BILL ANALYSIS Ó
AB 338
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ASSEMBLY THIRD READING
AB
338 (Roger Hernández)
As Amended April 13, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+--------------------|
|Local |6-3 |Gonzalez, Alejo, |Maienschein, |
|Government | |Chiu, Cooley, |Linder, Waldron |
| | |Gordon, Holden | |
| | | | |
|----------------+------+--------------------+--------------------|
|Transportation |11-5 |Frazier, Bloom, |Achadjian, Baker, |
| | |Chu, Daly, Dodd, |Kim, Linder, |
| | |Eduardo Garcia, |Melendez |
| | |Gomez, Medina, | |
| | |Nazarian, | |
| | |O'Donnell, Santiago | |
| | | | |
|----------------+------+--------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, |Bigelow, Chang, |
| | |Bonta, Calderon, |Gallagher, Jones, |
| | |Daly, Eggman, |Wagner |
| | |Eduardo Garcia, | |
| | |Holden, Quirk, | |
| | |Rendon, Weber, Wood | |
| | | | |
| | | | |
AB 338
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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 California
Constitution Article XIII C.
3)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;
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;
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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.
7)Makes findings and declarations relating to Los Angeles County
voter approved sales tax measures to fund transportation.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, negligible state fiscal impact. According to the State
Board of Equalization (BOE) a new 0.5% district tax in Los Angeles
County would raise approximately $8 million in the first full year
of implementation
COMMENTS:
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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%
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
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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
(Hernandez), 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 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
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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 [Los
Angeles] 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 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. SB 767 (De León) of the current
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legislative session, pending in the Senate, is substantially
similar to this bill. 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) of the current legislative session, pending in
the Assembly, 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
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.
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0000341
AB 338
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