BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 210
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          Date of Hearing:  May 6, 2013

                     ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
                                Raul Bocanegra, Chair

                  AB 210 (Wieckowski) - As Amended:  April 23, 2013
           
           Majority vote.
           
          SUBJECT  :  Transactions and use taxes:  County of Alameda and the  
          County of Contra Costa

           SUMMARY  :  Extends the current authorization for Alameda County  
          to adopt an ordinance imposing a transactions and use tax (TUT)  
          for transportation programs and allows Contra Costa County to  
          adopt a similar ordinance.  Specifically,  this bill  :  

          1)Extends the sunset date from January 1, 2014 to December 31,  
            2020, allowing the County of Alameda to adopt an ordinance,  
            conditioned upon voter approval, to propose the imposition of  
            a TUT for the support of countywide transaction programs.

          2)Allows the County of Contra Costa to adopt an ordinance  
            proposing the imposition of a TUT for the support of  
            countywide transportation programs at a rate of no more than  
            0.5% that, in combination with other specified taxes, exceeds  
            the 2% statutory limitation.

          3)Sets forth the following requirements for counties before  
            enacting a TUT:

             a)   The ordinance proposing the TUT must be adopted in  
               accordance with the applicable voting approval requirement;

             b)   The ordinance proposing the TUT must be submitted to the  
               electorate and be approved by the voters pursuant to the  
               California Constitution, Article XIIIC; and,

             c)   The proposed TUT must conform to current law, other than  
               Revenue and Taxation Code Section 7251.

          4)Eliminates the current requirement that the ordinance be  
            placed on the November general election ballot. 

          5)Finds and declares that a special law is necessary because of  








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            the unique fiscal pressures experienced in the Counties of  
            Alameda and Contra Costa in providing essential transportation  
            programs.

           EXISTING LAW  :

          1)Authorizes cities and counties, under the Bradley-Burns  
            Uniform Local Sales and Use Tax (SUT) Law, to impose local  
            SUT.  [Revenue & Taxation Code (R&TC), commencing with Section  
            7200].

          2)Imposes a tax for the privilege of selling tangible personal  
            property at retail upon every retailer in the local  
            jurisdiction, or purchased outside the jurisdiction for use  
            within the jurisdiction, at a rate of 1%.  Of the 1% tax, 75%  
            is allocated for city and county operations and 25% is  
            allocated to the county transportation funds.  (R&TC Section  
            7202).

          3)Provides counties and cities, under the TUT Law and the  
            Additional Local Taxes Law, with the authority to impose  
            district taxes under specified conditions.  (R&TC Section 7251  
            and 7280). 

          4)Provides that counties and cities may impose a district tax  
            for general purposes and special purposes at a rate of 0.125%,  
            or multiple thereof, if the ordinance imposing the tax is  
            approved by the required percentage of voters in the city or  
            county.  (R&TC Section 7285).

          5)Allows the County of Alameda to adopt an ordinance imposing a  
            TUT not to exceed 0.5% for the support of countywide  
            transportation programs at a rate that would, in combination  
            with all other TUTs, 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 TUT by any applicable voting requirements;

             b)   The ordinance proposing the TUT 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 TUT must conform to the TUT Law.  (R&TC Section  








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               7291).

          6)Provides that the authority for the County of Alameda to adopt  
            an ordinance to impose a TUT that exceeds the combined  
            statutory rate of 2% shall only remain in effect until January  
            1, 2014.  (R&TC Section 7292).
              
          7)Provides that the combined rate of all taxes imposed in  
            accordance with the TUT law in any county may not exceed 2%.   
            (R&TC Section 7251).

           FISCAL EFFECT  :  Assuming a January 1, 2015 voter-approved  
          measure in the County of Alameda, this bill would generate $66  
          million in fiscal year (FY) 2014-15 and $140 million in FY  
          2015-16.  Assuming a January 1, 2015 voter-approved measure in  
          the County of Contra Costa, this bill would generate $34 million  
          in FY 2014-15 and $72 million in FY 2015-16.  

           COMMENTS  :   

          1)The author has provided the following statement in support of  
            this bill:

               This bill allows Alameda County and Contra Costa County to  
               adopt an ordinance imposing a transactions and use tax for  
               the support of countywide transportation programs at a rate  
               that would, in combination with all other transactions and  
               use taxes, exceed the 2% limit in existing law, if a  
               countywide ballot measure is approved by voters before  
               December 31, 2020.

               The recent passage of two citywide sales tax measures has  
               occurred remaining local sales tax capacity in Alameda  
               County.  In addition, the Great Recession substantially  
               reduced sales tax revenue in the county, causing a decrease  
               in funds available for transportation improvements.  The  
               Governor signed AB 1086 in 2011, allowing Alameda County to  
               put a transportation measure on the November 2012 ballot.   
               Measure B1 was supported by an overwhelming majority of  
               voters, 66.53 percent, but fell .14% short of reaching the  
               two-thirds threshold.  Given that the clear majority of  
               voters 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.








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               More than half of all San Francisco Bay commuters go into  
               Alameda County every workday.  The Port of Oakland is the  
               nation's fifth-largest container port and two-thirds of  
               truck trips in the region go through the county.  AB 210  
               will help Alameda County meet the transportation needs of  
               its residents, businesses, students and commuters.

               Contra Costa County is also at the statutory limit of 2  
               percent.  The Contra Costa County Transportation Authority  
               (CCTA) is developing a 2014 update to its Countywide  
               Comprehensive Transportation Plan.  The work plan was  
               expanded last October to include a significant public input  
               component.  This transportation plan may provide key  
               information that could inform a countywide transportation  
               expenditure plan.  Contra Costa is one of 19 self-help  
               counties working to upgrade its transportation  
               infrastructure.  

          2)Proponents of this measure state:

               Existing law allowed Alameda County to exceed the existing  
               2% local sales tax cap if the transportation expenditure  
               plan was approved on the November 2012 ballot.   
               Unfortunately, Measure B1 fell 720 votes short of passage  
               with 66.53% voting in favor.  AB 210 would allow Alameda  
               County to try again.

               The Alameda [County Transportation Commission] [Alameda  
               CTC] has worked tirelessly to update the Countywide  
               Transportation Plan and the Transportation Expenditure Plan  
               (TEP) that became Measure B1.  With significant support  
               demonstrated for Measure B1, the Alameda CTC plans to try  
               again.  However, to seek an augmentation, the existing 2%  
               local sales tax limit will prevent the enactment of the  
               sales tax if it is approved by the voters.  In Alameda  
               County the cities of San Leandro and Union City enacted  
               local sales taxes, occupying the remaining local sales tax  
               capacity.  AB 210 would allow a countywide transportation  
               sales tax to be enacted if it is approved by 2/3 of the  
               voters.

          3)Opponents of this measure state:

               While the measure acknowledges the constitutionally  








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               mandated local voting requirements (as required by  
               Proposition 13 and 218), we are concerned about the  
               precedent it sets to begin to allow counties to increase  
               taxes beyond existing law.  Note that California now levies  
               the highest state sales and use [tax] in the nation and the  
               local "add ons" only render this highly regressive tax even  
               more regressive.

               The argument that this bill would simply grant more local  
               control by letting local voters decide the issue is a bit  
               ironic given that a similar bill by the author (AB 1086,  
               2011) was signed by Governor Schwarzenegger in order to  
               ultimately send a sales tax proposal, Measure B1, to the  
               ballot in 2012.  The measure was defeated in November.  

               Thus it appears that the voters have already spoken.  To  
               resurrect this issue so soon after the election would be a  
               waste of county resources.

          4)Committee Staff Comments:

              a)   Background  :  AB 1086 (Wieckowski), Chapter 327, Statutes  
               of 2011, enacted the authorization statute for Alameda  
               County to impose a district tax for transportation purposes  
               that would be excluded from the 2% combined rate  
               limitation.  The one-time exemption from the 2% limitation  
               was needed for several reasons, primarily because the City  
               of Union approved an additional 0.5% tax, which became  
               effective on April 1, 2011.  In combination with existing  
               county district taxes, the County of Alameda had already  
               reached the 2% limitation.  This one-time exemption was  
               only for Alameda County and should have applied if  
               two-thirds of voters, voting in the November 6, 2012,  
               election agreed.  

               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, but fell  
               0.14% short of the required two-thirds threshold.  The  
               author states that a majority of voters clearly support the  
               need to fund transportation improvements.  AB 210 would  
               allow the Alameda County Transportation Commission, once  
               again, to take another similar ballot measure to the  
               voters. 









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              b)   Back to the Voters  :  This bill would allow the Counties  
               of Alameda and Contra Costa to adopt an ordinance proposing  
               the imposition of a TUT.  Opponents claim that AB 210 is  
               not needed because the public has already spoken, deciding  
               not to pass Measure B1.  However, the voters of Alameda  
               County may have simply been displeased with the  
               Transportation Expenditure plan as outlined by the Alameda  
               County.  The enactment of AB 210 would allow the County of  
               Alameda to modify future transportation plans to better  
               serve its population and to present a new proposal to the  
               voters.  

              c)   Contra Costa County  :  The March 18th amendments added  
               Contra Costa County to this measure.  In November 2012,  
               voters within the City of Moraga approved an additional 1%  
               tax effective April 1, 2013.  As a result, any new  
               countywide tax would push Contra Costa County over the 2%  
               limit and require an exemption.  

               SB 566 (Scott), Chapter 709, Statutes of 2003, increased  
               the cap on total allowable TUT rates to 2%.  The rationale  
               for a 2% combined rate limitation is unclear to committee  
               staff since several large counties are currently exempt  
               from the limitation.  Instead of introducing individual  
               county legislation, the Legislature may wish to consider  
               increasing the cap or eliminating it all together.

              d)   Double-referral  :  This bill was heard in the Assembly  
               Committee on Local Government on April 3, 2013, and passed  
               out of that Committee on a vote of 7 to 2.  



           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Alameda County Transportation Commission
          Contra Costa County Transportation Authority
          Metropolitan Transportation Commission

           Opposition 
           
          California Taxpayers Association
          Howard Jarvis Taxpayers Association








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          Analysis Prepared by  :  Carlos Anguiano / REV. & TAX. / (916)  
          319-2098