BILL ANALYSIS Ó
AB 1665
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 1665
(Bonilla) - As Introduced January 14, 2016
SUBJECT: Transactions and use taxes: County of Alameda, County
of Contra Costa, and Contra Costa Transportation Authority.
SUMMARY: Extends the sunset date on the authority of Alameda
County and Contra Costa County to impose an additional
transactions and use tax, subject to voter approval, and grants
Contra Costa County's existing authority to the Contra Costa
Transportation Authority. Specifically, this bill:
1)Extends the sunset date from December 31, 2020, to December
31, 2024, on the existing authority granted to Alameda County
to adopt an ordinance to impose a transactions and use tax,
subject to voter approval, that exceeds the combined statutory
rate of 2%.
2)Removes the existing authority granted to Contra Costa County,
and instead, authorizes the Contra Costa Transportation
Authority (CCTA) to adopt an ordinance, in the same manner as
Alameda County, to impose a transactions and use tax, subject
to voter approval, that exceeds the combined statutory rate of
2% until December 31, 2024.
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3)Makes technical and conforming changes.
4)Finds and declares that a special law is necessary because of
the unique fiscal pressures experienced in Alameda County and
CCTA in providing essential transportation programs.
EXISTING LAW:
1)Authorizes cities and counties to impose a local sales and use
tax.
2)Authorizes cities and counties to impose transactions and use
taxes.
3)Prohibits, in any county, the combined rate of all taxes
imposed in accordance with Transactions and Use Tax Law from
exceeding 2%.
4)Authorizes Alameda County and Contra Costa County to adopt an
ordinance imposing a transactions and use tax not to exceed
0.5% for the support of countywide transportation programs at
a rate that would, in combination with all other transaction
and use taxes, exceed the 2% limit established in existing
law, if all the following conditions are met:
a) The local government entity adopts an ordinance
proposing the transactions and use tax by any applicable
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voting requirements;
b) The ordinance proposing the transactions and use tax is
submitted to the electorate and is approved by two-thirds
of the voters voting on the ordinance; and,
c) The transactions and use tax conforms to the Transaction
and Use Tax Law.
5)Provides that the authority for Alameda County and Contra
Costa County to adopt an ordinance to impose a transactions
and use tax that exceeds the combined statutory rate of 2%
shall only remain in effect until December 31, 2020.
FISCAL EFFECT: None
COMMENTS:
1)Transactions and Use Taxes. Existing 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%.
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 (majority vote
required), which are unrestricted, or special taxes
(two-thirds vote required), 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
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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. Currently, twenty counties
have transactions and use taxes for public transportation or
transit.
Prior to 2003, cities lacked the ability to place transactions
and use taxes before their voters without first obtaining
approval by the Legislature to bring an ordinance before the
city council, and, if approved at the council level, to the
voters. This was remedied by SB 566 (Scott), Chapter 709,
Statutes of 2003. SB 566 also contained provisions to
increase a county's transactions and use tax cap because of
the possibility that certain counties were going to run out of
room under their caps, if cities within those counties
approved transactions and use taxes.
Because of the interaction between city-imposed and
county-imposed transactions and use taxes, the concern that
counties will run into the 2% cap still applies today.
Currently, the Counties of Alameda, Contra Costa, Los Angeles,
and San Mateo have reached the 2% limit, and the Counties of
Marin, San Diego, and Sonoma are near the 2% limit. The
Legislature has granted several exemptions to the 2% cap,
including to several counties to allow an additional
countywide transactions and use tax for transportation
purposes.
2)Bill Summary. In 2011, the Legislature provided a one-time
exemption for Alameda County from the 2% transactions and use
tax combined rate cap [AB 1086 (Wieckowski), Chapter 327,
Statutes of 2011]. After a ballot measure in Alameda County
fell narrowly short of the necessary two-thirds vote, the
Legislature extended the authority for Alameda County to adopt
an ordinance imposing a transactions and use tax from January
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1, 2014, to December 31, 2020, and authorized Contra Costa
County to adopt an ordinance imposing a transactions and use
tax in the same manner as Alameda County [AB 210 (Wieckowski),
Chapter 194, Statutes of 2013].
This bill replaces Contra Costa County with CCTA as the entity
authorized to impose a countywide transactions and use tax,
subject to voter approval, beyond the 2% cap. Additionally,
this bill provides an extension to the sunset date on the
authority granted to Alameda County and CCTA from December 31,
2020, to December 31, 2024. This bill does not impact the
required two-thirds vote needed for transactions and use taxes
for the support of countywide transportation programs. This
bill is sponsored by CCTA.
3)Contra Costa Transportation Authority (CCTA). CCTA was formed
by the voters in 1988 to manage the funds generated by
transactions and use taxes for transportation purposes and to
lead Contra Costa County's transportation planning efforts.
That same year Contra Costa County voters passed Measure C
which imposed a 0.5% countywide transactions and use tax for
CCTA to extend Bay Area Rapid Transit (BART), make freeway
improvements, improve bus service, enhance bicycle facilities,
and provide more transportation options for senior citizens
and people with disabilities. In November 2004, voters
approved Measure J with a 71% vote to extend the half-cent
transactions and use tax from 2009 to 2034.
4)Author's Statement. According to the author, "CCTA is
considering bringing forth a transportation tax measure to the
Contra Costa County voters. However, as it currently stands,
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CCTA cannot place a tax measure before the voters without the
support of the county. The county must adopt an ordinance to
present a tax to the voters and then work with the Board of
Equalization to delegate responsibilities from the county to
CCTA. To that end, AB 1665 proposes to transfer the authority
from the county to CCTA. The rationale is that CCTA oversees
this county's countywide transportation program and will have
the responsibility to administer the tax proceeds, thus they
should have independent authority to place a ballot measure
before the voters.
"As a regional leader in transportation, CCTA, not the county,
is the Congestion Management Agency, [that] oversees
long-range planning efforts, and delivers the Transportation
Expenditure Plan for the existing cent sales tax. Since
they are the public agency tasked with managing the county's
transportation sales tax program, CCTA is in the best position
to adopt an ordinance proposing a transportation program tax
and achieving the maximum voter approval necessary for its
passage. Most importantly, CCTA keenly understands the
community's transportation needs, working in the field and
receiving community feedback.
"CCTA has a greater pulse on the necessity of local
transportation funding and has a proven track record of
planning and delivering critical transportation infrastructure
projects and programs. They have developed major projects on
state highways working with CalTrans; provided critical
funding to local cities, the county and transit districts; met
the goals of the countywide transportation plan to create a
balanced, safe and efficient transportation network; and plays
a significant role in reducing congestion, improving air
quality, and increasing mobility options for residents. In
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effect, CCTA has the trust of the voters and the expertise to
deliver the vision of local communities.
"In light of the severe state funding shortfall for
transportation, it is imperative that local governments,
agencies and their constituents have the ability to generate
additional funding to plan and bring forth critical
transportation projects. AB 1665 will streamline this
process, making local governments more efficient so voters can
weigh-in on the transportation issues of the county. Simply
put, this bill will allow CCTA to continue the great work they
have been known to accomplish, while meeting the precise needs
of Contra Costa County and its residents."
5)Prior Legislation. SB 314 (Murray), Chapter 785, Statutes of
2003, originally enacted provisions that authorized the Los
Angeles County Metropolitan Transportation Authority (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.
SB 767 (De León), Chapter 580, Statutes of 2015, authorized
MTA to impose an additional countywide transactions and use
tax.
AB 1324 (Skinner), Chapter 795, Statutes of 2014, allowed the
City of El Cerrito (in Contra Costa County) to adopt an
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ordinance to impose a transactions and use tax not to exceed
0.5% for general purposes that would, in combination with
other taxes, exceed the statutory limit of 2%. Most recently,
AB 464 (Mullin and Gordon) of 2015 would have increased the
countywide transactions and use tax combined cap from 2% to
3%, but was vetoed by the Governor.
6)Arguments in Support. CCTA argues that this bill "provides an
opportunity for Contra Costa voters to support transportation
investments consistent with an adopted Transportation
Expenditure Plan that could help our community advance our
competitive edge, improve mobility, and meet the State's
ambitious environmental goals."
7)Arguments in Opposition. The Howard Jarvis Taxpayers
Association argues even if appropriate voter approval is
achieved locally this bill still represents poor public policy
because it increases a deeply regressive sales tax.
Additionally, opposition argues that California already has
the highest state sales tax in the nation.
8)Double-Referral. This bill is double-referred to the Revenue
and Taxation Committee.
REGISTERED SUPPORT / OPPOSITION:
AB 1665
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Support
Contra Costa Transportation Authority [SPONSOR]
Contra Costa County Board of Supervisors
Opposition
California Taxpayers Association
Howard Jarvis Taxpayers Association
Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958