BILL ANALYSIS Ó
SB 705
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SENATE THIRD READING
SB
705 (Hill)
As Amended September 3, 2015
Majority vote
SENATE VOTE: Vote not relevant
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SUMMARY: Allows San Mateo and Marin County to impose a
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transactions and use tax at a specified amount for the support
of countywide transportation programs that would, in combination
with other taxes, exceed the statutory limit of 2%.
Specifically, this bill:
1)Allows San Mateo County, in accordance with the requirements
of the Bay Area County Traffic and Transportation Fund Act, to
impose a transactions and use tax for the support of
countywide transportation programs at a rate of no more than
0.5% that would, in combination with all other transactions
and use taxes, exceed the 2% limit established in existing
law.
2)Provides, if the ordinance in San Mateo County proposing the
transactions and use tax is not approved, that the provisions
of this bill shall be repealed as of January 1, 2026.
3)Allows Monterey County to impose a transactions and use tax
for the support of countywide transportation programs at a
rate of no more than 0.375% that would, in combination with
all other transactions and use taxes, exceed the 2% limit
established in existing law, if all of the following
conditions are met:
a) The Transportation Agency for Monterey County adopts an
ordinance proposing the transactions and use tax by an
applicable voting approval requirement;
b) The ordinance proposing the transactions and use tax is
submitted to the electorate and is approved by the voters
voting on the ordinance in accordance with California
Constitution Article XIII C; and,
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c) The transactions and use tax conforms to the
Transactions and Use Tax Law, as specified.
4)Provides, if the ordinance in Monterey County proposing the
transactions and use tax is not approved, that the provisions
of the bill shall be repealed as of January 1, 2026.
5)Finds and declares that a special law is necessary and that a
general law cannot be made applicable because of the unique
fiscal pressures experienced by the San Mateo County
Transportation Authority and by the Transportation Agency for
Monterey County in providing essential transportation
programs.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill provides an exemption to San Mateo
and Monterey Counties from the 2% transactions and use tax
combined rate cap that is currently in statute. This bill
authorizes San Mateo County to impose of a transactions and
use tax to support countywide transportation programs at a
rate of no more than 0.5% in accordance with the requirements
of the Bay Area County Traffic and Transportation Funding Act.
Additionally this bill authorizes Monterey County to impose a
transactions and use tax to support countywide transportation
programs at a rate of no more than 0.375%, and with the
appropriate voter approval pursuant to the California
Constitution. If the ordinance proposing the transactions and
use tax is not approved by voters by January 1, 2026, the
provisions of this bill would be repealed as of that same
date.
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2)Author's Statement. According to the author, "[This bill]
will provide for much needed capacity to allow the local
transportation agencies within the respective counties to
consider placing a measure before voters to consider, in order
to alleviate traffic congestion and infrastructure needs."
3)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 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.
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
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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.
According to the Board of Equalization, as of April 1, 2015,
there are 202 local jurisdictions (city, county, and special
purpose entity) imposing a transactions and use tax for
general or specific purposes. Of the 202 jurisdictions, 48
are county-imposed taxes and 154 are city-imposed taxes. Of
the 48 county-imposed taxes, 44 are imposed for special
purposes. Of the 154 city-imposed taxes, 124 are general
purpose taxes and 30 are special purpose taxes.
4)Exemptions to the 2% Cap. The Legislature has previously
granted exemptions to the 2% statutory cap for transactions
and use taxes to support countywide transportation programs
for Los Angeles, Alameda, and Contra Costa Counties.
AB 1086 (Wieckowski), Chapter 327, Statutes of 2011, allowed a
one-time exemption for Alameda County from the 2% transactions
and use tax combined rate cap. AB 210 (Wieckowski), Chapter
194, Statutes of 2013, extended the authority for Alameda
County to adopt an ordinance imposing a transactions and use
tax from January 1, 2014, to December 31, 2020, and allowed
Contra Costa County to adopt an ordinance imposing a
transactions and use tax in the same manner as Alameda County.
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
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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), pending in the Senate Appropriations Committee, and AB
338 (Hernández), pending in the Transportation Committee,
would both authorize MTA to impose an additional countywide
0.5% transactions and use tax.
Additionally, AB 1324 (Skinner), Chapter 795, Statutes of
2014, allowed the City of El Cerrito to adopt an 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%.
AB 464 (Mullin) of 2015, would have increased the countywide
transactions and use tax combined rate cap from 2% to 3%
statewide. AB 464 was vetoed by the Governor. In his veto
message, the Governor remarked, "Although I have approved
raising the limit for individual counties, I am reluctant to
approve this measure in view of all the taxes being discussed
and proposed for the 2016 ballot."
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0002119
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