BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sca 4
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: liu
VERSION: 5/21/13
Analysis by: Eric Thronson FISCAL: no
Hearing date: July 9, 2013
SUBJECT:
Local transportation sales tax measures
DESCRIPTION:
This proposed constitutional amendment reduces the voter
threshold from two-thirds to 55 percent for passage of local
sales taxes dedicated to transportation purposes.
ANALYSIS:
For purposes of local tax levies, the California Constitution
defines a "special tax" as any tax imposed for specific
purposes, while "general taxes" are imposed for general
governmental purposes and not dedicated to any particular use.
The Constitution further states that taxes levied by local
governments are either general taxes or special taxes. Local
governments may impose, extend, or increase general taxes with
majority approval of their voters, while two-thirds of voters
must approve a local government's special tax levies. The
Constitution also states that special districts, such as school
districts or transportation commissions, cannot levy general
taxes and are restricted to imposing only special taxes, which
means all local transportation taxes require two-thirds voter
approval.
As long as they abide by the constitutional restrictions above,
existing law generally permits cities and counties to impose
local sales taxes up to two percent higher than the statewide
sales tax in whatever combination of special and general taxes
they choose.
Existing law permits a county board of supervisors to create a
countywide transportation authority to plan and fund
transportation projects within the county. These transportation
authorities may impose a local sales tax for transportation
purposes, if the tax ordinance is within the local sales tax cap
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and abides by the constitutional restrictions on local taxes.
Counties that have chosen to tax themselves for transportation
purposes call themselves "self-help" counties because they have
approved measures to help themselves address their own
transportation problems.
For decades, the Legislature has taken steps to delegate
increasing amounts of transportation policy decision making
authority and specific project selection to regional and local
entities. For example, in 1971 the Legislature enacted the
Transportation Development Act, which reduced the state's share
of the sales tax in order to dedicate a statewide percent
sales tax to local transportation purposes. In 1987, the
Legislature enacted the Local Transportation Authority and
Improvement Act that allowed for counties to impose local sales
taxes and become self-help counties. And Senate Bill 45 (Kopp),
Chapter 622, Statutes of 1997, made major changes to the process
by which state and federal funds are allocated to individual
projects statewide, including giving regions the ability to
determine what projects receive at least 75 percent of these
funds.
In 1990, voters approved Proposition 111, which, among other
things, doubled the state fuel excise tax by 1994 from 9 cents
to 18 cents per gallon. The base fuel excise tax has not
increased since that time. While fuel use has increased with
the state's population, resulting in increased tax collections,
construction cost increases over that time period have reduced
the overall purchasing power of the fuel excise tax revenues.
Further, increased fuel efficiency has led to a decrease in fuel
purchased over the past few years, contributing to an increasing
reduction of state transportation resources.
This proposed constitutional amendment , subject to a future vote
of the people, reduces the voter threshold from two-thirds to 55
percent for passage of local sales taxes dedicated to
transportation purposes, if the local ballot proposition:
Contains a specific list of projects, programs, and
purposes to be funded by the tax proceeds;
Requires an annual independent audit of the tax proceeds
collected and expended; and
Requires the transportation authority's governing board
to create a citizens' oversight committee.
SCA 4 (LIU) Page 3
Further, this proposed constitutional amendment requires the
Legislature to define local transportation projects for purposes
of this measure. Finally, it restricts a local government from
expending tax proceeds approved under this authority until the
completion of a statutorily-identified capital project funded by
tax proceeds from previous self-help measures.
COMMENTS:
1.Purpose . According to the author, this proposed
constitutional amendment gives local government agencies the
opportunity to generate additional resources to fund
much-needed transportation improvements as well as create
jobs. Two local transportation sales tax proposals narrowly
failed at the November 2012 election. The measure in Los
Angeles County garnered 64.72 percent approval and the Alameda
County measure garnered 66.53 percent of the votes, but both
fell short of the 66.7 percent threshold currently required.
They both would have easily passed if the constitutional
amendment proposed in this measure had been in place.
2.Background . Despite the increasing transportation demands of
California's ever-growing population, the Legislature has not
increased the state's fuel excise tax since the early 1990s.
While state resources have not grown with demand, local
self-help sales tax measures have largely filled the funding
gap. Today, local sources provide roughly one-half of funding
used for transportation purposes statewide, and provide over
70 percent of transportation-related funding in Southern
California.
Along with the Legislature's actions mentioned earlier that
statutorily delegate decision making authority to regional and
local entities, the reduction in the state's share of overall
transportation funding has led to a diminution of the state's
role in determining California's transportation policy agenda.
Supporters argue that there are many advantages to this power
shift from the state to regional and local transportation
entities. For example, SB 45 was largely driven by the
concept that regions should determine their own priorities and
then let those priorities dictate funding decisions. This
empowers local elected officials to respond more effectively
to their constituencies' needs as well as makes them directly
answerable for their decisions. In addition, the self-help
county model has proven overall to be an effective way to
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raise transportation funds because, among other things, many
county measures are project-specific and the local officials
are held accountable for delivering the measure's promised
benefits.
Some argue there are marked disadvantages to the reduction of
the state's role in transportation policymaking. For example,
allowing regions or locals to largely dictate their own
priorities and transportation agendas can lead to diminished
interregional connectivity. In Southern California, Orange
County's emphasis on reducing highway congestion has led, in
part, to an expansion of Interstate 5 toward Los Angeles
County. Los Angeles has chosen instead to prioritize public
transit expansion and not increased capacity on Interstate 5
in their county. The unconnected interregional planning has
resulted in highway commuters from Orange County enjoying
freer-flowing traffic on Interstate 5 up to the Los Angeles
County line, where they subsequently experience a bottleneck
and increased congestion.
Another drawback to the state's reduced role in transportation
policymaking is that it can undermine some of the
Legislature's larger policy goals. For example, over the past
few years the Legislature has passed legislation prioritizing
the reduction of the state's greenhouse gas (GHG) emissions.
The transportation sector produces roughly 40 percent of the
state's GHG emissions, yet some suggest the Legislature thus
far has had a limited ability to influence the way the
transportation system is further developed in California
beyond requiring regional transportation plans to consider
ways to reduce emissions. Without a financial or other
incentive, regions are free to pursue solutions to their own
problems regardless of what the Legislature may choose to
prioritize.
Another example of how the state's policy challenges are not
always considered in the current transportation policy realm
includes the fact that regions often choose to spend resources
expanding the state highway system to address local congestion
issues. While potentially addressing a region's top priority,
studies suggest that increased highway capacity also leads to
increased driving and GHG emissions. Further, locals adding
capacity to the state highway system increases the financial
burden on the state to maintain the system. This maintenance
burden grows each year, while resources to address the problem
continue to decline.
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3.Legislature, empower thyself . To the extent the Legislature
wants the state to reenter the transportation policymaking
arena, it should consider how new transportation funding tools
such as this proposed constitutional amendment may be used to
influence regional and local decision makers to consider
statewide concerns.
For example, the Legislature has clearly prioritized GHG
emission reduction, yet arguably has had limited success
addressing emissions from the transportation sector. While
adding conditions to existing transportation revenues is both
practically and politically difficult, requiring a portion of
new resources or tools to be applied to the reduction of GHG
emissions seems to be a reasonable strategy to accomplishing
the Legislature's aim. This proposed constitutional amendment
already includes some requirements for locals to access the 55
percent voter threshold. Attaching additional strings to this
new funding tool only conditions new funding opportunities and
leaves the option for locals to utilize existing resources
should they choose not to accept the new conditions. To that
end, the committee may wish to amend this proposed
constitutional amendment to add an additional requirement that
a percentage of the tax proceeds raised under this new
authority be spent on projects aimed at reducing
transportation-related GHG emissions.
Another state priority the Legislature may wish to pursue is
funding the future maintenance costs of additional state
highway capacity added through this new means of local
taxation. Some argue that the state should be grateful for
the gift of local funding contributed to the state highway
system. If self-help counties didn't provide funding for the
expansion of the state's system, then the system would likely
get expanded only in limited ways. The gift of increased
highway lane-miles often primarily benefits the local traffic
paying the tax, but meanwhile increases the burden on the
state forever. Granting locals an easier tool for raising
local transportation revenues could further exacerbate the
state's financial burden for maintaining the state highway
system. The committee may wish to amend this proposed
constitutional amendment to require that a portion of any of
these tax proceeds spent on the state highway system be set
aside for the future maintenance of that new highway capacity.
4.Chaptering amendments . This constitutional amendment
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conflicts with a number of other proposed constitutional
amendments. Specifically, it is nearly identical to SCA 8
(Corbett), but it also conflicts with ACA 3 (Campos), SCA 7
(Wolk), SCA 9 (Corbett), and SCA 11 (Hancock). Should these
constitutional amendments continue to move through the
Legislature, the author will need to resolve these conflicts
at some point.
POSITIONS: (Communicated to the committee before noon on
Wednesday, July 3,
2013.)
SUPPORT: American Society of Civil Engineers Region 9
California Labor Federation
California State Council of Laborers
California Transportation Commission
Capitol Corridor Joint Powers Authority
City and County of San Francisco
City of Petaluma
Foothill Transit
Metro Gold Line Foothill Extension Construction
Authority
Metropolitan Transportation Commission
San Francisco Bay Area Rapid Transit
Santa Clara Valley Transportation Authority
Self Help Counties Coalition
Silicon Valley Leadership Group
Solano Transportation Authority
Transportation Agency of Monterey County
Transportation Authority of Marin
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OPPOSED: Apartment Association California Southern Cities
Apartment Association of Orange County
Associated Builders and Contractors of California
California Ambulance Association
California Asian Pacific Chamber of Commerce
California Association of Winegrape Growers
California Business Properties Association
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Manufacturers and Technology
Association
California Retailers Association
California Taxpayers Association
Camarillo Chamber of Commerce
East Bay Rental Housing Association
George Runner, Board of Equalization Member
Howard Jarvis Taxpayers Association
National Federation of Independent Businesses
Nor Cal Rental Property Association
Orange County Association of Realtors
Orange County Board of Supervisors
Western Manufactured Housing Communities