BILL ANALYSIS Ó
AB 1324
Page 1
Date of Hearing: August 27, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1324 (Skinner) - As Amended: August 7, 2014
SUBJECT : Transactions and use taxes: City of El Cerrito.
SUMMARY : Allows the City of El Cerrito to adopt an ordinance to
impose a transactions and use tax not to exceed 0.5% for general
purposes that would, in combination with other taxes, exceed the
statutory limit of 2%.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Allow the City of El Cerrito to impose a transactions and use
tax for general purposes at a rate of no more than 0.5% 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 city adopts an ordinance proposing the transactions
and use tax by any applicable voting requirements;
b) The ordinance proposing the transactions and use tax is
approved by the voters voting on the ordinance in
accordance with California Constitution Article XIII C, and
the election on the ordinance proposing the tax may occur
on or after November 4, 2014;
c) The transactions and use tax is imposed on or after
January 1, 2015; and,
d) The transactions and use tax conforms to the
Transactions and Use Tax Law, as specified.
2)Provide, if the ordinance proposing the transactions and use
tax is not approved, that the provisions of the bill shall be
repealed as of January 1, 2022.
3)Find and declare that a special law is necessary because of
the unique fiscal and public service pressures experienced in
the City of El Cerrito.
AB 1324
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AS PASSED BY THE ASSEMBLY , this bill authorized Alameda County
to increase the fee on vehicle registration to be used to fund
the prevention of vehicle theft crimes.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill. This bill provides an exemption to the
City of El Cerrito from the 2% transactions and use tax
combined rate cap that is currently in statute. This bill
authorizes the City of El Cerrito to each adopt an ordinance
to propose the imposition of a transactions and use tax for
general purposes at a rate of no more than 0.5%, and with the
appropriate voter approval pursuant to the California
Constitution, which requires a majority vote for transaction
and use taxes for general purposes. If the ordinance
proposing the transactions and use tax is not approved by
voters by January 1, 2022, the provisions of the bill would be
repealed as of that same date. This bill is author-sponsored.
In Contra Costa County, City of El Cerrito voters passed
Measure R in 2010, a transactions and use tax of 0.5% which in
addition to the existing transaction and use taxes fully
occupy the tax capacity under the 2% combined rate. In July,
the El Cerrito City Council voted to place a local funding
measure on the November 2014 ballot to extend the existing
0.5% to 1%. In order for the extension to be imposed, this
bill is needed to allow the City to exceed the statutory
limit, and voters must pass the November 2014 ballot measure.
2)Author's statement. According to the author, "The City of El
Cerrito was hit particularly hard by the recession and the
local economy is still struggling to recover. As a result,
local property values have declined. The sluggish economy,
diminished revenues from reduced property assessments, the
loss of redevelopment, store relocations, and other factors
are forcing the city to reduce services."
3)Related legislation. 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
AB 1324
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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
to 2% 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.
The Legislature has previously granted exemptions to the 2%
statutory cap for transactions and use taxes to support
countywide transportation programs. AB 1086 (Wieckowski),
Chapter 327, Statutes of 2011, allowed a one-time exemption
for Alameda County from the 2% transactions and use tax
combined rate cap. AB 210 (Wieckowski), Chapter 194, Statutes
of 2013, extended the authority for Alameda County to adopt an
ordinance imposing a transactions and use tax from January 1,
2014, to December 31, 2020, and allowed Contra Costa County to
adopt an ordinance imposing a transactions and use tax in the
same manner as Alameda County.
SB 33 (Wolk), currently pending in the Assembly, would allow
the County of Sonoma or any city within the County to impose a
transactions and use tax for general purposes, and allow
Sonoma County, any city within Sonoma County, or the Sonoma
County Transportation Authority to impose a transactions and
use tax for a specific purpose including, but not limited to
the support of transportation and road maintenance programs
and library services by up to 0.5% that would, in combination
with all other transaction and use taxes, exceed the 2%
statutory limit.
4)Policy consideration. The Legislature may wish to consider if
the financial difficulties experienced by the City of El
Cerrito are different than those experienced by other cities
or counties in California. In light of that consideration,
the Legislature may wish to discuss if the 2% transactions and
use tax combined rate cap needs to be raised statewide,
instead of having cities and counties come to the Legislature
on a case by case basis.
5)Arguments in support. Supporters argue that this bill gives
the voters the opportunity to decide whether to approve an
additional half percent sales tax in order to maintain city
services and allows the people to choose their own priorities.
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6)Arguments in opposition. Opposition argues that unless the
Legislature decides to raise the cap statewide, local
governments should not be given special permission to exceed
the 2% limit.
7)Gut and amend. The subject matter of this bill has not been
heard in any Assembly policy committee this legislative
session.
REGISTERED SUPPORT / OPPOSITION :
Support
City Manager Scott Hanin, City of El Cerrito
Chief of Police Sylvia Moir, City of El Cerrito
El Cerrito Fire Department
Mayor Janet Abelson, City of El Cerrito
Public Works Department, City of El Cerrito
Opposition
California Taxpayers Association
Howard Jarvis Taxpayers Association
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958