BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                     SB 767

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          Date of Hearing:  July 13, 2015


                                 Jim Frazier, Chair

          767 (De León) - As Amended July 8, 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) to impose, subject to voter  
          approval, an additional transactions and use tax (sales tax) not  
          to exceed .5% or 1%, for a period to be determined by MTA.   
          Specifically, this bill:  

          1)Authorizes MTA to impose, upon approval of the voters, a sales  
            tax in Los Angeles County for a period to be determined by MTA  
            at a rate not to exceed the following:

             a)   .5% if either Measure R (an existing .5% sales tax  
               through 2039) or an extension of Measure R (for another 30  
               years) is in effect.  (Currently, an extension of Measure R  
               is not in effect.)

             b)   1% if either Measure R or an extension of Measure R is  
               not in effect.


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          2)Specifies that the authorized tax is in addition to any other  
            tax MTA is authorized to impose or has imposed.

          3)Requires the ordinance imposing the sales tax to include all  
            of the following:

             a)   An expenditure plan that lists the transportation  
               projects and programs to be funded from net revenues from  
               tax and includes specific project and program cost and  
               schedule data. 

             b)   Provisions that conform to the Transactions and Use Tax  
               Law, the body of law that governs the process and  
               procedures for transactions and use tax ordinances.

             c)   Provisions limiting MTA's costs of administering the  
               ordinance and the revenues from the sales tax to 1.5% of  
               the total tax revenues.

             d)   A requirement that net revenues, as defined, from the  
               sales tax are to be used by MTA to fund transportation  
               projects and programs identified in the expenditure plan.

          4)Requires MTA to develop a transparent process to determine the  
            most up to date cost estimates to be included in the  

          5)Specifies that the ordinance only becomes operative if  
            approved by two-thirds 

          of the voters voting on the measure.  


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          6)Requires all projects listed in MTA's expenditure plan also to  
            be included in MTA's Long Range Transportation Plan if the  
            ordinance is approved by voters.

          7)Allows MTA to incur bonded indebtedness payable from the net  
            revenues of the tax.  

          8)Exempts the sales taxes authorized by this bill from the 2%  
            combined tax rate limit for sales taxes imposed in any county.
          EXISTING LAW:  

          1)Authorizes MTA, upon approval of the voters, to adopt the  
            following sales taxes for transportation in Los Angeles  

             a)   Two .5% sales taxes for an indefinite period of time  
               (Proposition A approved in 1980 and Proposition C approved  
               in 1990);  

             b)   A .5% sales tax for 30 years (Measure R approved in  
               2008); and

             c)   An extension of Measure R for an additional 30 years  
               (Measure J was rejected by the voters in 2012).  

          2)Authorizes MTA to incur bonded indebtedness payable from the  
            proceeds of Measure R.

          3)Requires MTA to adopt an expenditure plan prior to submitting  
            the proposed Measure R to the voters for a vote.

          4)Allows MTA, subject to two-thirds voter approval, to extend  
            Measure R indefinitely.  MTA placed a measure to do this  
            before the voters in November 2012 but it failed to achieve  


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            the two-thirds threshold necessary for passage.  

          5)Authorizes cities and counties to impose sales taxes in 0.125%  
            increments in addition to the state's 7.5% sales tax; limits  
            the combined rate of all transactions and use taxes imposed in  
            any county to 2%.

          6)Prescribes, under the Transactions and Use Tax Law, specific  
            requirements to be included in transactions and use taxes  

          FISCAL EFFECT:  Unknown

          COMMENTS:  Existing law authorizes individual counties or  
          regions to impose sales tax within their jurisdictions for the  
          purpose of funding transportation services, programs, and  
          projects.  Today, nearly 85 percent of the state's population  
          lives in a county in which an additional local sales tax is  
          levied for transportation.  These counties, often referred to as  
          self-help counties, generate approximately $4 billion annually  
          for transportation.

          SB 767 would authorize the MTA, upon voter approval, to impose  
          an additional sales tax in Los Angeles County for transportation  
          purposes.  MTA, which is sponsoring SB 767, is exploring the  
          potential for a ballot measure to seek voter approval for  
          funding for additional transportation investments.  The  
          authority granted in SB 767  will be necessary should the MTA  
          board decide to pursue the ballot measure.   

          Los Angeles is home to one of the nation's most congested  
          transportation networks.  According to the Texas A&M  
          Transportation Institute's 2012 Mobility Report, an auto  


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          commuter in Los Angeles spends an average of 61 hours stuck in  
          traffic per year and pays over $1,300 per year in lost time and  
          wasted fuel due to congestion.  These numbers will surely  
          increase as the county's population grows by an estimated 1.5  
          million people over the next 30 years.  

          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 proliferation of fuel-efficient cars and  
          alternative fuel vehicles, among other factors, are reducing  
          this funding.  

          Consequently, local transportation agencies have turned to the  
          voters to provide the authority and funding for priority  
          transportation projects.  These voter-approved sales tax  
          measures have addressed some of the transportation need at a  
          regional level.  In Los Angeles, Measure R was approved by a  
          majority of the voters in November of 2008 and enacted a .5%  
          sales tax increase, in addition to the two .5% sales tax  
          measures already in place.  The Measure R sales tax increase,  
          effective for 30 years, finances transportation projects and  
          programs, and accelerates those that were already in the  

          The author believes that, although Measure R is drastically  
          changing transportation in Los Angeles, further investment is  
          necessary.  He has introduced SB 767 in the hopes that Los  
          Angeles County voters will approve an additional .5% sales tax  
          for transportation and allow MTA to further expand its transit  
          systems, address key highway needs around the county, support  
          local agency transportation programs, and improve the Metrolink  


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          Writing in opposition to SB 767, the Howard Jarvis Taxpayers  
          Association is concerned that 

          SB 767 exempts the proposed sales tax from the sales tax limit  
          (combined 2%) imposed on counties by existing law.  The  
          association also argues that the sales tax is a regressive tax  
          and an increase will drive up the costs of goods. 

          Committee comments:  There is no doubt that the state needs more  
          funding for transportation.  In fact, the situation has become  
          so dire that the Governor just last month called for a special  
          session of the Legislature to immediately address California  
          transportation funding crisis, citing a $59 billion need for  
          maintenance and repair of the state highways alone.  Estimated  
          needs for local streets and roads and transit far exceed that  

          Whatever the outcome of the special session, even the cheeriest  
          predictions estimate that the funding solution will only  
          partially address the transportation needs in the state.  SB 767  
          provides the opportunity for Los Angeles County voters to decide  
          whether or not to tax themselves to address the transportation  
          needs in their own region. 

          Technical amendments:


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          1)Subregions.  SB 767 requires that, if voters approve the sales  
            tax increase, MTA must update the Long Range Transportation  
            Plan consistent with capital projects and programs adopted by  
            each "subregion," as that term was defined in the Long Range  
            Transportation Plan in 2008. 

            Reference to 2008 should be stricken from the bill because,  
            according to MTA, areas within the county have shifted  
            subregions, at their choosing, since 2008 and the reference is  
            now outdated.  The specific amendment should read:

            On page 4, at line 6, subparagraph (2):
            (2) For purposes of this subdivision, "subregion" shall have  
            the same meaning as that term is defined in the Long Range  
            Transportation Plan  process in effect as of January 1, 2008  .

          2)Measure J.  MTA went to the voters in 2012 with proposed  
            Measure J to extend the .5% sales tax authorized by Measure R  
            in 2008 by another 30 years so that it could accelerate  
            delivery of Measure R's 30-year program.  Measure J failed to  
            secure the necessary two-thirds voter approval by less than  
            two percentage points.  The statutes that authorized Measure  
            J, however, are still on the books.  In theory, MTA could use  
            this statutory authority to pursue another Measure R  
            extension, in addition to whatever authority the agency is  
            granted by way of enactment of this bill.  This is not,  
            however, what MTA intends to do.  Consequently, provisions  
            that authorized Measure J should be stricken from the bill so  
            there will be no confusion about MTA's intent or authority.  

            This specific amendment would strike Section 130350.6 of the  
            Public Utilities Code and make other, technical changes to  
            that were included in Measure J's enabling statute [AB 1446  
            (Feuer), Chapter 806, Statutes of 2012]. 


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          3)Authorized tax rate.  In recent amendments to SB 767, the  
            author attempted to clarify limits to the sales tax rate being  
            authorized by this bill.  Drafting errors, however, confuse  
            rather than clarify these limits.  These provisions should be  
            amended again to reflect the author's intent, which is this: 

               The author and MTA are seeking authority to take to the  
               voters a ballot measure to allow for  .5% increase in the  
               sales tax for transportation for as long as Measure R is in  
               place (until 2039).  Further, they would like authority to  
               include in the ballot measure provisions that would adjust  
               the sales tax rate upward to no more than 1% upon  
               expiration of Measure R in 2039.  To this end, the bill  
               should be amended to strike the language added by way of  
               the July 8, 2015, amendments and, instead, add language  
               that would authorize a sales tax rate of no more than 1%  
               when combined with whatever sales tax is in effect as  
               authorized by Measure R.  

          Related legislation:  This committee heard and passed a similar  
          bill, AB 338 (Hernández).  AB 338 authorizes MTA to impose, with  
          voter approval, an additional one half-cent sales tax for up to  
          30 years, subject to two-thirds voter approval.  Similar to SB  
          767, AB 338 requires the ordinance imposing the tax to contain  
          specified information, including an expenditure plan to list the  
          transportation projects and programs to be funded from the tax.   
          However, AB 338 also requires the expenditure plan to include  
          measures that ensure revenues are shared equitably between  
          regions of the county and specifies that 20% of all revenues  
          derived from that tax be spent for bus transit operations and 5%  
          for rail transit operations.  AB 338 is currently pending in  
          Senate Transportation and Housing Committee.  Should these bills  
          continue to move through the Legislature, the author will need  
          to resolve this chaptering out conflict.


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          Double-referral:  This bill passed out of the Assembly Local  
          Government Committee on 

          July 2, 2015, with a 6-3 vote.

          Previous legislation:  SB 314 (Murray), Chapter 785, Statutes of  
          2003, originally enacted provisions that authorized MTA to  
          impose, subject to voter approval, a 0.5% sales tax for no more  
          than six and one-half years for specific transportation projects  
          and programs.  That sales tax was never imposed.   

          AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized MTA  
          to impose, subject to voter approval, a 0.5% sales tax for 30  
          years and required MTA to include specified projects and  
          programs in its long-range transportation plan.  In November of  
          2008, more than 67% of Los Angeles County voters approved this  
          tax in a ballot measure known as Measure R.  

          AB 1446 (Feuer), Chapter 806, Statutes of 2012, authorized MTA,  
          subject to voter approval, to extend the existing sales tax  
          (Measure R) indefinitely.  AB 1446 also required MTA to update  
          its expenditure plan prior to submitting the tax measure to the  
          voters.  The measure was put before Los Angeles County voters in  
          November 2012 but failed to achieve the two-thirds threshold  
          necessary for passage.  

          SB 1037 (Hernández), Chapter 196, Statutes of 2014, required MTA  
          to update its expenditure plan and Long Range Transportation  


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          Plan before placing another sales tax measure before the voters.  



          Los Angeles County Metropolitan Transportation Authority  

          Amalgamated Transit Union

          Associate General Contractors

          Association for Commuter Transportation

          Avvantt Partners

          California Public Interest Research Group

          City of Culver City

          City of Santa Monica

          DE Architects


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          Endangered Habitats League

          Environment California

          Green Communications Initiative

          Hatch Mott MacDonald

          Honorable Eric Garcetti, Mayor, City of Los Angeles

          Kal Krishnan Consultant Services

          LA River Revitalization Corporation

          Los Angeles Community College District

          Metro Gold Line Foothill Extension Construction Authority

          Metropolitan Pacific Capital, Inc.

          MNS Engineers

          Mobility 21

          Pacifica Services, Inc.


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          SENER Engineering & Systems, Inc.

          Solutions International

          Southern California Association of NonProfit Housing

          Southern California Contractors Association

          Southern California Transit Advocates

          Subway to the Sea Coalition

          Transpo Group

          V&A Incorporated

          Westchester Neighborhood Association

          Westside Center for Independent Living



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          California Taxpayers Association

          Howard Jarvis Taxpayers Association

          Analysis Prepared by:Janet Dawson / TRANS. / (916)