BILL ANALYSIS �
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THIRD READING
Bill No: AB 686
Author: Huffman (D)
Amended: 3/9/11 in Assembly
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 06/29/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Huff, Fuller, La Malfa
ASSEMBLY FLOOR : 47-26, 05/12/11 (consent) - See last page
for vote
SUBJECT : Local sales and use taxes: transaction and use
taxes
SOURCE : Author
DIGEST : This bill decreases the rate at which a county
or city may levy, increase, or extend a transactions and
use tax (TUT) from 0.25 percent, or a multiple thereof, to
a rate of 0.125 percent, or a multiple thereof.
ANALYSIS : Under existing law, cities and counties may
impose a district tax, in increments of 0.25 percent, for
general or special purposes, subject to voter approval,
provided that the combined rate of tax does not exceed two
percent. These taxes may be imposed either directly by the
city or county, or through a special purpose entity
established by the city or county. Counties may also create
a transportation authority to impose district taxes under
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AB 686
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the Public Utilities Code. As of April 1, 2011, 132 local
jurisdictions, including cities, counties, and special
purpose entities, impose a district tax for general or
specific purposes. Generally, a district tax is imposed at
a rate of 0.25 percent, or 0.25 percent increments, up to
the two percent limit.
This bill decreases the rate at which a county or city may
levy, increase, or extend a TUT from 0.25 percent, or a
multiple thereof, to a rate of 0.125 percent, or a multiple
thereof. Specifically, this bill authorizes:
1.A county board of supervisors to levy, increase, or
extend a TUT at a rate of 0.125 percent, or a multiple
thereof, instead of 0.25 percent, if all of the
applicable requirements are satisfied.
2.The governing body of a city to levy, increase, or extend
a TUT at a rate of 0.125 percent, or a multiple thereof,
instead of 0.25 percent, if all of the applicable
requirements are satisfied.
Comments
Under the Transactions and Use Tax Law, counties are
authorized to impose transactions and use taxes for general
or special purposes at a rate of 0.25 percent, or multiples
of 0.25 percent, subject to voter approval. With the
exception of one section that authorizes counties to impose
a tax at a rate of 0.125 or 0.25 percent for library
purposes, counties impose transactions and use taxes at a
rate of 0.25 percent, or multiples of 0.25 percent.
Currently, there are four counties that levy a library
purposes tax at a rate of 0.125 percent (Fresno, Nevada,
Solano, and Stanislaus).
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/30/11)
California Professional Firefighters
California Tax Reform Association
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California State Association of Counties
County of Marin
League of California Cities
OPPOSITION : (Verified 6/30/11)
California Taxpayers Association
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author, "current
law allows cities and counties to propose tax measures to
voters to pay for local services, such as public safety,
schools, roads, parks, or libraries. This bill will allow
voters to approve taxes in smaller increments, giving local
governments flexibility to raise a more targeted amount of
money to meet a specific community need while retaining
current requirements for voter approval of tax measures."
ARGUMENTS IN OPPOSITION : According to the Assembly Third
Reading analysis, opponents argue that fewer "rates improve
the structure of the sales tax and ease compliance for
taxpayers." They state that additional increments,
"half-percents, eights and sixteenths of a percent
complicate the sales tax" and this bill "would further
distort the intention and design of California's local
sales tax."
ASSEMBLY FLOOR : 47-26, 05/12/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Gatto,
Gordon, Hall, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Pan, Perea, Skinner, Solorio, Swanson,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Grove, Hagman, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Cedillo, Galgiani, Garrick, Gorell, V.
Manuel P�rez, Portantino, Torres
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AGB:nl 6/30/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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