BILL ANALYSIS Ó AB 338 Page 1 Date of Hearing: May 6, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 338 (Roger Hernández) - As Amended April 13, 2015 ----------------------------------------------------------------- |Policy |Local Government |Vote:|6 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Transportation | |11 - 5 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill authorizes the Los Angeles County Metropolitan Transportation Authority (MTA), subject to voter approval, to impose an additional 0.5% transactions and use tax (sales tax) for no more than 30 years, for funding transportation-related AB 338 Page 2 projects and programs. FISCAL EFFECT: Negligible state fiscal impact. According to the State Board of Equalization (BOE) a new 0.5% district tax in LA County would raise approximately $8 million in the first full year of implementation. COMMENTS: 1)Purpose. 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." 2)Background. 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 AB 338 Page 3 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. 3)Related legislation: a) 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 is pending in the Senate Appropriations Committee. b) AB 464 (Mullin) raises the transactions and use tax rate cap from 2% to 3%. AB 464 is pending on the Assembly Floor. 1)Prior legislation: a) 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. b) 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 AB 338 Page 4 required MTA to update 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. c) 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. d) SB 314 (Murray), Chapter 785, Statutes of 2003, 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. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 AB 338 Page 5