BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 1086                     HEARING:  6/29/11
          AUTHOR:  Wieckowski                   FISCAL:  No
          VERSION:  5-19-11                     TAX LEVY:  No
          CONSULTANT:  Miller                   

                   TRANSACTIOSN AND USE TAXES: ALAMEDA COUNTY
          

            Allows Alameda County to impose an additional sales tax 
                           that exceeds the current 
                                    2% rate.


                           Background and Existing Law  

          Existing state law authorizes local governments to impose, 
          increase, or extend transactions and use taxes (also known 
          as district taxes), up to a combined rate of all district 
          taxes (cities, county, special districts) of 2% for the 
          county.  

          Cities and Counties may impose these taxes in increments of 
          0.25% and they may be used for any purpose as long as the 
          tax is approved.  These taxes must be placed on the ballot 
          by the Board of Supervisors for the County or the City 
          Council and approved by the voters.  Proposition 218 
          amended Proposition 13 to require a majority vote of the 
          people for a general tax and a 2/3 vote of the people for a 
          special tax.

          Cities and Counties are required 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. 


                                   Proposed Law  

          Assembly Bill 1086 allows Alameda County to adopt an 
          ordinance imposing a transactions and use tax for the 
          support of countywide transportation programs at a rate of 
          no more than 0.5% that would, in combination with all other 
          transaction and use taxes, exceed the 2% limit established 
          in existing law.




          AB 1086 -- 5/19/11 -- Page 2




          The bill requires that the tax be adopted pursuant to the 
          existing law.  If the tax is not adopted by the electorate 
          by November 6, 2012, the provisions of this bill shall be 
          repealed as of January 1, 2014.

          The bill states that the Legislature finds and declares 
          that a special law is necessary because of the unique 
          fiscal pressures experienced in Alameda County in providing 
          essential transportation programs.


                               State Revenue Impact
           
          The costs associated with this bill will be absorbed by the 
          tax.  According to the BOE a 0.5% transactions and use tax 
          in Alameda County can raises up to $141 million.


                                     Comments  

          1.   Purpose of the bill  .  The author's office states that 
          this bill is necessary because of the unique fiscal 
          pressure in Alameda county in providing essential programs. 
            The supporters of this bill further state that while 
          Alameda County's current half-cent sales tax measure for 
          transportation does not expire until 2022, approximately 
          95% of the projects that were identified in the expenditure 
          plan for that measure have already been constructed and the 
          sales tax revenue currently being generated is primarily 
          dedicated to debt service on the bonds.  In order to 
          deliver transportation improvements for those who live, 
          work and travel ain Alameda County, the county wants the 
          option of asking the voters to approve an extension ot the 
          existing tax for countywide transportation improvements. 

          2.   58 reasons for confusion  .  Business groups that oppose 
          this measure state that it will further complicate the tax 
          system in this state and that uniform rules of 
          administration ensure that businesses operating in more 
          than one county can easily understand what to tax and what 
          not to tax.  


                                 Assembly Actions  






          AB 1086 -- 5/19/11 -- Page 3



          Assembly Revenue & Taxation Committee:6-3
          Assembly Floor:                              49-26


                        Support and Opposition  (00/00/11)

           Support  :  Metropolitan Transportation Commission.

           Opposition  :  California Taxpayers Association; Howard 
          Jarvis Taxpayers Association.