BILL ANALYSIS                                                                                                                                                                                                    Ó

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 767            Hearing Date:    4/14/2015 
          |Author:   |De León                                               |
          |Version:  |2/27/2015                                             |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Eric Thronson                                         |
          |:         |                                                      |

          SUBJECT:  Los Angeles County Metropolitan Transportation  
          Authority:  transactions and use tax

            DIGEST:  This bill authorizes the Los Angeles County  
          Metropolitan Transportation Authority (LACMTA) to impose by  
          ordinance an additional local, countywide, one-half-cent sales  

          Existing law permits a county board of supervisors to create a  
          countywide transportation authority to plan and fund  
          transportation projects within the county.  These transportation  
          authorities may impose a local sales tax for transportation  
          purposes, if the tax ordinance is within statutory limits and  
          abides by restrictions on local taxes contained in the  
          California Constitution.  Counties that have chosen to tax  
          themselves for transportation purposes call themselves  
          "self-help" counties because they have approved measures to help  
          themselves address their own transportation problems.

          Instead of asking voters to impose a local sales tax for  
          transportation purposes under the generic authority in existing  
          law, some counties have specific authorization to propose a  
          measure to increase the sales tax for transportation purposes.   
          For example, the Legislature has passed specific legislation  
          authorizing Los Angeles County to propose to the voters an  
          increase in the local sales tax for transportation.  Voters have  
          approved three separate measures in Los Angeles County, for a  


          SB 767 (De León)                                   Page 2 of ?
          total sales tax rate of 1.5% dedicated to transportation  

          This bill:
          1.Authorizes LACMTA to impose by ordinance an additional local,  
            countywide, one-half-cent sales tax for a period to be  
            determined by LACMTA.

          2.Requires LACMTA to adopt the ordinance and submit the proposal  
            to the voters.

          3.Specifies that the ordinance only becomes operative if  
            approved by two-thirds of the voters voting on the measure.

          4.Requires the ordinance imposing the tax to contain all of the  

                 An expenditure plan that lists the projects and programs  
               to be funded from the tax
                 Provisions conforming to existing requirements for the  
               imposition of a sales tax, except the limitation that the  
               combined sales tax rate cannot exceed 2%
                 Provisions limiting LACMTA's administration costs to  
                 A requirement that net revenues must be used for  
               projects and programs in the expenditure plan


          1.Purpose.  In 2008, the L.A. County voters recognized the need  
            for additional transportation investments and approved Measure  
            R to fund both increased transit options and highway  
            improvements.  While Measure R will dramatically change  
            mobility throughout L.A. County, the author states that the  
            projects funded by the measure do not encompass all of the  
            transportation need in the region.  Residents, local  
            governments, and transportation leaders in the region believe  
            that there are thousands of worthy projects which will not be  
            funded by Measure R.  The author contends that an additional  
            one-half-cent sales tax will allow L.A. County to further  
            expand its transit system, address key highway needs around  
            the county, support local agency transportation programs, and  
            improve regional rail service.


          SB 767 (De León)                                   Page 3 of ?
          2.L.A. County measure history.  Los Angeles County currently has  
            in place three separate one-half-cent sales taxes for  
            transportation purposes (for a total of 1.5 cents per dollar  
            spent).  The first two one-half-cent taxes were initiated in  
            1981 and 1991 under terms of special legislation and after  
            local voter approval, and have no expiration date.

            In 2008, the Legislature passed and the governor signed AB  
            2321 (Feuer), Chapter 302, which authorized LACMTA to place  
            before the voters an ordinance to increase the local  
            transportation sales tax by another one-half cent for 30  
            years.  The statute required LACMTA to adopt an expenditure  
            plan prior to submitting the ordinance to the voters, and  
            identified 18 projects to be included in that expenditure  
            plan.  AB 2321 required LACMTA to include in the expenditure  
            plan the anticipated completion date for each project.  In  
            November 2008, LACMTA placed the sales tax ordinance, referred  
            to as Measure R, on the ballot, and 67% of the voters approved  
            the measure.

            At the time voters approved Measure R, LACMTA estimated that  
            the 30-year program would raise about $40 billion.  Because of  
            the recession and general economic malaise that followed that  
            vote, LACMTA adjusted its revenue estimates downward and now  
            only expects the sales tax measure to generate about $36  
            billion.  To address this funding shortfall, LACMTA began a  
            search for additional revenue or funding mechanisms to meet  
            its transportation needs.  In 2012, the Legislature passed and  
            the governor signed AB 1446 (Feuer), Chapter 806, which  
            authorized LACMTA to place before the voters an ordinance to  
            either eliminate or extend Measure R's 30-year sunset date.   
            The measure, put before the voters in November 2012, failed to  
            achieve the two-thirds majority necessary for passage.

            Instead of seeking to extend Measure R, the author of this  
            bill is authorizing LACMTA to propose to voters another  
            half-cent sales tax.  This new authorization would not contain  
            the required projects of past measures, nor the restrictions  
            of past legislation, but is somewhat a "clean slate" from  
            which LACMTA can build a new expenditure plan and funding  

          3.Project selection concerns.  In 1998, the Legislature created  
            the Metro Gold Line Foothill Extension Construction Authority  
            to oversee the construction of a light rail system from Los  


          SB 767 (De León)                                   Page 4 of ?
            Angeles to Claremont.  This Authority has nearly completed the  
            project to Azusa, but lacks funding to complete the project  
            all the way to Claremont.  The Authority would like to be  
            included in the expenditure plan for this new sales tax  
            measure, thereby securing the funding necessary to complete  
            its project.  In a letter to the author, the Authority  
            expresses concern that LACMTA staff may give priority to new  
            projects at the expense of projects that have been previously  
            approved.  The author has expressed a desire for the local  
            process to determine the projects to be included in the  
            expenditure plan instead of the Legislature making that  

          4.Similar legislation in Assembly.  Similar to this bill,  
            Assembly Bill 338 (R. Hernandez), currently pending in the  
            Assembly Local Government Committee, authorizes LACMTA to  
            impose an additional countywide sales tax measure, with a few  
            significant differences.  First, AB 338 limits the length of  
            the measure's term to no longer than 30 years, whereas this  
            bill allows LACMTA to determine the length of the measure's  
            term.  Second, AB 338 requires LACMTA to notify the  
            Legislature prior to amending the adopted expenditure plan.   
            Finally, AB 338 allocates an undetermined percentage of the  
            revenue raised by the potential measure to bus and rail  
          5.Double referral.  The Rules Committee has referred this bill  
            to both this committee and the Governance and Finance  
            Committee.  Therefore, if the bill passes this committee, it  
            will be referred to the Committee on Governance and Finance.
          SB 314 (Murray, 2003) established a list of projects that LACMTA  
          was to construct with proceeds from a voter-approved 6.5-year,  
          one-half-cent sales tax.  

          AB 2321 (Feuer, 2008) superseded SB 314, authorizing LACMTA to  
          place before the voters an ordinance to increase by one-half  
          cent the local transportation sales tax for 30 years.

          AB 1446 (Feuer, 2012) authorized LACMTA to place before the  
          voters an ordinance to either eliminate or extend Measure R's  
          30-year sunset date.


          SB 767 (De León)                                   Page 5 of ?
          SB 1037 (E. Hernandez, 2014) required LACMTA to update its  
          expenditure plan and Long-Range Transportation Plan before  
          presenting another measure to extend Measure R before the  

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No

            POSITIONS:  (Communicated to the committee before noon on  
                          April 8, 2015.)


          Amalgamated Transit Union
          Climate Resolve
          Los Angeles County Metropolitan Transportation Authority
          Move LA


          California Taxpayers Association

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