BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 210
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          Date of Hearing:  April 3, 2013

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                  AB 210 (Wieckowski) - As Amended:  March 18, 2013
           
          SUBJECT  :  Transactions and use taxes: County of Alameda and the  
          County of Contra Costa.

           SUMMARY  :  Extends the current authority for Alameda County to  
          adopt an ordinance imposing a transactions and use tax from  
          January 1, 2014 to December 31, 2020, and allows Contra Costa  
          County to adopt an ordinance imposing a transactions and use tax  
          in the same manner as Alameda County.  Specifically,  this bill  :
          
          1)Extends the sunset date, from January 1, 2014 to December 31,  
            2020, to provide authority to Alameda County to adopt an  
            ordinance to impose a transactions and use tax that exceeds  
            the combined statutory rate of 2%.  

          2)Allows, until December 31, 2020, Contra Costa County to adopt  
            an ordinance to impose a transactions and use tax not to  
            exceed 0.5% for the support of a countywide transportation  
            program at a rate that would, in combination with other taxes,  
            exceed the statutory limit of 2%.  

          3)Allows Alameda County and Contra Costa County to place the  
            ordinance proposing the transactions and use tax to the voters  
            in an election outside the November general election.

          4)Finds and declares that a special law is necessary because of  
            the unique fiscal pressures experienced in Alameda and Contra  
            Costa County in providing essential transportation programs.

           EXISTING LAW  : 

          1)Authorizes cities and counties to impose a local sales and use  
            tax.

          2)Authorizes cities and counties to impose 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%. 








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          4)Allows the County of Alameda to adopt an ordinance imposing a  
            transactions and use tax not to exceed 0.5% for the support of  
            countywide transportation programs at a rate 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)   The local government entity adopts an ordinance  
               proposing the transactions and use tax by any applicable  
               voting requirements;

             b)   The ordinance proposing the transactions and use tax 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 transactions and use tax conforms to the Transaction  
               and Use Tax Law.

          5)Provides that the authority for the County of Alameda to adopt  
            an ordinance to impose a transactions and use tax that exceeds  
            the combined statutory rate of 2% shall only remain in effect  
            until January 1, 2014.  

           FISCAL EFFECT  :  None

           COMMENTS  :   

          1)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 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.  

          2)In Alameda County, Union City voters recently passed a  
            transactions and use tax of 0.5%, which in addition to the  
            countywide rate of 1.5% occupy the tax capacity under the 2%  
            combined rate.  The existing 2% transactions and use tax limit  
            would have prevented the enactment of a ballot measure in  
            November of 2012 to increase the tax if it was approved by the  








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            voters.  In order to remedy this AB 1086 (Wieckowski), Chapter  
            327, Statutes of 2011, allows a one-time exemption from the 2%  
            transactions and use tax combined rate cap that is currently  
            in statute.  This one-time exemption was only for Alameda  
            County and only applied if two-thirds of voters, voting in the  
            November 6, 2012, election agreed and only if the transactions  
            and use tax conforms to Transactions and Use Tax Law.  

            To take advantage of this one-time remedy, Measure B1 was  
            placed on the November 6, 2012 ballot in Alameda County.   
            According to the author, "Measure B1 was supported by an  
            overwhelming majority of voters at 66.53%, but fell .15% short  
            of reaching the two-thirds threshold. Given the clear majority  
            of voters that support continued improvements to meet the  
            county's vast transportation needs, the Alameda County  
            Transportation Commission is seeking approval to take another  
            ballot measure before voters prior to 2020."  

          3)This bill allows Alameda County to go back to the voters with  
            another ballot measure by extending their existing authority,  
            from January 1, 2014 to December 31, 2020, to adopt an  
            ordinance to impose a transactions and use tax that exceeds  
            the combined rate of 2%.  According to the Alameda County  
            Transportation Commission (Alameda CTC) they are in the  
            process of developing long-term policies and a funding plan to  
            return with another ballot measure prior to 2020.  This bill  
            is sponsored by the Alameda CTC.  

          4)Additionally, Contra Costa Transportation Authority (CCTA) is  
            currently working on a 2014 update of the Countywide  
            Comprehensive Transportation Plan (CTP).  The development of  
            the CTP is underway and includes a public input component,  
            polling, and strategic planning that may inform the CCTA in  
            their decision to develop an expenditure plan that includes a  
            local transportation measure.  Without this bill, if the CCTA  
            decides to proceed with an increase, the existing 2%  
            transactions and use tax limit will prevent the enactment of  
            the tax 

          if it is approved by the voters.  The City of El Cerrito  
            recently enacted an additional transactions and use tax of  
            0.5%, which in addition to the current rate of 0.5% in El  
            Cerrito and the countywide rate of 1% occupy the tax capacity  
            under the 2% combined rate.  The CCTA would like the option of  
            placing a ballot measure before the voters to exceed the  








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            existing 2% cap by 0.5%.  

          5)This bill requires Contra Costa County to abide by  
            requirements established for Alameda County in order to exceed  
            the 2% transactions and use tax cap.  Like Alameda County,  
            this bill provides Contra Costa County an exemption to the 2%  
            cap, if two-thirds of voters in an election agree, and only if  
            the transactions and use tax conforms to Transactions and Use  
            Tax Law.  This bill allows the two counties to place a ballot  
            measure for a transactions and use tax up to 0.5% in any  
            election until December 31, 2020.  

            The Committee may wish to discuss if the 2% transactions and  
            use tax combined rate cap needs to be raised statewide,  
            instead of having counties come to the Legislature on a case  
            by case basis.  

           6)Support arguments  :  While this bill allows Alameda and Contra  
            Costa 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  
            an election prior to December 31, 2020.

             Opposition arguments  :  Opponents argue that this bill will  
            further distort the intention and design of California local  
            sales tax by promoting inconsistent rates amongst the  
            counties.  Additionally, excessive tax rates put the state at  
            a competitive disadvantage and forestall an economic recovery.

          7)This bill is double-referred to the Committee on Revenue and  
            Taxation.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Alameda County Transportation Commission [SPONSOR]
          Contra Costa County Transportation Authority

           Opposition 
           
          CalTax
          Howard Jarvis Taxpayers Association
           
          Analysis Prepared by  :    Misa Yokoi-Shelton / L. GOV. / (916)  








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