BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Norma J. Torres, Chair
BILL NO: SCA 9 HEARING DATE: 6/18/13
AUTHOR: CORBETT ANALYSIS BY: Darren Chesin
AMENDED: 5/21/13
FISCAL: NO
SUBJECT
Local government: economic development: special taxes: voter
approval.
DESCRIPTION
Existing law , pursuant to 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. 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 a 55% approval (Proposition 39 of 2000).
Existing law additionally allows local agencies to levy
qualified special taxes that are uniform as applied to all
taxpayers with a 2/3 vote of the electorate. The local agency
may implement these taxes, for as long as it wants, spend the
proceeds for any purpose, and apply any tax rate it chooses.
Cities and counties may also 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 voters.
This constitutional amendment lowers the vote threshold for
local agencies imposing, extending, or increasing a special tax
to fund local community and economic development projects within
their jurisdiction to 55% if 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 constitutional amendment defines a project as one that
improves, upgrades, or revitalizes areas within the local
government's jurisdiction that have become blighted because of
deterioration, disuse, or unproductive economic conditions.
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
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
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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.
RDAs . Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating Redevelopment
Agencies (RDAs) and returning billions of dollars of property
tax revenues to schools, cities, and counties to fund core
services. Among the statutory changes that the Legislature
adopted to implement the 2011-12 budget, ABx1 26 (Blumenfield of
2011) dissolved all RDAs. The California Supreme Court's 2011
ruling in California Redevelopment Association v. Matosantos
upheld AB X1 26, but invalidated AB X1 27 (Blumenfield of 2011),
which would have allowed most RDAs to avoid dissolution.
COMMENTS
1.According to the Author : With the loss of redevelopment
funds, local governments will require alternative financial
tools, if they are to continue economic development
activities. Without alternative financing options, local
governments will have only their General Fund dollars to pay
for economic development projects. For most
cities, General Fund dollars are already stretched thin with
little left over after providing basic services.
In 2011, the state's fiscal problems and Redevelopment
Agency's (RDA) questionable benefits to the state, led the
Governor and the Legislature to dissolve RDAs (AB X1 26) and
establish a voluntary reform program that cities could opt-in
to keep their RDAs in existence (AB X1 27). In addition,
because an RDA issued debt, owned and leased property, and
entered into long-term contracts a successor agency was needed
to manage an RDAs financial obligations (AB X1 26).
Soon after the passage of both bills, the League of California
Cities filed a lawsuit challenging the legality of dissolving
RDAs on constitutional grounds. The State Supreme Court
upheld AB X1 26 but struck down AB X1 27. After the
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conclusion of the lawsuit, on February 1, 2012, all of
California's 400 plus redevelopment agencies were dissolved
and a process for unwinding their financial affairs began.
Although RDAs have ended, economic development activities will
need to continue at the local level. Local governments will
require alternative financial tools, if they are to continue
economic development.
By lowering the voter approval threshold for special taxes for
economic development, SCA 9 provides a tool to localities to
finance projects to create jobs, stimulate the local economy,
and revitalize depressed community areas.
2.Lead and follow . SCA 9 lowers vote thresholds for special
taxes enacted for community and economic development projects,
defined as "projects that improve, upgrade, or revitalize
areas within the local government's jurisdiction that have
become blighted because of deterioration, disuse, or
unproductive economic conditions." While this definition is
broad, the Legislature can enact a statute following enactment
of SCA 9 filling in its details, such as more specifically
delineating the kinds of projects and areas for which local
agencies can assess taxes at lower voter thresholds. Doing so
is consistent with other Constitutional changes, where voters
have enacted the broad strokes of change, but let the
Legislature subsequently fill in the details in statute.
3.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 11 (Hancock), which is also on
today's agenda allows local agencies to levy, extend, or
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increase special taxes by a 55% vote for any purpose.
PRIOR ACTION
Senate Governance and Finance Committee5-1
POSITIONS
Sponsor: Author
Support: California Labor Federation
California Special Districts Association
California State Association of Counties
City of San Jose
Glendale City 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
Oppose: Apartment Association of Greater Los Angeles
Apartment Association California Southern Cities
Apartment Association of Orange County
Associated Builders and Contractors of California
California Ambulance Association
California Apartment Association
California Association of Realtors
California Business Properties Association
California Chamber of Commerce
California Grocers Association
California Manufacturers and Technology Association
California Retailers Association
California Taxpayers Association
East Bay Rental Housing Association
Howard Jarvis Taxpayers Association
National Federation of Independent Business
Nor Cal Rental Property Association
Orange County Association of Realtors
Orange County Business Council
San Diego County Apartment Association
Santa Barbara Rental Property Association
Southwest California Legislative Council
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Western Manufactured Housing Communities Association
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