BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 767 |Hearing | 4/22/15 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |De León |Tax Levy: |No |
|----------+---------------------------------+-----------+---------|
|Version: |2/27/15 |Fiscal: |Yes |
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|Consultant|Bouaziz |
|: | |
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LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY:
TRANSACTIONS AND USE TAX
Allows the Los Angeles County Metropolitan Transportation
Authority to adopt an ordinance proposing the imposition of a
transactions and use tax that exceeds the 2% statutory
limitation.
Background and Existing Law
The state sales and use tax rate is 7.50% as detailed below and
is generally imposed on all tangible personal property unless
specifically exempt. Cities and Counties may increase the sales
and use tax rate up to 2% as a transactions and use tax for
either specific or general purposes with a vote of the people.
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| | | |
| Rate | Jurisdiction | Purpose/Authority |
| | | |
|-------+--------------------+--------------------------------|
| | | |
|3.9375%|State (General |State general purposes |
| |Fund) | |
| | | |
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|-------+--------------------+--------------------------------|
| | | |
|1.0625%|Local Revenue Fund |Realignment of local public |
| |2011 |safety services |
| | | |
| | | |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.25% |State (Fiscal |Repayment of the Economic |
| |Recovery Fund) |Recovery Bonds |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.25% |State (Education |Schools and community college |
| |Protection Account) |funding |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local |Local governments to fund |
| |Revenue Fund) |health and welfare programs |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local Public |Local governments to fund |
| |Safety Fund) |public safety services |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 1.00% |Local (City/County) |City and county general |
| | |operations. Dedicated to county |
| | |transportation purposes |
| |0.75% City and | |
| |County | |
| | | |
| |0.25% County | |
|-------+--------------------+--------------------------------|
| | | |
| 7.50% |Total Statewide | |
| |Rate | |
| | | |
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Transactions & Use Tax
Existing law allows cities and counties to impose additional
sales and use taxes, called transactions and use taxes, up to a
combined 2% rate, with voter approval. The tax must be imposed
in increments of 0.125%.
In rare cases, the Legislature allows local agencies to exceed
the 2% cap. The Los Angeles County Metropolitan Transportation
Authority (MTA) had authority to levy a half-cent transaction
and use tax not subject to the 2% countywide cap for six and a
half years (SB 314, Murray, 2003). However, MTA didn't put the
measure authorized by that bill to the voters. In 2008, the
Legislature reauthorized MTA to place the half-cent transactions
and use tax for 30 years not subject to the cap; however, the
measure required MTA to adopt an expenditure plan prior to
submitting the ordinance to the voters (AB 2321, Feuer, 2008).
In November, 2008, Los Angeles County voters approved the tax
measure, Measure R.
Two years ago, the Legislature authorized MTA to impose a
permanent transactions and use tax (AB 1446, Feuer, 2012). That
measure required MTA to update its expenditure plan prior to
submitting the ordinance to the voters. However, Los Angeles
County voters didn't approve that tax.
Beginning April 1, 2014, there will be 178 local jurisdictions
(city, county, and special purpose entity) imposing a district
tax for general or specific purposes. Of the 178 jurisdictions,
44 are county-imposed taxes and 134 are city-imposed taxes.
Presently, the district tax rates vary from 0.10 percent to 1
percent. Generally, the combined state, local and district tax
rates range from 7.625 to 9.50 percent. Currently, in Los
Angeles County the cities of La Mirada, Pico Rivera, and South
Gate all have a rate of 10%.
Proposed Law
Senate Bill 767 allows Los Angeles County Metropolitan
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Transportation Authority (MTA) to adopt an ordinance proposing
the imposition of a transactions and use tax for the
transportation-related projects and programs, at a rate of no
more than 0.50%. The bill allows MTA to exceed the 2% statutory
limitation by 1%.
SB 767 requires the ordinance imposing the tax to include:
An expenditure plan that lists the transportation
projects and programs to be funded.
A provision limiting MTA's administration cost
reimbursement to 1.5% of the tax revenue.
A resolution adopted by the MTA board submitting the
ordinance to the voters.
A provision allowing MTA to incur bonded indebtedness.
The ordinance must be submitted to the electorate and approved
by two-thirds of the voters pursuant to subdivision (d) of
Section 2 of Article XIIIC of the California Constitution.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill. According to the author, "Los Angeles
is one of the nation's most congested transportation corridors,
and with a projected population growth of more than one and a
half million people in the next 30 years, congestion will only
worsen unless investments are made to improve mobility. At the
state level, investments to preserve California's transportation
system have not been sufficient to meet demand. In real terms,
funding has diminished while the demand and the cost to maintain
and operate the transportation system have soared. Traditional
fuel tax revenues are not keeping pace with inflation, and the
SB 767 (De León) 2/27/15 Page 5
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proliferation of fuel-efficient cars and alternative fuel
vehicles, among other factors, are reducing this funding. Los
Angeles has made efforts in recent years to raise additional
revenues for transportation projects through sales tax
increases. In 2008, Los Angeles County voters recognized the
need for increased transit investments and highway improvements,
and approved Measure R. Over the next 30 years, it is projected
Measure R will generate $36 billion for congestion relief
progress. While Measure R will dramatically change mobility
throughout Los Angeles, the projects funded by the measure do
not encompass all of the transportation need in the
region-further investment is necessary. Residents, local
governments, and transportation leaders in the region believe
there are thousands of worthy projects, particularly transit
projects, which will not be funded by Measure R. An additional
half-cent sales tax will allow Los Angeles County to further
expand its transit system, address key highway needs around the
county, support local agency transportation programs, and
improve the Metrolink service.
2. Existing cap. SB 566, (Scott, 2003) imposed the uniform 2%
cap for both cities and counties, in response to at least five
bills a year seeking to impose the tax. The cap set an upper
limit on the local rate, as California's sales and use tax rate
is very high. This year, AB 464 (Mullin and Gordon) seeks to do
just that, by raising the cap to 3%.
3. High rate. Three cities in Los Angeles County already impose
the highest sales and use tax rate in the state. The additional
0.5% will expand the number of cities with a double digit sales
and use tax rate. Unfortunately, this will disproportionately
impact low income individuals and families that generally pay a
higher percentage of their income in sales and use tax.
4. Related legislation. AB 338 (Hernandez), which is nearly
identical to SB 767, provides that a 0.5% tax must be imposed
for a period not to exceed 30 years, and a percentage of the net
revenues are to be allocated for bus and rail operations. The
bill is set to be heard in Assembly Local Government on April
27, 2015.
Support and
Opposition (4/16/15)
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Support : ACT; California Asphalt Pavement Association; CALPIRG;
CH2MHILL; Climate Resolve; Community Health Councils; DE
Architects; Endangered habitats League; Environment California;
Eric Garcetti, Mayor of Los Angeles; FAST; Green Communications
Initiative; HDR; IBEW Local11; IUOE Local 12; Jacobs; Kal
Krishnan Consultant Services;
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LAANE; Laborers Local 300; Los Angeles Area Chamber of Commerce;
Los Angeles Community College District (LACCD); Los Angeles
County Bike Coalition; Los Angeles County Business Federation;
Los Angeles County Federation of Labor; Los Angeles County
Metropolitan Transportation Authority (LA Metro); Los Angeles
County Museum of Art (LACMA); Los Angeles River Revitalization
Corporation; Los Angeles River Revitalization Corporation; Los
Angeles Urban League; Los Angeles Walks; Los Angeles/Orange
County Building and Construction Trades Council; Meghan
Sahli-Wells, Mayor of Culver City; Metropolitan Pacific Capitol,
Inc.; MNS Engineers Mobility 21; Move LA; NRDC; Pacifica
Services Inc.; Parsons Brinkerhoff; SCANPH; SENER Engineering &
Systems Inc.; SKANSKA; Southern California Association of
Governments (SCAG); Southern California Transit Advocates;
Stantec; Subway to the Sea Coalition; Transpo Group; V&A
Incorporated; Westchester Neighborhood Association; Westside
Center for Independent Living.
Opposition : California Taxpayers Association (CalTax); Howard
Jarvis Taxpayers Association.
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