BILL ANALYSIS �
AB 1324
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1324 (Skinner)
As Amended August 7, 2014
Majority vote
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|ASSEMBLY: | |(May 16, 2013) |SENATE: |22-12|(August 21, |
| | | | | |2014) |
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(vote not relevant)
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|COMMITTEE VOTE: |5-2 |(August 27, 2014) |RECOMMENDATION: |concur |
|(L. Gov.) | | | | |
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Original Committee Reference: TRANS.
SUMMARY : Allows the City of El Cerrito to adopt an ordinance to
impose a transactions and use tax not to exceed 0.5% for general
purposes that would, in combination with other taxes, exceed the
statutory limit of 2%.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Allow the City of El Cerrito to impose a transactions and use tax
for general purposes at a rate of no more than 0.5% that would,
in combination with all other transaction and use taxes, exceed
the 2% limit established in existing law, if all the following
conditions are met:
a) The city adopts an ordinance proposing the transactions and
use tax by any applicable voting requirements;
b) The ordinance proposing the transactions and use tax is
approved by the voters voting on the ordinance in accordance
with California Constitution Article XIII C, and the election
on the ordinance proposing the tax may occur on or after
November 4, 2014;
c) The transactions and use tax is imposed on or after January
1, 2015; and,
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d) The transactions and use tax conforms to the Transactions
and Use Tax Law, as specified.
2)Provide, if the ordinance proposing the transactions and use tax
is not approved, that the provisions of this bill shall be
repealed as of January 1, 2022.
3)Find and declare that a special law is necessary because of the
unique fiscal and public service pressures experienced in the
City of El Cerrito.
AS PASSED BY THE ASSEMBLY , this bill authorized Alameda County to
increase the fee on vehicle registration to be used to fund the
prevention of vehicle theft crimes.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill. This bill provides an exemption to the
City of El Cerrito from the 2% transactions and use tax combined
rate cap that is currently in statute. This bill authorizes the
City of El Cerrito to each adopt an ordinance to propose the
imposition of a transactions and use tax for general purposes at
a rate of no more than 0.5%, and with the appropriate voter
approval pursuant to the California Constitution, which requires
a majority vote for transaction and use taxes for general
purposes. If the ordinance proposing the transactions and use
tax is not approved by voters by January 1, 2022, the provisions
of the bill would be repealed as of that same date. This bill is
author-sponsored.
In Contra Costa County, City of El Cerrito voters passed Measure
R in 2010, a transactions and use tax of 0.5% which in addition
to the existing transaction and use taxes fully occupy the tax
capacity under the 2% combined rate. In July, the El Cerrito
City Council voted to place a local funding measure on the
November 2014 ballot to extend the existing 0.5% to 1%. In order
for the extension to be imposed, this bill is needed to allow the
City to exceed the statutory limit, and voters must pass the
November 2014 ballot measure.
2)Author's statement. According to the author, "The City of El
Cerrito was hit particularly hard by the recession and the local
economy is still struggling to recover. As a result, local
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property values have declined. The sluggish economy, diminished
revenues from reduced property assessments, the loss of
redevelopment, store relocations, and other factors are forcing
the city to reduce services."
3)Related legislation. Prior to 2003, cities lacked the ability to
place transactions and use taxes before their voters without
first obtaining approval by the Legislature to bring an ordinance
before the city council, and, if approved at the council level,
to the voters. This was remedied by SB 566 (Scott), Chapter 709,
Statutes of 2003. SB 566 also contained provisions to increase a
county's transactions and use tax cap to 2% because of the
possibility that certain counties were going to run out of room
under their caps if cities within those counties approved
transactions and use taxes.
The Legislature has previously granted exemptions to the 2%
statutory cap for transactions and use taxes to support
countywide transportation programs. AB 1086 (Wieckowski),
Chapter 327, Statutes of 2011, allowed a one-time exemption for
Alameda County from the 2% transactions and use tax combined rate
cap. AB 210 (Wieckowski), Chapter 194, Statutes of 2013,
extended the authority for Alameda County to adopt an ordinance
imposing a transactions and use tax from January 1, 2014, to
December 31, 2020, and allowed Contra Costa County to adopt an
ordinance imposing a transactions and use tax in the same manner
as Alameda County.
SB 33 (Wolk) of the current legislative session pending in the
Assembly, would allow the County of Sonoma or any city within the
County to impose a transactions and use tax for general purposes,
and allow Sonoma County, any city within Sonoma County, or the
Sonoma County Transportation Authority to impose a transactions
and use tax for a specific purpose including, but not limited to
the support of transportation and road maintenance programs and
library services by up to 0.5% that would, in combination with
all other transaction and use taxes, exceed the 2% statutory
limit.
4)Policy consideration. The Legislature may wish to consider if
the financial difficulties experienced by the City of El Cerrito
are different than those experienced by other cities or counties
in California. In light of that consideration, the Legislature
may wish to discuss if the 2% transactions and use tax combined
rate cap needs to be raised statewide, instead of having cities
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and counties come to the Legislature on a case by case basis.
5)Arguments in support. Supporters argue that this bill gives the
voters the opportunity to decide whether to approve an additional
half percent sales tax in order to maintain city services and
allows the people to choose their own priorities.
6)Arguments in opposition. Opposition argues that unless the
Legislature decides to raise the cap statewide, local governments
should not be given special permission to exceed the 2% limit.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0005505