BILL ANALYSIS Ó
AB 338
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, 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 (sales tax) at a
rate of 0.5% for no more than 30 years. Specifically, this
bill:
1)Authorizes MTA to impose a one half-cent sales tax that is
applicable to the incorporated and unincorporated areas of Los
Angeles County (County) for a period not to exceed 30 years.
2)Specifies that the authorized tax is in addition to any other
tax MTA is authorized to impose or has imposed.
3)Requires MTA to adopt an ordinance imposing the sales tax and
submit it to the voters.
4)Specifies that the ordinance only becomes operative if
approved by two-thirds
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of the voters voting on the measure pursuant to Article XIII C
of the California Constitution.
5)Requires the ordinance imposing the tax to contain all of the
following:
a) An expenditure plan that lists the transportation
projects and programs to be funded by the tax and that
includes measures that ensure net revenues are shared
equitably between regions of the County;
b) Provisions conforming the ordinance to the existing
Transactions and Use Tax Law, except to the 2% combined
transactions and use tax cap;
c) A provision that limits MTA's administrative costs to
1.5% of total net revenues;
d) A requirement that the net revenues from the tax and
MTA's administration costs be used by MTA to fund
transportation projects and programs identified in the
expenditure plan; 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.
6)Requires MTA to notify the Legislature prior to the adoption
of amendments to the adopted expenditure plan.
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7)Allows MTA to incur bonded indebtedness payable from the net
revenues of the tax.
8)Requires the tax to be imposed pursuant to the Transactions
and Use Tax Law and exempts it from the 2% combined rate
limitation.
9)Requires that the 20% of tax revenues for bus operations be
allocated to all eligible and included municipal transit
operators in the County and to MTA in accordance with current
law.
10)Requires that the allocations to MTA and eligible and
included municipal operators be made solely from the revenues
derived from the tax and not from local discretionary sources.
11)Requires that the funds allocated for bus operations not
supplant any other funds allocated for public transit.
EXISTING LAW:
1)Authorized MTA to adopt a one half cent-sales tax in Los
Angeles County for 30 years, subject to two-thirds voter
approval. The sales tax, presented to the voters as Measure
R, was approved in 2008.
2)Requires MTA to allocate 20% of the proceeds derived from the
one half-cent sales tax for bus operations and 5% for rail
operations.
3)Authorizes MTA to incur bonded indebtedness payable from the
proceeds of Measure R.
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4)Required MTA to adopt an expenditure plan prior to submitting
the proposed Measure R to the voters for a vote.
5)Allows MTA, subject to two-thirds voter approval, to extend
the tax approved through Measure R indefinitely. MTA placed
this measure before the voters in November 2012 but it failed
to achieve the two-thirds threshold necessary for passage.
6)Authorizes cities and counties to impose sales taxes in 0.125%
increments in addition to the state's 7.5% sales tax.
7)Limits the combined rate of all transactions and use taxes
imposed in any county to 2%.
FISCAL EFFECT: Unknown
COMMENTS: 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 sales tax, subject
to two-thirds voter approval. Existing law caps the combined
rate of all sales taxes in a county at 2% but provides several
exemptions to the cap, including to several counties to allow an
additional sales tax for transportation purposes.
According to the Board of Equalization, Los Angeles County has
14 sales taxes, including three county-wide taxes for
transportation purposes and 11 city-wide taxes. Despite the
statutory exemption for Measure R, the County has reached the 2%
cap. Measure R, in addition to Measure C (1990) and Proposition
A (1980), which were both imposed indefinitely, are the three
one half-cent county-wide sales taxes that provide the majority
of MTA's funding.
AB 338 authorizes MTA to impose, with voter approval, an
additional one half-cent sales tax for up to 30 years, subject
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to two-thirds voter approval. The tax authorized by this bill
is not subject to the 2% cap. 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, AB 338 also requires the expenditure plan to include
measures that ensure revenues are shared equitably between
regions of the County. Similar to the authorizing legislation
for Measure R, AB 338 specifies that 20% of all revenues derived
from that tax be spent for bus transit operations and 5% for
rail transit operations.
According to the author, "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
responsive to 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. AB 338 provides an approach
to bring additional resources to Los Angeles County predicated
on fairness, transparency and acknowledgement of best
practices."
There is no doubt that the state needs more funding for
transportation across the board. AB 338 provides the
opportunity for Los Angeles County voters to decide whether or
not to tax themselves to fulfill that funding need in their own
region. This is a reasonable approach to addressing
transportation funding needs.
Double referral: This bill passed out of the Assembly Local
Government Committee on April 22, 2015, with a 6-3 vote.
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Related legislation: SB 767 (De León) also authorizes MTA to
impose an additional countywide 0.5% transactions and use tax,
but is not identical to this bill. SB 767 allows MTA to
determine the length of the transactions and use tax, whereas
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.
SB 767 passed out of the Senate Transportation and Housing and
Governance and Finance committees and is awaiting a hearing in
the Senate Appropriations Committee.
AB 464 (Mullin) raises the transactions and use tax rate cap
from 2% to 3%. AB 464 passed the Assembly Revenue and Taxation
Committee on April 13 on a 5-3 vote and will be heard in the
Assembly Local Government Committee on April 29, 2015.
Prior legislation: SB 314 (Murray), Chapter 785, Statutes of
2003, originally enacted provisions that authorized MTA to
impose, subject to voter approval, a 0.5% sales tax for no more
than six and one-half years for specific transportation projects
and programs. That sales tax was never imposed.
AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized MTA
to impose, subject to voter approval, a 0.5% sales tax for 30
years and required MTA to include specified projects and
programs in its long-range transportation plan. In November of
2008, more than 67% of Los Angeles County voters approved this
tax in a ballot measure known as Measure R.
AB 1446 (Feuer), Chapter 806, Statutes of 2012, authorized MTA,
subject to voter approval, to extend the existing sales tax
(Measure R) indefinitely. AB 1446 also required MTA to update
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its expenditure plan prior to submitting the tax measure to the
voters. The measure was put before Los Angeles County voters in
November 2012 but failed to achieve the two-thirds threshold
necessary for passage.
SB 1037 (Hernández), Chapter 196, Statutes of 2014, required MTA
to update its expenditure plan and Long-Range Transportation
Plan before placing another sales tax measure before the voters.
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:Anya Lawler / TRANS. / (916) 319-2093