BILL ANALYSIS Ó
SB 767
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Date of Hearing: July 1, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
SB
767 (De León) - As Amended June 1, 2015
SENATE VOTE: 24-13
SUBJECT: Los Angeles County Metropolitan Transportation
Authority: transactions and use tax.
SUMMARY: Authorizes the Los Angeles County Metropolitan
Transportation Authority (MTA), subject to voter approval, to
impose an additional transactions and use tax at a rate of 0.5%.
Specifically, this bill:
1)Authorizes MTA to impose a transactions and use tax at a rate
of 0.5% that is applicable to the incorporated and
unincorporated areas of Los Angeles County.
2)Requires the ordinance imposing the tax to contain an
expenditure plan that lists the transportation projects and
programs to be funded by the tax and requires the expenditure
plan to include all of the following:
a) The most recent cost estimates for each project and
program identified in the expenditure plan;
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b) The identification of the accelerated cost, if
applicable, for each project and program in the expenditure
plan;
c) The approximate schedule during which the MTA
anticipates funds will be available for each project and
program; and,
d) The expected completion dates for each project and
program within a three-year range.
3)Requires the ordinance imposing the tax to contain the
following:
a) A provision conforming the ordinance to the existing
Transaction and Use Tax Law, except the 2% combined
transactions and use tax cap;
b) A provision that limits MTA's administrative costs to
1.5% of total net revenues; and,
c) A requirement that the net revenues from the tax,
defined to mean the total tax revenues, as specified, be
used by MTA to fund transportation projects and programs
identified in the expenditure plan.
4)Requires MTA to do the following:
a) Develop a transparent process to determine the most
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recent costs; and,
b) Post the expenditure plan, at least 30 days before
submitting the ordinance, as specified under 5), below, on
its Internet Web site in a prominent manner.
5)Requires the ordinance to be adopted by the MTA board, which
shall also adopt a resolution that submits the ordinance to
the voters.
6)Specifies that the ordinance only becomes operative, if
approved by two-thirds
of the voters voting on the measure, pursuant to Article XIII C
of the California Constitution.
7)Requires, if the voters approve the ordinance, the expenditure
plan included as an exhibit to the ordinance to be included in
the revise and updated Long-Range Transportation Plan (LRTP)
within one year of the date the ordinance takes effect.
8)Requires the LRTP to also include capital projects and
programs adopted by each subregion that are submitted to MTA
for inclusion in the LRTP, if the cost and schedule details
are provided by the subregions in a manner consistent with the
requirements of the plan. States that inclusion of a capital
project or program in the LRTP is not a commitment or
guarantee that the project or program will receive any future
funding.
9)Defines "subregion" to have the same meaning as that term as
defined in the LRTP process in effect as of January 1, 2008.
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10)Allows MTA to incur bonded indebtedness payable from the net
revenues of the tax.
11) Requires the tax authority granted by this bill to be
imposed, pursuant to the existing Transactions and Use Tax
Law, notwithstanding the 2% combined transactions and use tax
cap.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
1)Transaction and Use Taxes. Transactions and use taxes are
taxes imposed on the total retail price of any tangible
personal property and the use or storage of such property when
sales tax is not paid. These types of taxes may be levied as
general taxes, which are unrestricted, or special taxes, 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 transactions and use tax, if voters approve the tax.
Existing state law 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%. The Legislature has granted
several exemptions to the 2% cap, including to several
counties to allow an additional countywide transaction and use
tax for transportation purposes.
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2)Prior Legislation. SB 314 (Murray), Chapter 785, Statutes of
2003, originally enacted provisions that authorized MTA to
impose a 0.5% transactions and use 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 transactions and use tax for 30 years.
AB 2321 additionally required MTA to adopt an expenditure plan
prior to submitting a transactions and use tax to the voters
and to include specified projects and programs in its
Long-Range Transportation Plan. In November 2008, more than
67% of Los Angeles County voters approved this tax in a ballot
measure known as Measure R. Measure R, in addition to Measure
C (1990) and Proposition A (1980), are the three 0.5%
countywide transactions and use taxes that provide the
majority of MTA's funding.
AB 1446 (Feuer), Chapter 806, Statutes of 2012, authorized
MTA, subject to voter approval, to extend the existing
transactions and use tax (Measure R) for an unlimited amount
of time, allowing MTA to determine a sunset date, if any. AB
1446 also required MTA to update its expenditure plan prior to
submitting the tax measure to the voters. However, the
measure put before Los Angeles County voters in November 2012
failed to achieve the two-thirds threshold necessary for
passage. SB 1037 (Hernández), Chapter 196, Statutes of 2014,
requires MTA to update its expenditure plan and Long-Range
Transportation Plan before placing another transactions and
use tax measure before the voters.
According to the Board of Equalization, Los Angeles County has
14 transaction and use taxes, three county-wide taxes for
transportation purposes and 11 city-wide taxes. Despite the
statutory exemption for MTA's transactions and use tax, Los
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Angeles County has reached the 2% cap.
3)Bill Summary. This bill authorizes MTA to impose by ordinance
an additional 0.5% transactions and use tax, subject to
two-thirds voter approval, pursuant to the California
Constitution. The transaction and use tax authorized by this
bill is not subject to the 2% cap in existing law.
Additionally, this bill aligns the taxing authority with
substantially similar requirements established in existing law
by SB 1037 (Hernández) for the extension of MTA's existing
transactions and use tax (Measure R). This bill requires the
expenditure plan included in the ordinance imposing the tax to
include the following: (1) cost estimates for each project and
program, using a transparent process; (2) accelerated costs of
each of the plan's projects and programs, if applicable; (3)
an approximate schedule for when MTA anticipates funds will be
available for each project and program; and, (4) expected
completion dates for each project and program. Additionally,
this bill requires the revised and updated LRTP to include the
expenditure plan if voters approve the ordinance within one
year of the date the ordinance takes effect. The LRTP also
must list capital projects and programs adopted by each
subregion that are submitted to MTA for inclusion. The bill
notes that including cost estimates does not mean the project
is guaranteed funding.
This bill is sponsored by MTA.
4)Author's Statement. According to the author, "Los Angeles is
one of the nation's most congested transportation corridors in
the nation. According to the Texas Transportation Institute's
2012 Mobility Report, an auto commuter in Los Angeles spends
an average of 61 hours delayed in traffic per year, costing
about $1,300 per year in lost time and wasted fuel due to
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congestion. These numbers will increase as the county's
population will grow by one and a half million people in the
next 30 years.
"At the state level, investments to preserve California's
transportation system have not been sufficient to meet demand.
Consequently, Los Angeles and other counties have raised
additional revenues for transportation projects through sales
tax increases. Although there continues to be an unmet need
for transportation funding, LA County has reached its
transactions and use tax limit and requires exemption from the
State and the authority to raise the sales tax for
transportation funding.
"In 2008, the Los Angeles County voters recognized the need
for additional transportation investments, both for increased
transit options and highway/road improvements, and approved
Measure R. Over the next 30 years, it is projected Measure R
will generate $40 billion for congestion relief progress.
Measure R is transforming Los Angeles County. The transit and
highway projects now being constructed will relieve congestion
and improve air quality. The Los Angeles Economic Development
Council estimated in 2008 that Measure R projects will create
166,000 jobs.
"While Measure R will dramatically change mobility throughout
Los Angeles, 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 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."
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5)Related Legislation. This bill is substantially similar to AB
338 (Hernandez), which is currently pending in the Senate
Transportation and Housing Committee. AB 338 would also
authorize MTA to impose an additional countywide 0.5%
transactions and use tax, but contains several differences to
this bill. This bill allows MTA to determine the length of
the transactions and use tax and AB 338 establishes a 30-year
limit. Additionally, this bill does not contain several of
the provisions in AB 338, including the requirement that the
expenditure plan must contain a measure to ensure equity
between regions, the dedicated percentage of revenue to bus
and rail operations, or the requirement that MTA must notify
the Legislature prior to adopting amendments to the adopted
expenditure plan.
AB 464 (Mullin), currently pending on the Senate Floor, seeks
to raise the overall statewide transactions and use tax rate
cap from 2% to 3%. The authority granted by this bill is
exempted from the 2% cap; however, if AB 464 were signed into
law the authority granted by this bill would not be exempted
from the 3% cap.
6)Conflicting Legislation. Provisions of this bill conflict
with AB 338 (Hernández) and may need amendments to address the
conflict, should both bills continue to move through the
legislative process.
7)Arguments in Support. The Los Angeles County Metropolitan
Transportation Authority states, "Currently, the Los Angeles
Metropolitan Transit Authority is deciding whether to pursue a
ballot measure to provide funding for additional
transportation investments. This option is not possible
without this legislation. Regardless of eventual decision
made by the board, your legislation is essential to ensuring
that all options to cut traffic, reduce smog, and increase
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mobility are available to the people of Los Angeles."
8)Arguments in Opposition. The California Taxpayers Association
states, "Although the bill's intent to advance funding for
transportation projects may be meritorious, any increase in
the sales and use tax rate would only add to what is already
one of the most regressive taxes in the state; and
disproportionately impacts California's most vulnerable
residents, making it more difficult for them to budget and
purchase everyday necessities."
9)Double-Referral. This bill is double-referred to the
Transportation Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Los Angeles County Metropolitan Transportation Authority
[SPONSOR]
ACT, Southern California
Avvantt Partners
Amalgamated Transit Union
California Asphalt Pavement Association
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CALPIRG
CH2M HILL
Climate Resolve
Community Health Councils
DE Architects
Endangered Habitats League
Environment California
FAST
Green Communications Initiative
Hatch Mott MacDonald
HDR
International Brotherhood of Electrical Workers (IBEW), Local 11
International Union of Operating Engineers (IUOE), Local 12
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Jacobs
Kal Krishnan Consultant Services
Laborers Local l300
Los Angeles Alliance for a New Economy (LAANE)
Los Angeles Area Chamber of Commerce
Los Angeles County Business Federation
Los Angeles Community College District
Los Angeles County Bicycle Coalition
Los Angeles County Federation of Labor
Los Angeles County Museum of Art (LACMA)
Los Angeles / Orange Counties Building and Construction Trades
Council
Los Angeles Urban League
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Los Angeles Walks
L.A. River Revitalization Corporation
Mayor Eric Garcetti, City of Los Angeles
Mayor Meghan Sahli-Wells, Culver City
Metropolitan Pacific Capital, Inc.
MNS Engineers, Inc.
Support (continued)
Mobility 21
Move LA
National Resources Defense Council (NRDC)
Pacifica Services, Inc.
Parsons Brinkerhoff
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SENER Engineering & Systems, Inc.
SKANSKA
Southern California Association of Governments
Southern California Association of NonProfit Housing (SCANPH)
Southern California Transit Advocates
Stantec
Subway to the Sea
Transpo Group
V&A Incorporated
Westchester Neighborhood Association
Westside Center for Independent Living
Opposition
California Taxpayers Association
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Howard Jarvis Taxpayers Association
Analysis Prepared by:Misa Lennox / L. GOV. / (916)
319-3958