BILL ANALYSIS Ó AB 1112 Page 1 ( Without Reference to File ) CONCURRENCE IN SENATE AMENDMENTS AB 1112 (Ammiano) As Amended September 11, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: | |(May 16, 2013) |SENATE: |24-11|(September 12, | | | | | | |2013) | ----------------------------------------------------------------- (vote not relevant) Original Committee Reference: HUM. S. SUMMARY : Removes a statutory cap of 1% that applies to the combined rate of any transactions and use tax approved pursuant to the Bay Area County Traffic and Transportation Funding Act and the Transactions and Use Tax Law. The Senate amendments delete the Assembly version of this bill, and instead, remove a statutory cap of 1% that applies to the combined rate of any transactions and use tax (TUT) approved pursuant to the Bay Area County Traffic and Transportation Funding Act (Act) and the TUT Law. EXISTING LAW : 1)Authorizes cities and counties to impose local sales and use taxes. 2)Authorizes cities and counties to impose TUTs. 3)Prohibits, in any county, the combined rate of all taxes imposed in accordance with the TUT Law from exceeding 2%. 4)Creates the Metropolitan Transportation Commission (Commission) to provide comprehensive regional transportation planning for the region comprised of the City and County of San Francisco and the Counties of Alameda, Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma. 5)Establishes the Act, which allows voters in any county in the nine-county San Francisco Bay area (specified above) to create a county transportation authority or to authorize the AB 1112 Page 2 Commission to implement a TUT for the purpose of funding a local transportation expenditure plan showing a need for the proceeds from that tax. 6)Allows, pursuant to the Act, a county transportation authority or the Commission to impose a TUT ordinance for a tax of either 0.5% or 1% applicable in the incorporated and unincorporated territory of a county in the manner prescribed in the Act and in the TUT Law, as specified, if two-thirds of the electors voting on the measure vote to approve its imposition at an election called for this purpose by the board of supervisors within one year after the adoption of a county transportation expenditure plan. 7)Provides that the rate of tax imposed pursuant to 6) above, together with the rate of tax imposed pursuant to the TUT Law by any entity, as authorized by any other provision of law, shall not exceed 1% in any county. AS PASSED BY THE ASSEMBLY , this bill required rates and fees for supported employment services for people with developmental disabilities to be consistent with rates and fees set by the Department of Rehabilitation. FISCAL EFFECT : None COMMENTS : This bill deletes language in the Act that limits to 1% the allowable combined rates of TUTs imposed pursuant to the Act and the TUT law, which will allow the City and County of San Francisco to utilize a maximum 2% allowed under the TUT law for all counties statewide. According to the author, "San Francisco's unique geography and population have led to some of the most intensive transportation needs in California. At the same time, an archaic piece of code limits the San Francisco County Transportation Authority's ability to use sales tax revenue. While Revenue and Taxation code allows an overall local sales tax cap of 2 percent, an older 1986 code limits the SFCTA under a cap that is only 1 percent - half the revenue potential. That restriction doesn't apply to other authorities. AB 1112 would simply remove one subsection of the outdated code, so that SFCTA would have the same cap as other transportation authorities. This does not raise any taxes, but merely allows the authority to ask voters for approval of new tax programs." AB 1112 Page 3 The TUT Law authorizes local governments to levy TUTs as "add-ons" to the combined state and local sales tax rate. The Legislature has approved specific authorizations for certain cities, counties, special districts, and countywide authorities to levy TUTs for general and special purposes. Of those approved for special purposes, many TUTs are dedicated for transportation purposes. The Act authorizes any of the nine counties within the San Francisco Bay Area to place before the voters a TUT in amounts of 0.5% or 1%, the proceeds of which are to be used to fund a local transportation expenditure plan for the county and any partnering counties. The San Francisco County Transportation Authority (Authority) was created pursuant to the Act's enabling statutes, which were enacted in 1986. Although the TUT law was enacted earlier, in 1969, portions of the TUT Law were amended in 2003 via SB 566 (Scott), Chapter 709, Statutes of 2003, which allowed cities and counties to place TUT ordinances before local voters without first obtaining legislative approval and increased the TUT rate to a maximum of 2% in any given county. According to the Authority, related TUT statutes were updated in 2003 to reflect the increased 2% TUT cap allowed under SB 566. However, the 1986 Act was apparently overlooked, and still contains a county-wide TUT cap of 1%. The Authority notes that it currently relies on a 0.5% TUT for its operations that, when combined with a .25% TUT for the San Francisco Community College District, reaches a total of .75% for the City and County of San Francisco. According to the author, "The Authority is presently working in concert with the City and County to develop potential funding options for consideration in the coming year, and in undertaking the research to support this effort have found this cap to be too limiting." Because the Act allows the Authority to ask voters for a TUT specifically in increments of 0.5% or 1%, even the smaller rate would put the City and County over the Act's statutory limit of 1%. The Authority reports that this 1% limitation came to light only this summer, and that it is seeking this legislative remedy now in preparation for a possible TUT proposal to the voters in AB 1112 Page 4 2014. Related legislation. AB 210 (Wieckowski), Chapter 194, Statutes of 2013, extends from January 1, 2014, to December 31, 2020, current authority for Alameda County 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, under specified conditions, and allows Contra Costa County to adopt an ordinance imposing a TUT in the same manner as Alameda County. Prior legislation. SB 566 (Scott), Chapter 709, Statutes of 2003, allows cities and counties to place TUT ordinances before local voters without first obtaining legislative approval, and increases the TUT rate to a maximum of 2%. SB 144 (Local Government Committee), Chapter 343, Statutes of 2007, updates the voter approval requirement for 13 local TUT authorizations, in conformity with Propositions 13 and 218. Support arguments: Supporters note that this bill will even the playing field for the City and County of San Francisco relative to the total allowable TUT, in keeping with the TUT law and other counties statewide. Opposition arguments: None on file. This bill was substantially amended in the Senate and the Assembly-approved provisions of this bill were deleted. The subject matter of this bill, as amended in the Senate, has not been heard in any Assembly policy committee this legislative session. Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958 FN: 0002854