BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 705|
|Office of Senate Floor Analyses | |
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UNFINISHED BUSINESS
Bill No: SB 705
Author: Hill (D), et al.
Amended: 9/3/15
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE TRANS. & HOUSING COMMITTEE: 7-2, 9/11/15 (pursuant to
Senate Rules 29.10)
AYES: Beall, Cannella, Allen, Leyva, McGuire, Mendoza,
Wieckowski
NOES: Bates, Gaines
NO VOTE RECORDED: Galgiani, Roth
ASSEMBLY FLOOR: 51-29, 9/10/15 - See last page for vote
SUBJECT: Transactions and use taxes: County of San Mateo:
Transportation Agency for Monterey County
SOURCE: Author
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.
Assembly Amendments remove the original contents of the bill
related to charter school facilities and replace it with the
current language.
ANALYSIS:
Existing law:
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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:
1)Authorizes San Mateo County to impose a countywide sales tax
at a rate of no more than 0.5% for transportation purposes
that will, 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.
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3)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
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 affords each county
the flexibility to place items before the voters to fund local
transportation programs.
Transactions and use taxes. As stated earlier, existing law
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
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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.
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
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 Assembly 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%.
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
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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."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified9/10/15)
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: (Verified9/11/15)
California Taxpayers Association
ASSEMBLY FLOOR: 51-29, 9/10/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
SB 705
Page 6
Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd,
Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,
Holden, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina,
Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,
Irwin, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes,
Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner,
Waldron, Wilk
Prepared by:Eric Thronson / T. & H. / (916) 651-4121
9/11/15 14:29:01
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