BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2119|
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THIRD READING
Bill No: AB 2119
Author: Stone (D), et al.
Amended: 5/14/14 in Assembly
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 6/11/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Walters
ASSEMBLY FLOOR : 50-22, 5/19/14 - See last page for vote
SUBJECT : Local taxes: transactions and use taxes
SOURCE : Author
DIGEST : This bill authorizes a county board of supervisors to
levy, increase, or extend a transactions and use tax, for
general or specific purposes, within the unincorporated area of
the county.
ANALYSIS : Proposition (Prop) 62 (1986) and Prop 218 (1996)
require voter approval for new and increased local taxes. Prop
62 added statutes to the Government Code that prohibit a local
government from imposing:
A special tax unless the special tax is submitted to the
electorate of the local government and approved by a
two-thirds vote.
A general tax unless the general tax is submitted to the
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electorate of the local government and approved by a majority
vote.
Prop 218 amended the California Constitution to define the
difference between general taxes and special taxes and impose
voter approval requirements that are similar to Prop 62's
statutory provisions.
Counties can only impose taxes that state law specifically
authorizes them to impose. With some exceptions, state law
generally grants counties the power to impose taxes only in
their unincorporated areas. The Transactions and Use Tax Law
authorizes a county to levy a transactions and use tax
throughout the county's entire territory, at a rate of 0.125%,
or multiples of 0.125%. A transactions and use tax is 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.
The tax is added on to, and administered in tandem with, the
combined state and local sales and use tax rate. An ordinance
imposing a county-wide transactions and use tax must be approved
either by a majority of county voters, if the tax is for general
purposes, or by two-thirds of county voters, if the tax is for
special purposes.
This bill allows a county's board of supervisors to levy,
increase, or extend a general-purpose transactions and use tax
either:
Throughout the entire county, if the tax is approved by a
majority vote of qualified voters of the entire county, or
Within the unincorporated area of the county if the tax is
approved by a majority vote of qualified voters of the
unincorporated area.
This bill directs that a county must use revenues from a
general-purpose transactions and use tax only for general
purposes within the area for which the tax was approved by the
qualified voters.
This bill allows a county's board of supervisors to levy,
increase, or extend a special-purpose transactions and use tax
either:
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Throughout the entire county, if the tax is approved by a
two-thirds vote of qualified voters of the entire county, or
Within the unincorporated area of the county if the tax is
approved by a two-thirds vote of qualified voters of the
unincorporated area.
This bill directs that a county must use revenues from a
special-purpose transactions and use tax only for specific
purposes within the area for which the tax was approved by the
qualified voters.
Comments
In many counties throughout the state, more than half of their
territory is in unincorporated areas, making those counties
responsible for financing a large amount of infrastructure.
Unlike some other statutes that authorize counties to impose
taxes only within their unincorporated areas, existing law only
authorizes a county to impose an add-on transactions and use tax
rate throughout the entire county. This bill allows counties to
introduce a sales tax measure that will be applied to
unincorporated areas, spent on the infrastructure of those
unincorporated areas, and voted on by the qualified voters of
those areas. By allowing county supervisors to limit the
geographic area in which a county transactions and use tax
applies, this approach mirrors existing law for other county
taxes. Additionally, when cities impose a transactions and use
tax, only voters who reside in the area where the tax is going
to be imposed get to vote on that tax. This bill makes the
approval process for county transactions and use taxes
comparable to the current process for approving city
transactions and use taxes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/11/14)
AFSCME
California State Association of Counties
California Tax Reform Association
Counties of Humboldt, Monterey, San Luis Obispo, and Santa Cruz
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OPPOSITION : (Verified 6/11/14)
California Taxpayers Association
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : Supporters argue that many counties in
California have half or more of their county in unincorporated
areas, making those counties responsible for a large amount of
infrastructure without much taxing authority. This bill will
give residents who live outside of cities the same rights to
levy their own sales tax as those who live in them.
ARGUMENTS IN OPPOSITION : Opponents argues that a tax measure
approved by the board of supervisors should apply evenly to all
county residents and that this bill could also prove to be
cumbersome for businesses to administer as there would now be
different tax rates across the county.
ASSEMBLY FLOOR : 50-22, 5/19/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Dababneh, Daly, Dickinson, Eggman, Fong, Frazier,
Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hagman, Hall,
Roger Hern�ndez, Holden, Jones-Sawyer, Levine, Lowenthal,
Mullin, Pan, Perea, John A. P�rez, V. Manuel P�rez, Quirk,
Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting,
Weber, Wieckowski, Williams, Yamada, Atkins
NOES: Allen, Bigelow, Ch�vez, Conway, Dahle, Donnelly, Fox,
Beth Gaines, Gorell, Grove, Harkey, Jones, Linder, Logue,
Maienschein, Melendez, Muratsuchi, Patterson, Quirk-Silva,
Wagner, Waldron, Wilk
NO VOTE RECORDED: Achadjian, Cooley, Mansoor, Medina, Nazarian,
Nestande, Olsen, Vacancy
AB:k 6/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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