7102 that is
attributable to revenue collected for the sale, storage, use, or
other consumption in this state of motor vehicle fuel, as defined in
Section 7304.
(2) The State Board of Equalization shall inform the Controller,
in writing, of the amount estimated under paragraph (1).
(3) Commencing with the 2003-04 fiscal year, the Controller shall
transfer the amount estimated under paragraph (1) from the General
Fund to the fund.
(c) For each quarter during the period commencing on July 1, 2003,
and ending on June 30, 2008, the Controller shall make all of the
following transfers and apportionments from the funds identified for
transfer under paragraph (2) of subdivision (b) in the following
order:
(1) To the Traffic Congestion Relief Fund created in the State
Treasury by Section 14556.5 of the Government Code, the sum of one
hundred sixty-nine million five hundred thousand dollars
($169,500,000), except that the transfer for the final quarter shall
be ninety-three million four hundred thousand dollars ($93,400,000),
for a total transfer of three billion three hundred thirteen million
nine hundred thousand dollars ($3,313,900,000).
(2) To the Public Transportation Account, a trust fund in the
State Transportation Fund, 20 percent of the amount remaining after
the transfer required under paragraph (1). Funds transferred under
this paragraph shall be appropriated by the Legislature as follows:
(A) To the Department of Transportation, 50 percent for purposes
of subdivision (a) or (b) of Section 99315 of the Public Utilities
Code.
(B) To the Controller, 25 percent for allocation pursuant to
Section 99314 of the Public Utilities Code. Funds allocated under
this subparagraph shall be subject to all of the provisions governing
funds allocated under Section 99314 of the Public Utilities Code.
(C) To the Controller, 25 percent for allocation pursuant to
Section 99313 of the Public Utilities Code. Funds allocated under
this subparagraph shall be subject to all of the provisions governing
funds allocated under Section 99313 of the Public Utilities Code.
(3) To the Department of Transportation for expenditure for
programming for transportation capital improvement projects subject
to all of the provisions governing the State Transportation
Improvement Program, 40 percent of the amount remaining after the
transfer required under paragraph (1), except that in the 2006-07 and
2007-08 fiscal years, the transfer shall be 80 percent of the amount
remaining after the transfer required under paragraph (1).
(4) To the Controller for apportionment to the counties, including
a city and county, 20 percent of the amount remaining after the
transfer required under paragraph (1), except that in the 2006-07 and
2007-08 fiscal years, no transfer may be made under this paragraph.
Funds transferred under this paragraph shall be allocated in
accordance with the following formulas:
(A) Seventy-five percent of the funds payable under this paragraph
shall be apportioned among the counties in the proportion that the
number of fee-paid and exempt vehicles that are registered in the
county bears to the number of fee-paid and exempt vehicles registered
in the state.
(B) Twenty-five percent of the funds payable under this paragraph
shall be apportioned among the counties in the proportion that the
number of miles of maintained county roads in each county bears to
the total number of miles of maintained county roads in the state.
For the purposes of apportioning funds under this subparagraph, any
roads within the boundaries of a city and county that are not state
highways shall be deemed to be county roads.
(5) To the Controller for apportionment to cities, including a
city and county, 20 percent of the amount remaining after the
transfer required under paragraph (1), except that in the 2006-07 and
2007-08 fiscal years, no transfer may be made under this paragraph.
Funds transferred under this paragraph shall be apportioned among the
cities in the proportion that the total population of the city bears
to the total population of all the cities in the state.
(d) Funds received under paragraph (4) or (5) of subdivision (c)
shall be deposited as follows in order to avoid the commingling of
those funds with other local funds:
(1) In the case of a city, into the city account that is
designated for the receipt of state funds allocated for
transportation purposes.
(2) In the case of a county, into the county road fund.
(3) In the case of a city and county, into a local account that is
designated for the receipt of state funds allocated for
transportation purposes.
(e) Funds allocated to a city, county, or city and county under
paragraph (4) or (5) of subdivision (c) shall be used only for street
and highway maintenance, rehabilitation, reconstruction, and storm
damage repair. For purposes of this section, the following terms have
the following meanings:
(1) "Maintenance" means either or both of the following:
(A) Patching.
(B) Overlay and sealing.
(2) "Reconstruction" includes any overlay, sealing, or widening of
the roadway, if the widening is necessary to bring the roadway width
to the desirable minimum width consistent with the geometric design
criteria of the department for 3R (reconstruction, resurfacing, and
rehabilitation) projects that are not on a freeway, but does not
include widening for the purpose of increasing the traffic capacity
of a street or highway.
(3) "Storm damage repair" is repair or reconstruction of local
streets and highways and related drainage improvements that have been
damaged due to winter storms and flooding, and construction of
drainage improvements to mitigate future roadway flooding and damage
problems, in those jurisdictions that have been declared disaster
areas by the President of the United States, where the costs of those
repairs are ineligible for emergency funding with Federal Emergency
Relief (ER) funds or Federal Emergency Management Administration
(FEMA) funds.
(f) (1) Cities and counties shall maintain their existing
commitment of local funds for street and highway maintenance,
rehabilitation, reconstruction, and storm damage repair in order to
remain eligible for the allocation of funds pursuant to paragraph (4)
or (5) of subdivision (c).
(2) In order to receive any allocation pursuant to paragraph (4)
or (5) of subdivision (c), the city or county shall annually expend
from its general fund for street, road, and highway purposes an
amount not less than the annual average of its expenditures from its
general fund during the 1996-97, 1997-98, and 1998-99 fiscal years,
as reported to the Controller pursuant to Section 2151 of the Streets
and Highways Code. For purposes of this paragraph, in calculating a
city's or county's annual general fund expenditures and its average
general fund expenditures for the 1996-97, 1997-98, and 1998-99
fiscal years, any unrestricted funds that the city or county may
expend at its discretion, including vehicle in-lieu tax revenues and
revenues from fines and forfeitures, expended for street and highway
purposes shall be considered expenditures from the general fund.
One-time allocations that have been expended for street and highway
purposes, but which may not be available on an ongoing basis,
including revenue provided under the Teeter Plan Bond Law of 1994
(Chapter 6.6 (commencing with Section 54773) of Part 1 of Division 2
of Title 5 of the Government Code, may not be considered when
calculating a city's or county's annual general fund expenditures.
(3) For any city incorporated after July 1, 1996, the Controller
shall calculate an annual average of expenditure for the period
between July 1, 1996, and December 31, 2000, that the city was
incorporated.
(4) For purposes of paragraph (2), the Controller may request
fiscal data from cities and counties in addition to data provided
pursuant to Section 2151, for the 1996-97, 1997-98, and 1998-99
fiscal years. Each city and county shall furnish the data to the
Controller not later than 120 days after receiving the request. The
Controller may withhold payment to cities and counties that do not
comply with the request for information or that provide incomplete
data.
(5) The Controller may perform audits to ensure compliance with
paragraph (2) when deemed necessary. Any city or county that has not
complied with paragraph (2) shall reimburse the state for the funds
it received during that fiscal year. Any funds withheld or returned
as a result of a failure to comply with paragraph (2) shall be
reallocated to the other counties and cities whose expenditures are
in compliance.
(6) If a city or county fails to comply with the requirements of
paragraph (2) in a particular fiscal year, the city or county may
expend during that fiscal year and the following fiscal year a total
amount that is not less than the total amount required to be expended
for those fiscal years for purposes of complying with paragraph (2).
(7) The allocation made under paragraph (4) or (5) of subdivision
(c) shall be expended not later than the end of the fiscal year
following the fiscal year in which the allocation was made, and any
funds not expended within that period shall be returned to the
Controller and shall be reallocated to the other cities and counties
pursuant to the allocation formulas set forth in paragraph (4) or (5)
of subdivision (c).
(g) The Los Angeles County Metropolitan Transportation Authority
shall give first priority for using its share of the funds made
available under subparagraphs (B) and (C) of paragraph (2) of
subdivision (c) to providing the levels of bus service mandated under
the consent decree entered into by the authority on October 29,
1996, in the case of Labor/Community Strategy Center, et al. v. Los
Angeles County Metropolitan Transportation Authority.
(h) (1) For the purpose of allocating funds under paragraph (4) or
(5) of subdivision (c) to counties, cities, and a city and county,
the Controller shall use the most recent population estimates
prepared by the Demographic Research Unit of the Department of
Finance. For a city that incorporated after January 1, 1998, that
does not appear on the most recent population estimates prepared by
the Demographic Research Unit, the Controller shall use the
population determined for that city under Section 11005.3 of the
Revenue and Taxation Code.
(2) The amendments made to Section 11005.3 by the act adding this
paragraph shall not apply to a population determination under
paragraph (1).
(i) This section shall become inoperative on the date that all
encumbrances incurred for the projects funded under paragraph (3) of
subdivision (c) have been liquidated or on June 30, 2008, whichever
date is later, and as of the January 1 immediately following that
date is repealed.
SEC. 2. Section 11005 of the Revenue and Taxation Code is amended
to read:
11005. After payment of refunds therefrom and after making the
deductions authorized by Section 11003 and reserving the amount
determined necessary by the Pooled Money Investment Board to meet the
transfers ordered or proposed to be ordered pursuant to Section
16310 of the Government Code, commencing with the 2004-05 fiscal
year, the balance of all motor vehicle license fees and any other
money appropriated by law for expenditure pursuant to this section
and deposited to the credit of the Motor Vehicle License Fee Account
in the Transportation Tax Fund and remaining unexpended therein at
the close of business on the last day of the calendar month, shall be
allocated by the Controller by the 10th day of the following month
in accordance with the following:
(a) First, to the County of Orange. For the 2004-05 fiscal year,
that county shall be allocated fifty-four million dollars
($54,000,000) in monthly installments. For the 2005-06 fiscal year
and each fiscal year thereafter, that county shall receive, in
monthly installments, an amount equal to the amount allocated under
this section for the prior fiscal year, adjusted for the percentage
change in the amount of revenues credited to the Motor Vehicle
License Fee Account in the Transportation Tax Fund from the revenues
credited to that account in the prior fiscal year. Moneys allocated
to the County of Orange under this subdivision shall be used first
for the service of indebtedness as provided in paragraph (1) of
subdivision (a) of Section 11001.5. Any amounts in excess of the
amount required for this service of indebtedness may be used by that
county for any lawful purpose.
(b) Second, to each city, the population of which is determined
under Section 11005.3 on August 5, 2004, in an amount equal to the
additional amount of vehicle license fee revenue, including offset
transfers, that would be allocated to that city under Sections 11000
and 11005, as those sections read on January 1, 2004, as a result of
that city's population being determined under subdivision (a) or (b)
of Section 11005.3.
(c) Third, to each city that was incorporated from an
unincorporated territory after August 5, 2004, but before July 1,
2009, in an amount equal to the product of the following two amounts:
(1) The quotient derived from the following fraction:
(A) The numerator is the product of the following two amounts:
(i) Fifty dollars ($50) per year.
(ii) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.
(B) The denominator is the fraction determined as the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities in the 2004-05 fiscal year.
(2) The city's population determined in accordance with Section
11005.3.
(d) Fourth, to each city that was incorporated before August 5,
2004, in an amount equal to the product of the following two amounts:
(1) The quotient derived from the following fraction:
(A) The numerator is the product of the following two amounts:
(i) Fifty dollars ($50) per year.
(ii) The fraction determined as the total amount of vehicle
license fee revenue collected during the most recent fiscal year
divided by the total amount of vehicle license fee revenue collected
during the 2004-05 fiscal year.
(B) The denominator is the fraction determined as the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities during the most recent fiscal year, divided by the actual
population, as defined in subdivision (e) of Section 11005.3, of all
cities in the 2004-05 fiscal year.
(2) The actual population, as defined in subdivision (e) of
Section 11005.3, residing in areas annexed after August 5, 2004, but
before July 1, 2009, as of the date of annexation.
(e) Fifth, to the cities and cities and counties of this state in
the proportion that the population of each city or city and county
bears to the total population of all cities and cities and counties
in this state, as determined by the Demographic Research Unit of the
Department of Finance. For the purpose of this subdivision, the
population of each city or city and county shall be determined in
accordance with Section 11005.3.
SEC. 3. Section 11005.3 of the Revenue and Taxation Code is
amended to read:
11005.3. (a) In the case of a city that incorporated on or after
January 1, 1987, and before August 5, 2004, the Controller shall
determine that the population of the city for its first 10 full
fiscal years, and any portion of the first year in which the
incorporation is effective if less than a full fiscal year, is the
greater of either:
(1) The number of registered voters in the city multiplied by
three. The number of registered voters shall be calculated as of the
effective date of the incorporation of the city.
(2) The actual population, as defined in subdivision (e).
(b) In the case of a city that incorporated on or after January 1,
1987, and before August 5, 2004, and for which the application for
incorporation was filed with the executive officer of the local
agency formation commission pursuant to subdivision (a) of Section
56828 of the Government Code on or after January 1, 1991, the
Controller shall determine that the population of the city for its
first seven full fiscal years, and any portion of the first year in
which the incorporation is effective if less than a full fiscal year,
is the greater of either:
(1) The number of registered voters in the city multiplied by
three. The number of registered voters shall be calculated as of the
effective date of the incorporation of the city.
(2) The actual population, as defined in subdivision (e).
(c) In the case of a city that was incorporated from
unincorporated territory after August 5, 2004, and before July 1,
2009, the Controller shall determine the population of the city as
follows:
(1) For its first 12 months, 150 percent of the city's actual
population.
(2) For its 13th through 24th months, 140 percent of the city's
actual population.
(3) For its 25th through 36th months, 130 percent of the city's
actual population.
(4) For its 37th through 48th months, 120 percent of the city's
actual population.
(5) For its 49th through 60th months, 110 percent of the city's
actual population.
(6) After its 60th month, the city's actual population.
(d) In the case of a city that was incorporated from
unincorporated territory on or after July 1, 2009, the city's
population shall be its actual population.
(e) For purposes of this section, "actual population" means the
population determined by the last federal decennial or special
census, or a subsequent census validated by the Demographic Research
Unit of the Department of Finance or subsequent estimate prepared
pursuant to Section 2107.2 of the Streets and Highways Code.
(f) In the case of unincorporated territory being annexed to a
city, during the 10-year, seven-year, or five-year period following
incorporation, as the case may be, subsequent to the last federal
census, or a subsequent census validated by the Demographic Research
Unit of the Department of Finance, the unit shall determine the
population of the annexed territory by the use of any federal
decennial or special census or any estimate prepared pursuant to
Section 2107.2 of the Streets and Highways Code. The population of
the annexed territory as determined by the Demographic Research Unit
shall be added to the city's population as previously determined by
the Controller pursuant to paragraph (1) or (2) of subdivision (a),
paragraph (1) or (2) of subdivision (b), or subdivision (c), as
applicable.
(g) After the 10-year, seven-year, or five-year period following
incorporation, as the case may be, the Controller shall determine the
population of the city as the city's actual population, as defined
in subdivision (e).
(h) The amendments made to this section by the act adding this
subdivision shall not apply with respect to either of the following:
(1) Any city that has adopted an ordinance or resolution, approved
a ballot measure, or is subject to a consent decree or court order,
that annually limits the number of housing units that may be
constructed within the city.
(2) Any city that has not prepared and adopted a housing element
in compliance with Section 65585 of the Government Code.
(i) This section shall become operative July 1, 1991.
SEC. 4. Section 2107 of the Streets and Highways Code is amended
to read:
2107. A sum equal to the net revenues derived from a per gallon
tax of 1.315 cents ($0.01315) under the Motor Vehicle Fuel License
Tax Law (Part 2 (commencing with Section 7301) of Division 2), 2.59
cents ($0.0259) under the Use Fuel Tax Law (Part 3 (commencing with
Section 8601) of Division 2), and 1.80 cents ($0.0180) under the
Diesel Fuel Tax Law (Part 31 (commencing with Section 60001) of
Division 2) of the Revenue and Taxation Code, shall be apportioned
monthly to the cities and cities and counties of this state from the
Highway Users Tax Account in the Transportation Tax Fund as provided
in this section.
From that sum, the Controller shall allocate annually to each city
that has filed a report containing the information prescribed by
subdivision (c) of Section 2152, and that had expenditures in excess
of five thousand dollars ($5,000) during the preceding fiscal year
for snow removal, an amount equal to one-half of the amount of its
expenditures for snow removal in excess of five thousand dollars
($5,000) during that fiscal year.
The balance of that sum from the Highway Users Tax Account shall
be allocated to each city, including city and county, in the
proportion that the total population of the city bears to the total
population of all the cities in this state.
For the purpose of this section, except as otherwise provided in
this paragraph, the population in each city is the population
determined for that city in the manner specified in Section 11005.3
of the Revenue and Taxation Code. Commencing with the ninth fiscal
year of a city described in subdivision (a) of Section 11005.3 of the
Revenue and Taxation Code, the sixth fiscal year of a city described
in subdivision (b) of Section 11005.3 of the Revenue and Taxation
Code, and the 61st month of the city described in subdivision (c) of
Section 11005.3 of the Revenue and Taxation Code, the population in
each city is the actual population of that city, as defined in
subdivision (e) of Section 11005.3 of the Revenue and Taxation Code.