BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SCA 4 HEARING: 5/15/13
AUTHOR: Liu FISCAL: No
VERSION: 3/19/13 TAX LEVY: No
CONSULTANT: Grinnell
TAXATION
Lowers the vote threshold to levy, increase, or extend
special taxes for transportation from 2/3 to 55%.
Background and Existing Law
The California Constitution states 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 (Article XIII C). Proposition 13 (1978)
required a 2/3 vote of each house of the Legislature for
state tax increases, and 2/3 vote of local voters for local
special taxes. Proposition 62 (1986) prohibited local
agencies from imposing general taxes without majority
approval of local voters, and a 2/3 vote for special taxes.
Proposition 218 (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% percent approval
(Proposition 39, 2000).
Cities and counties may impose transactions and use taxes,
basically additional sales and use taxes levied in their
jurisdiction, provided that the combined rate in the county
does not exceed 2 percent, upon a 2/3 vote of the local
agency's governing board and voter approval according to
the above.
Additionally, SB 314 (Murray, 2003) authorized MTA to levy
a .5% transactions and use tax that was not subject to the
2% countywide cap for six and a half years, but MTA never
SCA 4 -- 3/19/13 -- Page 2
put the measure to the voters. AB 2321 (Feuer, 2008)
reauthorized MTA to place the .5% transactions and use tax
for 30 years before the voters subject to the cap. SB 314
and SB 2321 required MTA to spend the tax proceeds in
certain ways or for specified projects. MTA placed a sales
tax ordinance, referred to as Measure R, on the November
2008 ballot. 67% of the voters approved the increase. Los
Angeles County Transportation Commission has two additional
.5% transactions and use taxes still in effect: one enacted
on April 1, 1991 and one enacted on July 1, 1982.
Proposed Law
Senate Constitutional Amendment 4 lowers the vote threshold
for local agencies imposing, extending, or increasing a
special tax to fund local transportation projects within
their jurisdiction to 55%. The measure also makes
conforming changes to the Constitution.
SCA 4 additionally requires a local agency that previously
imposed a tax under a 2/3 vote to first complete capital
projects funded by that tax before spending proceeds from a
tax approved by 55% of voters.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "SCA 4
upon approval of voters at a statewide election, would
authorize a local government to impose a sales tax
exclusively for transportation improvements upon the
approval of 55 percent of the voters of that local
government, rather than the current 2/3rds vote
requirement. In 1987, the Legislature enacted the "Local
Transportation Authority and Improvement Act" (SB 142,
Deddeh). This bill allowed county Boards of Supervisors to
create a local transportation agency. Voters could - by a
majority vote - approve local sales tax increases to fund
transportation projects, such as road and street repaving,
construction of High-Occupancy Vehicle Lanes, and bus and
passenger rail projects. The 19 so-called "self-help"
SCA 4 -- 3/19/13 -- Page 3
sales tax counties - including Los Angeles County - now
represent approximately 85% of the state's population and
have successfully completed many needed transportation
projects. However, a number of these taxes face
reauthorization by local voters as the measures' impending
"sunset" dates approach. In 1995, the State Supreme Court
ruled that these transportation taxes require a 2/3rds vote
to be created, extended or increased. This ruling has made
it more difficult to adjust the taxes when needed. In
California, an average of 48% of the funding for
transportation projects comes from local sources, while in
Southern California that percentage goes up to over 70%,
according to the nonpartisan Legislative Analyst's Office
and the Southern California Association of Governments.
The reliance on local revenue sources has made the taxes
even more important as state and federal funding sources
have declined. A proposal to extend the voter-approved Los
Angeles County transportation sales tax narrowly failed at
the November 2012 election. The measure gathered 64.72
percent approval, just shy of the 66.7 percent threshold
needed to pass. In Alameda County, a measure to increase
and make permanent a transportation sales tax gathered
66.53 percent approval and was subject to a recount as of
early December 2012. SCA 4 clarifies that a local
government agency cannot spend revenues for a sales tax
increase or extension - approved at 55 percent - unless
projects funded by a prior sales tax measure are completed
2. More or less . 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 due to fears
about its ability to use its power to oppress minority
interests. For the great majority of public issues,
fifty-percent plus one of a legislative body or an
electorate rule, but for others the United States and
California Constitutions provides that a majority is not
enough and a higher threshold is necessary, such as
amending the U.S. Constitution, impeaching a president, or
overriding a veto. States largely import the 2/3 vote from
the United States 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 can be enacted by majority vote; local
SCA 4 -- 3/19/13 -- Page 4
agencies can enact general taxes, and voters can approve
tax initiatives increasing state taxes by majority vote, as
they did with Proposition 30 (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 forth the use of the tax proceeds.
Supermajorities of the Legislature are necessary to
increase taxes, but only majorities of voters can.
SCA 4 adds another layer onto the complex system above. If
enacted, local agencies can enact special taxes for
transportation purposes at 55% vote, paralleling
Proposition 39's similar allowance for school bonds.
However, the measure doesn't affect thresholds for any
other kind of tax. The first policy question for the
Committee is: what should be the voting threshold for local
special taxes? The Legislative Analyst's Office says
there's no right answer, as requirements vary across
states, but adds that the process should be easy enough for
voters to understand and reflect overarching objectives for
voter participation in tax decisions. The second is:
should the thresholds be different based on the use of the
tax proceeds, like transportation? The Committee may wish
to consider the reasons for affording transportation taxes
special treatment when contemplating the overall system of
voter thresholds necessary to increase taxes.
3. Join the party . The Committee will hear five other
measures that change the vote threshold for special taxes:
SCA 3 (Leno) - allows school districts, community
college districts, and county office of education to
levy parcel taxes at 55% vote.
SCA 7 (Wolk) - lowers the vote threshold for bonded
indebtedness incurred to construct, reconstruct,
rehabilitate, or replace public libraries; allows
local agencies to levy, extend, or increase special
taxes at 55% vote to fund public libraries.
SCA 8 (Corbett) - identical to this measure except
for the restriction on local agencies spending
proceeds from new taxes until completing capital
projects from previously imposed taxes.
SCA 9 (Corbett) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for
community and economic development projects.
SCA 11 (Hancock) - allows local agencies to levy,
extend, or increase special taxes at 55% vote for any
SCA 4 -- 3/19/13 -- Page 5
purpose.
Support and Opposition (05/09/13)
Support : Glendale Employees Association, League of
California Cities; Organization of SMUD Employees; San
Bernardino Public Employees Association; San Luis Obispo
County Employees Association; Santa Rosa City Employees
Association
Opposition : Apartment Association California Southern
Cities; Apartment Association of Orange County; Associated
Builders and Contractors of California; California
Ambulance