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