BILL ANALYSIS Ó
SB 767
Page 1
SENATE THIRD READING
SB
767 (De León)
As Amended July 16, 2015
Majority vote
SENATE VOTE: 24-13
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+---------------------+--------------------|
|Local |6-3 |Gonzalez, Alejo, |Maienschein, |
|Government | |Chiu, Cooley, |Linder, Waldron |
| | |Gordon, Holden | |
| | | | |
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|Transportation |12-2 |Frazier, Achadjian, |Linder, Melendez |
| | |Bloom, Campos, Chu, | |
| | |Daly, Dodd, Eduardo | |
| | |Garcia, Gomez, | |
| | |Medina, Nazarian, | |
| | |O'Donnell | |
| | | | |
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|Appropriations |12-4 |Gomez, Bloom, Bonta, |Bigelow, Gallagher, |
| | |Calderon, Daly, |Jones, Wagner |
SB 767
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| | |Eggman, Eduardo | |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Authorizes the Los Angeles County Metropolitan
Transportation Authority (MTA), subject to voter approval, to
impose an additional transactions and use tax. Specifically,
this bill:
1)Authorizes MTA to impose a transactions and use tax for a
period to be determined by MTA, at a rate that when combined
with Measure R (2008), shall not exceed 1%.
2)Deletes authority previously granted to MTA to extend an
existing 0.5% transactions and use tax (Measure R) by 30
years.
3)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;
b) The identification of the accelerated cost, if
applicable, for each project and program in the expenditure
plan;
SB 767
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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.
4)Requires the ordinance imposing the tax to contain the
following:
a) A provision conforming the ordinance to the existing
Transactions 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;
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; and,
d) The rate of the tax.
5)Requires MTA to do the following:
a) Develop a transparent process to determine the most
recent costs; and,
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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.
6)Requires the ordinance to be adopted by the MTA board, which
shall also adopt a resolution that submits the ordinance to
the voters.
7)Specifies that the ordinance only becomes operative, if
approved by two-thirds of the voters voting on the measure,
pursuant to California Constitution Article XIII C.
8)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.
9)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.
10)Defines "subregion" to have the same meaning as that term as
defined in the LRTP.
11)Allows MTA to incur bonded indebtedness payable from the net
revenues of the tax.
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12) 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 Assembly Appropriations
Committee, negligible state fiscal impact. According to the
State Board of Equalization (BOE) a new 0.5% district tax in Los
Angeles County would raise approximately $8 million in the first
full year of implementation.
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 transactions 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 LRTP.
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
(Measure J) 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 LRTP before placing another transactions and use tax
measure before the voters.
According to the Board of Equalization, Los Angeles County has
14 transactions 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
Angeles County has reached the 2% cap.
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3)Bill Summary. This bill authorizes MTA to impose an
additional transactions and use tax, subject to two-thirds
voter approval, pursuant to the California Constitution.
Under this bill, MTA may determine the length of the
transactions and use tax, and the rate, when combined with
Measure R, shall not exceed 1%. The transactions and use tax
authorized by this bill is not subject to the 2% cap in
existing law.
Additionally, this bill requires the expenditure plan included
in the ordinance imposing the tax to include the following:
a) cost estimates for each project and program, using a
transparent process; b) accelerated costs of each of the
plan's projects and programs, if applicable; c) an approximate
schedule for when MTA anticipates funds will be available for
each project and program; and, d) 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
congestion. These numbers will increase as the county's
population will grow by one and a half million people in the
next 30 years.
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"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 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."
5)Related Legislation. This bill is substantially similar to AB
338 (Hernández) of the current legislative session, which is
pending in the Senate Transportation and Housing Committee
with no hearing date set.
AB 338 would also authorize MTA to impose an additional
countywide 0.5% transactions and use tax, but contains several
differences to this bill.
AB 464 (Mullin) of 2015, vetoed by the Governor, sought to
raise the overall statewide transactions and use tax rate cap
from 2% to 3%.
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6)Arguments in Support. MTA 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
mobility are available to the people of Los Angeles."
7)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."
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0001399