BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1665


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          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