BILL ANALYSIS Ó
AB 338
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 338
Roger Hernández - As Amended April 13, 2015
SUBJECT: Los Angeles County Metropolitan Transportation
Authority: transactions and use tax.
SUMMARY: Authorizes the Los Angeles County Metropolitan
Transportation Authority (MTA), subject to voter approval, to
impose an additional transactions and use tax at a rate of 0.5%
for a period not to exceed 30 years. Specifically, this bill:
1)Authorizes MTA to impose a transactions and use tax at a rate
of 0.5% that is applicable to the incorporated and
unincorporated areas of Los Angeles County (County) for a
period not to exceed 30 years.
2)Requires MTA to adopt the ordinance and submit the proposed
transactions and use tax to the voters. Specifies that the
ordinance only becomes operative, if approved by two-thirds
of the voters voting on the measure, pursuant to Article XIII C
of the California Constitution.
3)Requires the ordinance imposing the tax to contain all of the
following:
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a) An expenditure plan that lists the transportation
projects and programs to be funded by the tax;
b) An expenditure plan that includes measures that ensure
net revenues are shared equitably between regions of the
County;
c) A provision conforming the ordinance to the existing
Transaction and Use Tax Law, except to the 2% combined
transactions and use tax cap;
d) A provision that limits MTA's administrative costs to
1.5% of total net revenues; and,
e) A requirement that MTA allocate 20% of net revenues from
the tax to bus operations and 5% of net revenues from the
tax to rail operations, during the period that the
ordinance is operative.
4)Requires MTA to notify the Legislature prior to the adoption
of amendments to the adopted expenditure plan.
5)Allows MTA to incur bonded indebtedness payable from the net
revenues of the tax.
6)Requires the 20% of tax revenues to bus operations to be
allocated to all eligible and included municipal transit
operators in the County and to MTA in accordance with current
law. Requires the allocation to MTA and eligible and included
municipal operators to be made solely from the revenues
derived from the tax and not from local discretionary sources.
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7)Makes findings and declarations relating to Los Angeles County
voter approved sales tax measures to fund transportation.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Transaction and Use Taxes. Transactions and use taxes are
taxes 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. These types of taxes may be levied as
general taxes, which are unrestricted, or special taxes, which
are restricted for a specified use. The Transactions and Use
Tax law authorizes the adoption of local add-on rates to the
combined state and local sales tax rate. The law has been
amended multiple times to authorize specific cities, counties,
special districts and county transportation authorities to
impose a transactions and use tax, if voters approve the tax.
Existing state law authorizes cities and counties to impose
transactions and use taxes in 0.125% increments in addition to
the state's 7.5% sales tax provided that the combined rate in
the county does not exceed 2%. The Legislature has granted
several exemptions to the 2% cap, including to several
counties to allow an additional countywide transaction and use
tax for transportation purposes.
2)Prior Legislation. SB 314 (Murray), Chapter 785, Statutes of
2003, originally enacted provisions that authorized MTA to
impose a 0.5% transactions and use tax, not subject to the 2%
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cap for no more than six and one-half years, for specific
transportation projects and programs. The authority to put a
tax measure on the ballot was never used. AB 2321 (Feuer),
Chapter 302, Statutes of 2008, modified those provisions to
allow MTA to impose a transactions and use tax for 30 years.
AB 2321 additionally required MTA to adopt an expenditure plan
prior to submitting a transactions and use tax to the voters
and to include specified projects and programs in its Long
-Range Transportation Plan. In November 2008, more than 67%
of Los Angeles County voters approved this tax in a ballot
measure known as Measure R. Measure R, in addition to Measure
C (1990) and Proposition A (1980), are the three 0.5%
countywide transactions and use taxes that provide the
majority of MTA's funding.
AB 1446 (Feuer), Chapter 806, Statutes of 2012, authorized
MTA, subject to voter approval, to extend the existing
transactions and use tax (Measure R) for an unlimited amount
of time, allowing MTA to determine a sunset date, if any. AB
1446 also required MTA to update its expenditure plan prior to
submitting the tax measure to the voters. However, the
measure put before Los Angeles County voters in November 2012
failed to achieve the two-thirds threshold necessary for
passage. SB 1037 (Hernández), Chapter 196, Statutes of 2014,
requires MTA to update its expenditure plan and Long-Range
Transportation Plan before placing another transactions and
use tax measure before the voters.
According to the Board of Equalization, Los Angeles County has
14 transaction and use taxes, three county-wide taxes for
transportation purposes and 11 city-wide taxes. Despite the
statutory exemption for MTA's transactions and use tax, Los
Angeles County has reached the 2% cap.
3)Bill Summary. This bill authorizes MTA to impose by ordinance
an additional 0.5% transactions and use tax, for a period not
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to exceed 30 years, subject to two-thirds voter approval
pursuant to the California Constitution. The transaction and
use tax authorized by this bill is not subject to the 2% cap
in existing law.
Similar to prior legislation, this bill requires the ordinance
imposing the tax to contain specified information, including
an expenditure plan to list the transportation projects and
programs to be funded from the tax. However, this bill also
requires the expenditure plan to include measures that ensure
revenues are shared equitably between regions of the County.
Similar to AB 2321, this bill specifies that 20% of all
revenue derived from that tax is for bus transit operations
and 5% is for rail transit operations.
This bill is author-sponsored.
4)Author's Statement. According to the author, "The purpose of
this bill is to provide MTA with an opportunity to seek a
county-wide voter approval for a half cent increase to the
countywide sales tax for transportation purposes. As MTA
continues to work with the subregional Council of Governments
to develop priorities for a potential expenditure plan, this
bill furthers that commitment by providing constructive
parameters to ensure a fair and equitable distribution of
resources and investments in the county. Moreover, this bill
recognizes best practices by investing in transit and rail as
an important part of addressing the traffic issues in Los
Angeles. In fact, all three existing voter approved sales tax
measures in LA County include funding for transit and rail.
"While Los Angeles continues to experience some of the most
challenging traffic congestion in the state and nation, Los
Angeles voters have also recognized the importance of
investing in a transportation network that is responsible to
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the needs to commuters, transit users, and that facilitates
the movement of goods in the region. Most importantly, Los
Angeles voters have responded to an expenditure plan that can
demonstrate fairness in the distribution of investments
throughout the region.
"This bill provides an approach and potential pathway to bring
additional resources to Los Angeles County by creating a
platform which will lead to investments predicated on fairness
and transparency."
5)Pending Legislation. This bill is substantially similar to SB
767 (De León), which passed out of the Senate Transportation
and Housing Committee and is currently pending in the Senate
Governance and Finance Committee. SB 767 would also authorize
MTA to impose an additional countywide 0.5% transactions and
use tax, but contains several differences to this bill. SB
767 allows MTA to determine the length of the transactions and
use tax and this bill establishes a 30-year limit.
Additionally, SB 767 does not contain several of the
provisions in this bill, including the requirement that the
expenditure plan must contain a measure to ensure equity
between regions, the dedicated percentage of revenue to bus
and rail operations, or the requirement that MTA must notify
the Legislature prior to adopting amendments to the adopted
expenditure plan.
AB 464 (Mullin), currently pending in this Committee, would
not impact the authority granted by this bill to MTA, but
seeks to raise the overall statewide transactions and use tax
rate cap from 2% to 3%.
6)Arguments in Support. Supporters argue given current
transportation needs, this bill is a reasonable approach to
getting additional funding that will help reduce gridlock, put
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people to work, and promote economic growth in the region.
7)Arguments in Opposition. Opposition argues that any increase
in the transactions and use tax only adds to what is already
one of the most regressive taxes in the state which
disproportionately impacts California's most vulnerable
residents.
8)Double-Referral. This bill is double-referred to the
Transportation Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Amalgamated Transit Union
California Teamsters Public Affairs Council
Opposition
California Taxpayers Association
Howard Jarvis Taxpayers Association
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Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958