BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 767|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 767
          Author:   De León (D), et al.
          Introduced:2/27/15  
          Vote:     21  

           SENATE TRANS. & HOUSING COMMITTEE:  8-0, 4/14/15
           AYES:  Beall, Cannella, Allen, Galgiani, Leyva, McGuire,  
            Mendoza, Wieckowski
           NO VOTE RECORDED:  Bates, Gaines, Roth

           SENATE GOVERNANCE & FIN. COMMITTEE:  5-2, 4/22/15
           AYES:  Hertzberg, Beall, Hernandez, Lara, Pavley
           NOES:  Nguyen, Moorlach

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

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


          SOURCE:    Author


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


          ANALYSIS:

          Existing law:









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          1)Allows cities and counties to impose beyond the state sales  
            tax 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%. 

          2)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 total sales tax rate of 1.5% dedicated to  
            transportation purposes.

          This bill:

          1)Allows LACMTA to exceed the 2% statutory limitation on local  
            transactions and use taxes by 1%.

          2)Authorizes LACMTA to impose by ordinance an additional local,  
            countywide, one-half-cent sales tax for a period to be  
            determined by LACMTA.

          3)Requires LACMTA to adopt the ordinance and submit the proposal  
            to the voters.

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

          5)Requires the ordinance imposing the tax to contain all of the  
            following:







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                 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  
               1.5%.
                 A requirement that net revenues must be used for  
               projects and programs in the expenditure plan.

          Comments

          Purpose.  In 2008, 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 needs 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.

          L.A. County measure history.  L.A. 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  







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          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 prioritization.

          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 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 determination.

          Related Legislation
          
          Similar to this bill, AB 338 (R. Hernandez), currently pending  
          in the Assembly Appropriations Committee, authorizes LACMTA to  







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          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 operations.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified5/4/15)


          Amalgamated Transit Union
          Amalgamated Transit Union Local 1277
          Association for Commuter Transportation, Southern California
          Avvantt Partners
          California Asphalt Pavement Association
          CALPIRG
          CH2MHILL
          City of Culver City
          Climate Resolve
          Community Health Councils
          DE Architects
          Endangered Habitats League
          Environment California
          Eric Garcetti, Mayor of Los Angeles
          Fixing Angelenos Stuck in Traffic 
          Green Communications Initiative
          Hatch Mott McDonald
          HDR
          International Brotherhood of Electrical Workers Local 11
          International Union of Operating Engineers Local 12
          Jacobs Engineering Group
          Kal Krishnan Consultant Services
          LAANE
          Laborers International Union Local 300
          Los Angeles Area Chamber of Commerce
          Los Angeles Community College District 
          Los Angeles County Bike Coalition
          Los Angeles County Business Federation







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          Los Angeles County Federation of Labor
          Los Angeles County Metropolitan Transportation Authority 
          Los Angeles County Museum of Art 
          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
          Natural Resources Defense Council
          Pacifica Services Inc.
          Parsons Brinkerhoff
          railLA
          SENER Engineering & Systems Inc.
          SKANSKA
          Solutions International
          Southern California Association of Governments
          Southern California Association of Nonprofit Housing
          Southern California Contractors Association
          Southern California Transit Advocates
          Stantec
          State Building and Construction Trades Council
          Subway to the Sea Coalition
          Transpo Group
          V&A Incorporated
          Westchester Neighborhood Association
          Westside Center for Independent Living


          OPPOSITION:   (Verified5/4/15)


          California Taxpayers Association
          Howard Jarvis Taxpayers Association 


          ARGUMENTS IN SUPPORT:     According to the proponents, this bill  
          grants LACMTA the flexibility to impose an additional  
          transportation transaction and use tax at a rate of 0.5%,  
          subject to voter approval and adoption of an expenditure plan.   







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          Given Southern California's significant transportation needs,  
          supporters of this bill suggest that it is a common-sense  
          approach to address funding needs in a transparent and  
          accountable way.


          ARGUMENTS IN OPPOSITION:     Opponents argue that this bill sets  
          a negative taxation precedent because it would exempt the tax  
          from the existing 2% cap for local sales taxes.  Also, a sales  
          tax increase is highly regressive, and therefore it seems unwise  
          to authorize additional tax increases.


          Prepared by:Eric Thronson / T. & H. / (916) 651-4121
          5/6/15 16:49:55


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