BILL ANALYSIS Ó
AB 1665
Page 1
Date of Hearing: April 25, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
AB 1665
(Bonilla) - As Introduced January 14, 2016
Majority vote. Non-fiscal.
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 (TUT), subject to voter approval, and
shifts Contra Costa County's existing or extended authority to
impose the TUT to the Contra Costa Transportation Authority
(CCTA). 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 TUT for county transportation
programs at a rate of no more than 0.5%, subject to voter
approval, that exceeds the combined statutory rate of 2%.
2)Extends and shifts to the CCTA the existing authority granted
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to Contra Costa County to adopt an ordinance in the same
timeframe and manner as Alameda County to impose a TUT.
3)Finds and declares that a special law is necessary because of
the unique fiscal pressures being experienced in the County of
Alameda and by the CCTA in providing essential transportation
programs.
EXISTING LAW:
1)Authorizes cities and counties, under the Bradley-Burns
Uniform Local Sales and Use Tax (SUT) Law, to impose local SUT
for the privilege of selling tangible personal property (TPP)
at retail in the local jurisdiction, or purchasing TPP outside
the local jurisdiction for use within the local jurisdiction.
2)Authorizes cities, counties, or other authorized governmental
entities to impose TUT for general or special purposes, in
addition to SUT, at a rate of 0.125% or multiples of 0.125%,
if approved by the requisite threshold of voters.
3)Prohibits, in any county, the combined rate of all TUT from
exceeding 2%.
4)Authorizes Alameda County and Contra Costa County to adopt an
ordinance imposing a TUT not to exceed 0.5% for the support of
countywide transportation programs at a rate that would, in
combination with other TUT, exceed the 2% limit established in
existing law, if the all the following conditions are met:
a) The local government entity adopts an ordinance
proposing the TUT by any applicable voting approval
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requirement;
b) The ordinance proposing the TUT is submitted to the
electorate and approved by voters pursuant to Article XIII
C of the California Constitution governing voter approval
for local tax levies; and,
c) The TUT conforms to existing law governing TUTs.
5)Provides that the authority for Alameda County and Contra
Costa County to adopt an ordinance imposing TUT in excess of
the combined statutory rate of 2% shall only remain in effect
until December 31, 2020.
FISCAL EFFECT: Unknown
COMMENTS:
1)Author's Statement : The Author has provided the following
statement in support of this bill:
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.
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2)Arguments in Support : Proponents of this bill state 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."
3)Arguments in Opposition : Opponents of this bill state that
"California already has the highest sales and use tax rate in
the country." Extending the sunset date on the TUT in Alameda
County and Contra Costa County "increases the cost of doing
business" and "imposes a regressive tax on disadvantaged
communities."
4)Transactions and Use Tax Law : Cities and counties are
authorized to impose additional TUT to the state's 7.5% SUT
rate, subject to a vote of the People. General purpose taxes
require majority voter approval and special purpose taxes
restricted for a specified use require two-thirds voter
approval. According to the State Board of Equalization (BOE),
as of January 1, 2016, 4 of 48 county-imposed taxes are
general purpose taxes and 44 are special purpose taxes with 30
dedicated for transportation purposes.
Generally, TUT may be imposed in 0.125% increments, up to a
total of 2% within the county. However, the Legislature has
granted several exemptions to the 2% cap, subject to voter
approval, as local jurisdictions where both the county and
cities within the county impose TUT may otherwise easily
exceed the cap. These jurisdictions include the City of El
Cerrito, County of Alameda, County of Contra Costa, County of
San Mateo, Transportation Agency for Monterey County, and the
Los Angeles Metropolitan Transportation Authority (MTA).
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5)Alameda County : This bill extends the existing authority
granted to Alameda County to impose TUT in excess of the 2%
countywide cap if an ordinance is submitted and approved by
voters prior to December 31, 2024. However, on November 4,
2014, 70.76% of Alameda County voters approved an additional
0.50% TUT via Measure BB to fund transportation improvements
for 30 years, the first tax in the county levied in excess of
the 2% cap. As such, Alameda County is currently at its 2.5%
countywide cap; the extension of the sunset date has no
practical effect on county taxpayers at this time.
6)Contra Costa Transportation Authority : This bill also extends
the existing authority granted to Contra Costa County to
impose TUT in excess of the 2% countywide cap if an ordinance
is submitted and approved by voters prior to December 31,
2024. This bill also shifts the authorization to impose TUT
from the county to the CCTA, similar to authorization granted
to transportation authorities on behalf of other counties.
The CCTA was formed by voters in 1988 to lead Contra Costa
County's transportation efforts and manage funds generated by
Measure C, a 0.50% TUT approved by voters that same year for
transportation purposes. The CCTA also manages funds
generated by Measure J, approved by voters in November 2004 to
extend the TUT for another 30 years.
According to the author, CCTA is considering bringing forth a
transportation tax measure to county voters, but cannot do so
directly under current law - instead, Contra Costa County must
first adopt an ordinance to present a tax to voters and then
work with the BOE to delegate administrative responsibilities
from the county to CCTA. This bill transfers the authority to
seek TUT voter approval to the local jurisdiction that would
ultimately administer the tax proceeds if approved by
two-thirds of voters. Since plans to ask voters for a new tax
are already under way, however, the Committee may wish to
consider whether CCTA needs an additional four years to put
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forth its ordinance.
7)Double Referral : This bill was double-referred to the
Assembly Committee on Local Government, which passed this bill
on April 6, 2016, with a vote of 6-3. For additional
discussion of local government issues, please refer to the
analysis prepared by the Assembly Committee on Local
Government.
8)Related Legislation : SB 705 (Hill), Chapter 579, Statutes of
2015, authorized San Mateo County and the Transportation
Agency for Monterey County, until January 1, 2026, to impose
TUT in excess of the 2% countywide cap if approved by voters.
SB 767 (De Leon), Chapter 580, Statutes of 2015, authorized
MTA to impose TUT in excess of the 2% countywide cap if
approved by voters.
9)Prior Legislation : AB 210 (Wieckowski), Chapter 194, Statutes
of 2013, extended the authority of Alameda County and
authorized Contra Costa County, until December 31, 2020, to
impose TUT in excess of the 2% countywide cap if approved by
voters.
REGISTERED SUPPORT / OPPOSITION:
Support
California-Nevada Conference of Operating Engineers
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Contra Costa County Board of Supervisors
Contra Costa Transportation Authority
Opposition
California Taxpayers Association
Analysis Prepared by:Irene Ho / REV. & TAX. / (916) 319-2098