BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 705 Hearing Date: 9/11/2015
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|Author: |Hill |
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|Version: |9/3/2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Eric Thronson |
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SUBJECT: Transactions and use taxes: County of San Mateo:
Transportation Agency for Monterey County
DIGEST: This bill authorizes Monterey and San Mateo counties to
impose a countywide sales tax for transportation purposes that
would, in combination with all other locally-imposed sales tax,
exceed the 2% tax rate cap if certain requirements are met.
ANALYSIS:
Existing law:
1)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%.
2)Exempts the counties of Los Angeles, Alameda, and Contra Costa
from the 2% combined tax rate cap for countywide
transportation programs.
3)Contains the Bay Area County Traffic and Transportation
Funding Act, which authorizes the nine Bay Area counties,
including San Mateo County, to establish a 0.5 or 1% sales tax
for specified transportation purposes if the ordinance levying
the tax meets the state's sales tax laws and is approved by a
two-thirds vote.
This bill:
SB 705 (Hill) Page 2 of ?
1)Authorizes San Mateo County to impose a countywide sales tax
at a rate of no more than 0.5% for transportation purposes
that would, in combination with all other locally imposed
sales tax, exceed the 2% tax rate cap as long as it otherwise
conforms to the Bay Area County Traffic and Transportation
Funding Act.
2)Authorizes Monterey County to impose a countywide sales tax at
a rate of no more than 0.375% for transportation purposes that
would, in combination with all other locally-imposed sales
tax, exceed the 2% tax rate cap if all of the following
requirements 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
c) The transactions and use tax conforms to the
Transactions and Use Tax Law, as specified.
1)Repeals either provision of this bill if voters of either
county do not approve a proposed tax increase authorized by
this bill before January 1, 2026.
COMMENTS:
1)Purpose. According to the author, the 2% cap is particularly
problematic for counties because if one city within a county
reaches the cap, then the county is precluded from seeking
voter approval to self-impose additional countywide taxes.
Both San Mateo and Monterey counties have significant
transportation needs that cannot be addressed without more
local revenue, but both suffer under the 2% ceiling. This
bill provides affords each county the flexibility to place
items before the voters to fund local transportation programs.
2)Transactions and use taxes. As stated earlier, existing law
SB 705 (Hill) Page 3 of ?
authorizes cities and counties to impose transactions and use
taxes (generally called sales 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%. 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 sales tax upon
voter approval.
Prior to 2003, cities lacked the ability to place sales tax
measures 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 sales 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 additional sales taxes.
Because of the interaction between city-imposed and
county-imposed sales 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.
3)Exemptions to the 2% cap. The Legislature has previously
granted exemptions to the 2% statutory cap for sales 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% sales tax
combined rate cap. AB 210 (Wieckowski, Chapter 194, Statutes
of 2013) extended the authority for Alameda County to adopt an
SB 705 (Hill) Page 4 of ?
ordinance imposing a sales tax for transportation purposes
from January 1, 2014, to December 31, 2020, and allowed Contra
Costa County to adopt an ordinance imposing a sales 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%
sales 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 sales
tax for 30 years. SB 767 (De León), pending on the Senate
Floor, and AB 338 (Hernández), pending in the Senate
Transportation and Housing Committee, would both authorize MTA
to impose an additional countywide 0.5% sales 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%.
4)Governor's veto. Instead of doing individual bills for each
county in California, this year's AB 464 (Mullin) would have
increased the countywide sales tax combined rate cap from 2%
to 3% statewide. On August 17, the Governor vetoed AB 464.
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."
5)Concurrence hearing. When this bill passed off the Senate
Floor in May, it related to charter school facilities. The
bill was amended on the Assembly Floor to its current form.
Because of these amendments, the Senate Rules Committee
referred this bill back to this committee for a hearing under
Senate Rule 29.10(d). At today's hearing, the committee may
not amend the bill further and may only, with a majority vote,
(1) hold the bill or (2) return the bill as approved by the
SB 705 (Hill) Page 5 of ?
committee to the Senate Floor.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Thursday,
September 10, 2015.)
SUPPORT:
California State Association of Counties
City of Carmel-by-the-Sea
City of Del Rey Oaks
City of Gonzales
City of Greenfield
City of King
City of Marina
City of Monterey
City of Pacific Grove
City of Salinas
City of Sand City
City of Seaside
City of Soledad
Monterey County
Peninsula Corridor Joint Powers Board
San Mateo County Transit District
San Mateo County Transportation Authority
Santa Cruz County Regional Transportation Commission
Transportation Agency for Monterey County
OPPOSITION:
None received
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