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)
AB 210
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