BILL ANALYSIS Ó
AB 1446
Page 1
Date of Hearing: April 11, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1446 (Feuer) - As Amended: March 29, 2012
SUBJECT : Los Angeles County Metropolitan Transportation
Authority: transactions and use tax.
SUMMARY : Allows the Los Angeles County Metropolitan
Transportation Authority (MTA), subject to voter approval, to
extend the length of imposition of an existing transactions and
use tax of 0.5 % for specified purposes. Specifically, this
bill :
1)Allows MTA to extend an existing transactions and use tax
approved by voters in 2008 beyond the existing 30-year period,
without a limit as to its duration, subject to the following:
a) The extension shall be proposed in a transactions and
use tax ordinance, or an amendment of the previously
approved ordinance, and is approved by a majority
of the entire membership of MTA; and,
b) Provides that the tax can only be imposed if the
proposing ordinance, or amended ordinance, is approved by
two-thirds of the voters voting on the measure in a special
or general election.
2)Allows MTA to incur bonded indebtedness payable from the
proceeds of the tax extension pursuant to MTA's bond issuance
provisions in existing law, and any successor act, and
specifies that proceeds from the bonds must be used to
accelerate the completion of the capital projects and capital
programs listed in existing law for MTA.
3)Requires, upon completion of the projects identified in 2)
above, that any funds remaining from the bonds and any funds
remaining from the proceeds of the tax, after payment of the
bonded indebtedness, must be deposited in MTA's sales tax
revenue fund to be used for the purposes of projects and
programs contained in the expenditure plan or MTA's Long Range
Transportation Plan (LRTP).
4)Requires MTA, prior to submitting the ordinance to the voters,
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to amend the expenditure plan with updates of the estimated
total cost for each project or program, the schedule during
which MTA anticipates funds will be available for each project
or program, and the expected completion dates for each project
or program.
5)Allows revenues raised under the tax extension to facilitate
the transportation of people and goods within Los Angeles
County.
6)Makes legislative findings and declarations.
EXISTING LAW :
1)Allows MTA to impose a transactions and use tax at a rate of
0.5% that is applicable in the incorporated and unincorporated
areas of the county for a period not to exceed 30 years.
2)Provides, for purposes of the imposition of the transactions
and use tax, the following requirements:
a) The tax shall be proposed in a transactions and use tax
ordinance that conforms with specified laws and that is
approved by a majority of the entire membership of the MTA;
b) The tax may be imposed only if the proposing ordinance
is approved by two-thirds of the voters in a specified
manner; and,
c) The proposing ordinance shall specify, in addition to
the rate of tax and other matters, that the tax be imposed
for a period not to exceed 30 years and the net revenues
derived from the tax are to be administered and allocated
by the MTA as specified.
3)Allows MTA to incur bonded indebtedness payable from the
proceeds of the tax.
4)Requires MTA, prior to submitting the ordinance to the voters,
to adopt an expenditure plan for the net revenues derived from
the tax, as specified.
5)Allows transactions and use taxes by qualifying entities to be
imposed at a rate of 0.25% or a multiple thereof, if the
following requirements are met:
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a) The ordinance proposing the tax must be approved by a
two-thirds vote of all members
of the governing body;
b) If for general purposes, the tax must be approved by a
majority vote of the voters in the city or county;
c) If for specific purposes, the tax must be approved by a
two-thirds vote of the voters in the city or county; and,
d) The maximum combined rate of transactions and use taxes
in any location may not exceed 2%.
FISCAL EFFECT : Unknown. This bill is keyed fiscal.
COMMENTS :
1)SB 314 (Murray), Chapter 785, Statutes of 2003, originally
enacted provisions that authorized MTA to impose a 0.5% sales
tax, for no more than six and one-half years, for specific
transportation projects and programs. That sales tax was never
imposed.
AB 2321 (Feuer), Chapter 302, Statutes of 2008, modified those
provisions to require MTA's tax ordinance to specify that the
tax is imposed for a period not to exceed 30 years, and
required the MTA to include specified projects and programs in
its Long Range Transportation Plan. AB 2321 additionally
required MTA to notify Members of the Legislature representing
the County of Los Angeles of proposed amendments to the
expenditure plan, as specified, and authorized MTA to incur
bonded indebtedness. In November of 2008, more than 67% of
Los Angeles County voters approved this tax in a ballot
measure known as Measure R.
2)This bill authorizes MTA to place on the ballot for Los
Angeles County voter approval the permanent extension of an
existing countywide 0.5% sales and use tax. Revenue from the
existing 0.5% tax is dedicated to construction and operation
of rail, highway, and bus projects in MTA's Long Range
Transportation Plan, as well as local initiatives such as
street and signal improvements, bicycle and pedestrian
projects, and more. The bill is author-sponsored.
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According to the author, this bill is intended to give Los
Angeles County voters the opportunity to extend the duration
of a local source of funding for an ambitious program
of transportation infrastructure projects that will transform
the Los Angeles region. The anticipated new revenue can be
bonded against to build projects in MTA's transportation plan
sooner.
The author notes that efforts are underway to obtain federal
loans secured by Measure R revenues to expedite the
construction of Measure R projects. While these efforts may
yet succeed, under all circumstances additional Measure R
revenues will be necessary to accelerate Measure R projects to
the maximum extent. The bill does not change the project list
already contained in current law and all Measure R rail,
highway, bus and other projects will be accelerated at the
same rate, without prioritizing any one category.
3)California's Transactions and Use Tax Law was adopted in 1969
to authorize the adoption of local add-on rates to the
combined state and local sales tax rate. Over the years, the
law was amended to provide specific authorizations for various
particular cities, counties, special districts and countywide
authorities. Prior to 2003, the most common transactions and
use tax measures were those for a specific countywide need,
usually related to transportation. Since a 2003 change in law
ÝSB 566 (Scott), Chapter 709, Statutes of 2003)], add-on taxes
by cities and some counties for general purposes have become
more frequently imposed.
4)This bill allows MTA to impose a transactions and use tax with
no limit as to the duration
of the tax. The Committee may wish to ask the author first why
the existing 30-year authority granted in 2008 through
legislation and approved by voters is not enough, and second,
why, four years later, an extension is needed but no limit is
specified. When does the author anticipate putting such a
ballot measure forward for voters to decide whether to
permanently extend this transactions and use tax?
5)Support arguments : The Los Angeles Economic Development
Council estimated in 2008 that Measure R projects alone will
create 166,000 jobs. This bill will help to expedite the
building of transportation projects in Los Angeles County.
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Opposition arguments : The Howard Jarvis Taxpayers Association
has concerns about the bill's intent to use the revenue stream
for the purpose of incurring additional debt and believes that
the risks of getting money upfront to complete projects will
far outweigh the rewards.
REGISTERED SUPPORT / OPPOSITION :
Support
American Council of Engineering Companies (ACEC California)
Los Angeles Business Council
State Building and Construction Trades Council, AFL-CIO
Opposition
CalTax
Howard Jarvis Taxpayers Association
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958