BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 2119
          Author:   Stone (D), et al.
          Amended:  5/14/14 in Assembly
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  5-2, 6/11/14
          AYES:  Wolk, Beall, DeSaulnier, Hernandez, Liu
          NOES:  Knight, Walters
           
          ASSEMBLY FLOOR  :  50-22, 5/19/14 - See last page for vote


           SUBJECT  :    Local taxes:  transactions and use taxes

          SOURCE  :     Author


           DIGEST  :    This bill authorizes a county board of supervisors to  
          levy, increase, or extend a transactions and use tax, for  
          general or specific purposes, within the unincorporated area of  
          the county.

           ANALYSIS  :    Proposition (Prop) 62 (1986) and Prop 218 (1996)  
          require voter approval for new and increased local taxes.  Prop  
          62 added statutes to the Government Code that prohibit a local  
          government from imposing:

           A special tax unless the special tax is submitted to the  
            electorate of the local government and approved by a  
            two-thirds vote.  

           A general tax unless the general tax is submitted to the  
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            electorate of the local government and approved by a majority  
            vote. 

          Prop 218 amended the California Constitution to define the  
          difference between general taxes and special taxes and impose  
          voter approval requirements that are similar to Prop 62's  
          statutory provisions.  

          Counties can only impose taxes that state law specifically  
          authorizes them to impose.  With some exceptions, state law  
          generally grants counties the power to impose taxes only in  
          their unincorporated areas.  The Transactions and Use Tax Law  
          authorizes a county to levy a transactions and use tax  
          throughout the county's entire territory, at a rate of 0.125%,  
          or multiples of 0.125%.  A transactions and use tax is imposed  
          on the total retail price of any tangible personal property and  
          the use or storage of such property when sales tax is not paid.   
          The tax is added on to, and administered in tandem with, the  
          combined state and local sales and use tax rate.  An ordinance  
          imposing a county-wide transactions and use tax must be approved  
          either by a majority of county voters, if the tax is for general  
          purposes, or by two-thirds of county voters, if the tax is for  
          special purposes.

          This bill allows a county's board of supervisors to levy,  
          increase, or extend a general-purpose transactions and use tax  
          either:

           Throughout the entire county, if the tax is approved by a  
            majority vote of qualified voters of the entire county, or

           Within the unincorporated area of the county if the tax is  
            approved by a majority vote of qualified voters of the  
            unincorporated area.

          This bill directs that a county must use revenues from a  
          general-purpose transactions and use tax only for general  
          purposes within the area for which the tax was approved by the  
          qualified voters.

          This bill allows a county's board of supervisors to levy,  
          increase, or extend a special-purpose transactions and use tax  
          either:


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           Throughout the entire county, if the tax is approved by a  
            two-thirds vote of qualified voters of the entire county, or

           Within the unincorporated area of the county if the tax is  
            approved by a two-thirds vote of qualified voters of the  
            unincorporated area.

          This bill directs that a county must use revenues from a  
          special-purpose transactions and use tax only for specific  
          purposes within the area for which the tax was approved by the  
          qualified voters.

           Comments
           
          In many counties throughout the state, more than half of their  
          territory is in unincorporated areas, making those counties  
          responsible for financing a large amount of infrastructure.   
          Unlike some other statutes that authorize counties to impose  
          taxes only within their unincorporated areas, existing law only  
          authorizes a county to impose an add-on transactions and use tax  
          rate throughout the entire county.  This bill allows counties to  
          introduce a sales tax measure that will be applied to  
          unincorporated areas, spent on the infrastructure of those  
          unincorporated areas, and voted on by the qualified voters of  
          those areas.  By allowing county supervisors to limit the  
          geographic area in which a county transactions and use tax  
          applies, this approach mirrors existing law for other county  
          taxes.  Additionally, when cities impose a transactions and use  
          tax, only voters who reside in the area where the tax is going  
          to be imposed get to vote on that tax.  This bill makes the  
          approval process for county transactions and use taxes  
          comparable to the current process for approving city  
          transactions and use taxes.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  6/11/14)

          AFSCME
          California State Association of Counties
          California Tax Reform Association
          Counties of Humboldt, Monterey, San Luis Obispo, and Santa Cruz


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           OPPOSITION  :    (Verified  6/11/14)

          California Taxpayers Association
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    Supporters argue that many counties in  
          California have half or more of their county in unincorporated  
          areas, making those counties responsible for a large amount of  
          infrastructure without much taxing authority.  This bill will  
          give residents who live outside of cities the same rights to  
          levy their own sales tax as those who live in them.

           ARGUMENTS IN OPPOSITION  :    Opponents argues that a tax measure  
          approved by the board of supervisors should apply evenly to all  
          county residents and that this bill could also prove to be  
          cumbersome for businesses to administer as there would now be  
          different tax rates across the county.  
           

           ASSEMBLY FLOOR  :  50-22, 5/19/14
          AYES:  Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,  
            Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,  
            Chesbro, Dababneh, Daly, Dickinson, Eggman, Fong, Frazier,  
            Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hagman, Hall,  
            Roger Hernández, Holden, Jones-Sawyer, Levine, Lowenthal,  
            Mullin, Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk,  
            Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,  
            Weber, Wieckowski, Williams, Yamada, Atkins
          NOES:  Allen, Bigelow, Chávez, Conway, Dahle, Donnelly, Fox,  
            Beth Gaines, Gorell, Grove, Harkey, Jones, Linder, Logue,  
            Maienschein, Melendez, Muratsuchi, Patterson, Quirk-Silva,  
            Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Achadjian, Cooley, Mansoor, Medina, Nazarian,  
            Nestande, Olsen, Vacancy


          AB:k  6/12/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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