BILL ANALYSIS Ó AB 1086 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1086 (Wieckowski) As Amended June 29, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |49-26|(May 23, 2011) |SENATE: |22-15|(August 22, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY : Allows Alameda County to adopt an ordinance to impose a transactions and use tax not to exceed 0.5% for specified purposes that would, in combination with other taxes, exceed the statutory limit of 2%. The Senate amendments make minor technical changes. EXISTING LAW : 1)Authorizes cities and counties to impose a local sales and use tax. 2)Authorizes cities and counties to impose a transactions and use taxes. 3)Prohibits, in any county, the combined rate of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%. AS PASSED BY THE ASSEMBLY , this bill: 1)Allowed Alameda County to impose 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, if all the following conditions are met: a) Alameda County adopts an ordinance proposing the transactions and use tax by any applicable voting requirements; b) The ordinance proposing the transactions and use tax is AB 1086 Page 2 submitted to the electorate on the November 6, 2012, general election ballot and is approved by the voters voting on the ordinance in accordance with Article XIII C of the California Constitution; and, c) The transactions and use tax conforms to the Transactions and Use Tax Law, as specified. 2)Provided, if the ordinance proposing the transactions and use tax is not approved at the November 6, 2012, general election, that the provisions of the bill shall be repealed as of January 1, 2014. 3)Stated that the Legislature finds and declares that a special law is necessary because of the unique fiscal pressures experienced in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. FISCAL EFFECT : None COMMENTS : According to the author, the Alameda County Transportation Commission (Alameda CTC) is currently updating their countywide Transportation Plan and is in the developmental stages of a new Transportation Expenditure Plan (TEP) that could be placed on the ballot in November of 2012. While the development of the TEP is underway, the Alameda CTC has not yet determined if it will consider an extension of the existing sales tax or an augmentation. If the Alameda CTC decides to proceed with an increase, the existing 2% local sales tax limit will prevent the enactment of the sales tax if it is approved by the voters. This bill is needed because two cities in Alameda County, San Leandro and Union City, recently enacted local sales taxes, which have occupied the remaining local sales tax capacity under the 2% combined rate. This bill allows a one-time exemption from the 2% transactions and use tax combined rate cap that is currently in statute. This one-time exemption would only be applicable for Alameda County and only if voters voting in the November 6, 2012, election agree, and only if the transactions and use tax conforms to Transactions and Use Tax Law and does not exceed a rate of more than 0.5%. If the ordinance proposing the transactions and use tax is not approved by voters at the November 2012 election, the provisions of the bill would be AB 1086 Page 3 repealed as of January 1, 2014. Prior to 2003, cities lacked the ability to place transactions and use taxes before their voters without first obtaining approval by the Legislature to bring an ordinance before the city council, and, if approved at the council level, to the voters. This was remedied by SB 566 (Scott), Chapter 709, Statutes of 2003. SB 566 (Scott) also contained provisions to increase a county's transactions and use tax cap because of the possibility that certain counties were going to run out of room under their caps if cities within those counties approved transactions and use taxes. Support arguments: While this bill allows Alameda County to exceed the current 2% combined county rate, it abides by all local voting requirements, and would only take effect if voters approve the new transactions and use tax at the November 2012 election. Opposition arguments: CalTax argues that California's sales and use tax is already the highest rate in the nation and if Alameda County were to go beyond the current levels, California would have the highest combined state and local sales and use tax rates. Analysis prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0001578