BILL ANALYSIS Ó SENATE COMMITTEE ON ELECTIONS AND CONSTITUTIONAL AMENDMENTS Senator Norma J. Torres, Chair BILL NO: SCA 11 HEARING DATE: 6/18/13 AUTHOR: HANCOCK ANALYSIS BY: Darren Chesin AMENDED: 5/21/13 FISCAL: NO SUBJECT Local government: special taxes: voter approval DESCRIPTION Existing law , pursuant to the California Constitution, provides that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote. Proposition 13 of 1978 required a 2/3 vote of each house of the Legislature for state tax increases, and a 2/3 vote of local voters for local special taxes. Proposition 62 of 1986 prohibited local agencies from imposing general taxes without majority approval of local voters, and a 2/3 vote for special taxes. Proposition 218 of 1996 extended those vote thresholds to charter cities, and limited local agencies' powers to levy new assessments, fees, and taxes. Local agencies generally propose to increase taxes by adopting an ordinance or a resolution at a public hearing. The Constitution further bars school districts from imposing general taxes, but allows school districts, community college districts, and county offices of education to issue bonded indebtedness for school facilities with 55% approval (Proposition 39 of 2000). This constitutional amendment would lower the vote threshold for local agencies imposing, extending, or increasing any special tax from 2/3 to 55% provided all of the following requirements are met: The ballot proposition contains a specific list of programs and purposes to be funded, and a requirement that tax proceeds be spent solely for those programs and purposes. The ballot proposition includes a requirement for annual independent audit of the amount of tax proceeds collected and the specified purposes and programs funded. The ballot proposition requires the governing board to create a citizens' oversight committee to review all expenditures of proceeds and financial audits, and report its findings to the governing board and public. This measure also makes other conforming changes to the Constitution. BACKGROUND Majorities and Super Majorities . Majority rule is a two-edged sword: democratically elected governments are supposed to enact policies that the voters want, but both federal and state systems of government restrict the majority's ability to oppress a minority interests. For the great majority of public issues, fifty-percent plus one of a legislative body or an electorate rule. But for some issues, the United States and California Constitutions provide that a majority is not enough and a higher threshold is necessary, such as amending the U.S. Constitution, removing a president from office, ratifying a treaty, or overriding a veto. States largely import the 2/3 vote from the U.S. Constitution into their own for those same purposes, but also require 2/3 vote on taxes or other measures. In a series of voter initiatives, Californians have elevated local special tax increases and legislatively enacted state tax increases to this level, while almost every other change to the law can be enacted by majority vote; local agencies can enact general taxes, and voters can approve tax initiatives increasing state taxes by majority vote, as they did with Proposition 30 of 2012. As such, local agencies need a majority vote to assess taxes and spend the proceeds on whatever purposes they want to, but 2/3 if they restrict the use of the tax proceeds. Super majorities of the Legislature are necessary to increase taxes, but only majorities of voters can. COMMENTS According to the Author : "SCA 11 would lower the vote threshold for increasing most special taxes from 2/3 to 55%. By doing so, it would align the general requirement with that of school bonds under Proposition 39. It would lower the burden on cities, SCA 11 (HANCOCK) Page 2 counties, and special districts to increase revenue for needed local services provided to Californians. It would apply to nearly all services, from schools, to transportation, to public safety agencies. SCA 11 would not mandate any increase on special taxes. Cities, counties, and special districts would still have to place proposals on the ballot, and local voters would still have to approve them. The existing exceptions to the 2/3 rule (for instance, sales taxes on real property sales) under Prop. 13 would remain in place. The only change SCA 11 makes in existing law is to lower the vote threshold so that 55% of local voters can choose to increase revenue for their city, county or special district." Related Legislation . SCA 3 (Leno) which is also on today's agenda allows school districts, community college districts, and county offices of education to levy parcel taxes by a 55% vote. SCA 4 (Liu), which is pending in the Senate Committee on Transportation and Housing, allows local agencies to levy, extend, or increase special taxes by a 55% vote for local transportation projects. SCA 7 (Wolk) which is also on today's agenda authorizes cities, counties, or special districts to impose a special tax by a 55% vote of the voters and to issue bonded indebtedness to construct, reconstruct, rehabilitate, or replace public libraries. SCA 8 (Corbett), which is also pending in the Senate Committee on Transportation and Housing, allows local agencies to levy, extend, or increase special taxes by a 55% vote for local transportation projects. SCA 9 (Corbett) which is also on today's agenda allows local agencies to levy, extend, or increase special taxes by a 55% vote for community and economic development projects. PRIOR ACTION Senate Governance and Finance Committee 5-1 POSITIONS Sponsor: Author Support: Alameda County Transportation Commission Alameda-Contra Costa Transit District American Federation of State, County and Municipal SCA 11 (HANCOCK) Page 3 Employees (AFSCME) Association of California Construction Managers Association of California Healthcare Districts Association of California Water Agencies California Association of Zoos and Aquariums California Center for Public Health Advocacy California Coalition for Adequate School Housing California Labor Federation California Park and Recreation Society California Professional Firefighters California Special Districts Association California State Association of Counties California Transit Association California Watershed Coalition Chabot Space and Science Center Chino Valley Independent Fire District City and County of San Francisco City of Fairfield City of Rancho Cordova City of San Jose Contra Costa County Fire Protection District Cosumnes Community Services District Cordova Recreation and Park District Cucamonga Valley Water District Desert Recreation District East Bay Municipal Utility District East Bay Regional Park District East Bay Zoological Society Fulton-El Camino Recreation and Park District Glendale City Employees Association Hesperia Recreation and Park District Idyllwild Fire Protection District League of California Cities Leucadia Wastewater District Little Lake Fire Protection District Livermore Area Recreation and Park District Metropolitan Transportation Commission Napa County Transportation & Planning Agency/Napa Valley Transportation Authority Olivehurst Public Utility District Palos Verdes Library District Reclamation District No. 1000 SCA 11 (HANCOCK) Page 4 Running Springs Water District San Bernardino Public Employees Association San Luis Obispo County Employees Association Santa Clara County Board of Supervisors Santa Clara County Open Space Santa Rosa City Employees Association Small School Districts Association Three Valleys Municipal Water District Tomales Village Community Services District Oppose: American Council of Engineering Companies Apartment Association California Southern Cities Apartment Association of Orange County California; Apartment Association of Greater Los Angeles Association of California Life and Health Insurance Companies California Ambulance Association California Apartment Association California Association of Realtors California Business Properties Association California Chamber of Commerce California Grocers Association California Healthcare Institute California Manufacturers and Technology Association California Restaurant Association California Retailers Association California Taxpayers Association California Association of Winegrape Growers Camarillo Chamber of Commerce East Bay Rental Housing Association Howard Jarvis Taxpayers Association; National Federation of Independent Business Nor Cal Rental Property Association Orange County Business Council San Diego County Apartment Association Santa Barbara Rental Property Association Union Pacific Railroad; Western Manufactured Housing Communities Association SCA 11 (HANCOCK) Page 5 SCA 11 (HANCOCK) Page 6