BILL ANALYSIS Ó AB 1086 Page 1 Date of Hearing: May 2, 2011 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Henry T. Perea, Chair AB 1086 (Wieckowski) - As Amended: April 4, 2011 Majority vote. SUBJECT : Transactions and use taxes: County of Alameda SUMMARY : Authorizes the County of Alameda to adopt an ordinance imposing a transactions and use tax (TUT) for the support of countrywide transportation programs that would, in combination with other taxes, exceed the statutory limit of 2%. Specifically, this bill : 1)Allows the County of Alameda to adopt an ordinance imposing a TUT for the support of countrywide transportation programs that would, in combination with other taxes, exceed the statutory limit of 2% if all of the following requirements are met: a) The local government entity adopts an ordinance proposing the TUT by any applicable voting requirements; b) The ordinance proposing the TUT is submitted to the electorate on the November 6, 2012, general election ballot and is approved by two-thirds of the voters voting on the ordinance; and, c) The TUT conforms to the TUT Law, as specified. 2)Provides that the authority for the County of Alameda to adopt an ordinance to impose TUT that exceeds the combined statutory rate of 2% shall only remain in effect until January 1, 2013, and as of January 1, 2014 is repealed. 3)States that the Legislature finds and declares that a special law is necessary because of the unique fiscal pressures experienced in the County of Alameda in providing essential transportation programs. EXISTING LAW : AB 1086 Page 2 1)Authorizes local governments to impose, increase, or extend TUTs (also known as district taxes), under specified conditions. ÝRevenue and Taxation Code (R&TC) Part 1.6 (commencing with Section 7251) (TUT Law), and R&TC Part 1.7 (commencing with Section 7285) (Additional Local Tax Law)]. 2)Authorizes a county to impose a district tax for special purposes at a rate of 0.25%, or multiple thereof, if the ordinance proposing the tax is approved by a two-thirds vote of the board of supervisors and a two-thirds vote of the qualified voters in the county. (R&TC Section 7285.5). 3)Provides that the combined rate of all district taxes imposed in any county may not exceed 2%. 4)Requires cities and counties to contract with the State Board of Equalization (BOE) to perform all functions in the administration and operations of the ordinances imposing the Bradley-Burns local taxes and district taxes. FISCAL EFFECT : The BOE estimates this bill would generate the following revenue for Alameda County: 1)For the operative date April 1, 2013 to December 31, 2013, the imposition of a TUT tax at 0.5% is estimated to generate $100 million. 2)For the calendar year 2014, the imposition of a TUT tax at 0.5% is estimated to generate $141 million. COMMENTS : 1)The author has provided the following statement: "Alameda County has a long history of being a self-help county, willing to raise revenue on its own to fund key local transportation projects that are vital to its economy. These projects are developed after considerable public community meetings and input from all parts of the county. This extensive collaboration with the public resulted in the last ballot measure being approved with 81.5 percent of the public's support. Now, the Alameda County Transportation Commission is updating its Countywide Transportation Plan and is in the developmental stages of a new Transportation Expenditure Plan. AB 1086 Page 3 "In Alameda County, the cities of San Leandro and Union City recently enacted local sales taxes, occupying remaining local sales tax capacity. AB 1086 would allow a countywide transportation sales tax to be enacted if it is approved by 2/3 of the voters at the November 2012 election. The region's overall ability to offer a variety of transportation options to meet the needs of a diverse population of local businesses, workers, students, and residents is crucial to its future success." 2)Committee staff notes all of the following: a) AB 1086 does not specify the proposed rate of tax increase expected to be placed on the November 6, 2012 ballot. As the Assembly Committee on Local Government noted in their April 5, 2011 analysis, the County is limited by the required two-thirds vote threshold contained in this bill. Although voter approval may limit the amount of the proposed tax, past bills such as SB 314 (Murray), Chapter 785, Statutes of 2003, SB 264 (Alquist), Chapter 430, Statutes of 2007, and AB 2321 (Feuer) Chapter 302, Statutes of 2008, all specified the amount of the proposed TUT in the statute. SB 314 authorized the Los Angeles County Metropolitan Transportation Authority to impose a TUT at the rate of 0.5%, notwithstanding the 2% ceiling imposed on all district taxes. The author may wish to amend this bill to specify the rate of TUT tax. b) This bill may affect local commerce in a negative manner. The additional tax, which will be higher than many of the surrounding counties, may incentivize consumers to purchase goods outside of Alameda County. c) This bill was double-referred to the Assembly Committee on Local Government, which passed out on a 6-3 vote on April, 6, 2011. For additional discussion of AB 1086, please refer to that committee's analysis of this bill. REGISTERED SUPPORT / OPPOSITION : Support None on file AB 1086 Page 4 Opposition None on file Analysis Prepared by : Myriam Bouaziz and Oksana Jaffe / REV. & TAX. / (916) 319-2098