The California Constitution conditions the imposition of a special tax by a city, county, or special district upon the approval of ²/₃ of the voters of the city, county, or special district voting on that tax, except that certain school entities may levy an ad valorem property tax for specified purposes with the approval of 55% of the voters within the jurisdiction of these entities.

The California Constitution prohibits the Legislature from imposing taxes for local purposes, but allows the Legislature to authorize local governments to impose them. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes local governments to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law.

This measure would provide that the imposition, extension, or increase of a sales and use tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or a transactions and use tax imposed in accordance with the Transactions and Use Tax Law by a local government county, city, city and county, or special district for the purpose of providing funding for local transportation projects, as defined, requires the approval of 55% of its voters voting on the proposition. The measure would also make conforming and technical, nonsubstantive changes. This measure would also provide that it would become effective immediately upon approval by the voters and would apply to any local measure imposing, extending, or increasing a sales and use tax or transactions and use tax for local transportation projects submitted at the same election.

The California Constitution conditions the imposition of a special tax by a city, county, or special district upon the approval of ²/₃ of the voters of the city, county, or special district voting on that tax, except that certain school entities may levy an ad valorem property tax for specified purposes with the approval of 55% of the voters within the jurisdiction of these entities.

This measure would provide that the imposition, extension, or increase of a special tax sales and use tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or a transactions and use tax imposed in accordance with the Transactions and Use Tax Law by a local government for the purpose of providing funding for local transportation projects, as defined, requires the approval of 55% of its voters voting on the proposition. The measure would also make conforming and technical, nonsubstantive changes. This measure would also provide that it shall would become effective immediately upon approval by the voters and shall would apply to any local measure imposing, extending, or increasing a special tax sales and use tax or transactions and use tax for local transportation projects submitted at the same election.

The California Constitution conditions the imposition of a special tax by a city, county, or special district upon the approval of ²/₃ of the voters of the city, county, or special district voting on that tax, except that certain school entities may levy an ad valorem property tax for specified purposes with the approval of 55% of the voters within the jurisdiction of these entities.

This measure would provide that the imposition, extension, or increase of a special tax by a local government for the purpose of providing funding for local transportation projects, as defined, requires the approval of 55% of its voters voting on the proposition. The measure would also make conforming and technical, nonsubstantive changes. This measure would also provide that it shall become effective immediately upon approval by the voters and shall apply to any local measure imposing, extending, or increasing a special tax for local transportation projects submitted at the same election.

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 201516 Regular Session commencing on the first day of December 2014, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows:

Except as otherwise provided by Section 2 of Article XIIIC, a city, county, or special district, by a two-thirds vote of its voters voting on the proposition, may impose a special tax within that city, county, or special district, except an ad valorem tax on real property or a transactions tax or sales tax on the sale of real property within that city, county, or special district.

Notwithstanding any other provision of this Constitution:

(a)A tax imposed by any local government is either a general tax or a special tax. A special district or agency, including a school district, has no authority to levy a general tax.

(b)A local government shall not impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.

(c)Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to November 6, 1996, may continue to be imposed only if that general tax is approved by a majority vote of the voters voting in an election on the issue of the imposition, which election is held no later than November 6, 1998, and in compliance with subdivision (b).

(d)(1)Except as otherwise provided in paragraph (2), a local government shall not impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by two-thirds of the voters voting on the proposition. A special tax is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved.

(2)(A)The imposition, extension, or increase of a sales and use tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law, or its successor, or a transactions and use tax imposed in accordance with the Transactions and Use Tax Law, or its successor, by a local government county, city, city and county, or special district for the purpose of providing funding for local transportation projects under its jurisdiction, as may otherwise be authorized by law, requires the approval of 55 percent of the voters voting on the proposition. A sales and use tax or transactions and use tax for the purpose of providing funding for local transportation projects is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate previously approved in the manner required by law.

(B)For purposes of this paragraph, local transportation project means the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance of local streets, roads, and highways, state highways and freeways, and public transit systems.

(3)This subdivision, and the amendments made to Section 4 of Article XIIIA by the act adding this subdivision, shall become effective immediately upon approval by the voters and shall apply to any local measure imposing, extending, or increasing a sales and use tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or a transactions and use tax imposed in accordance with the Transactions and Use Tax Law for the funding of local transportation projects that is submitted at the same election.

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 201516 Regular Session commencing on the first day of December 2014, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows:

Except as otherwise provided by Section 2 of Article XIIIC, a city, county, or special district, by a two-thirds vote of its voters voting on the proposition, may impose a special tax within that city, county, or special district, except an ad valorem tax on real property or a transactions tax or sales tax on the sale of real property within that city, county, or special district.

Notwithstanding any other provision of this Constitution:

(a)A tax imposed by any local government is either a general tax or a special tax. A special district or agency, including a school district, has no authority to levy a general tax.

(b)A local government shall not impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.

(c)Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this article November 6, 1996, may continue to be imposed only if that general tax is approved by a majority vote of the voters voting in an election on the issue of the imposition, which election is held no later than November 6, 1998, and in compliance with subdivision (b).

(d)(1)Except as otherwise provided in paragraph (2), a local government shall not impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by two-thirds of the voters voting on the proposition. A special tax is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved.

(2)(A)The imposition, extension, or increase of a special tax sales and use tax imposed pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law, or its successor, or a transactions and use tax imposed in accordance with the Transactions and Use Tax Law, or its successor, by a local government for the purpose of providing funding for local transportation projects under its jurisdiction, as may otherwise be authorized by law, requires the approval of 55 percent of the voters voting on the proposition. A special tax sales and use tax or transactions and use tax for the purpose of providing funding for local transportation projects is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate previously approved in the manner required by law.

(B)For purposes of this paragraph, local transportation project means the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance of local streets, roads, and highways, state highways and freeways, and public transit systems.

Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 201516 Regular Session commencing on the first day of December 2014, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows:

Cities, Counties and special districts, Except as otherwise provided by Section 2 of Article XIIIC, a city, county, or special district, by a two-thirds vote of the qualified electors of such district its voters voting on the proposition, may impose special taxes on such district a special tax within that city, county, or special district, except an ad valorem taxes tax on real property or a transaction transactions tax or sales tax on the sale of real property within such City, County that city, county, or special district.

Local Government Tax Limitation. Notwithstanding any other provision of this Constitution:

(a)All taxes A tax imposed by any local government shall be deemed to be is either a general taxes tax or a special taxes. Special purpose districts tax. A special district or agencies agency, including a school districts, shall have district, has no power authority to levy a general taxes tax.

(b)No A local government may shall not impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote. A general tax shall is not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, except in cases of emergency declared by a unanimous vote of the governing body.

(c)Any general tax imposed, extended, or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this article, shall may continue to be imposed only if that general tax is approved by a majority vote of the voters voting in an election on the issue of the imposition, which election shall be is held within two years of the effective date of this article no later than November 6, 1998, and in compliance with subdivision (b).

(d)No (1)Except as otherwise provided in paragraph (2), a local government may shall not impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote of the voters voting on the proposition. A special tax shall is not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved.

This measure shall become effective immediately upon approval by the voters and shall apply to any local measure imposing, extending, or increasing a special tax for the funding of local transportation projects that is submitted at the same election.

Date of Hearing: August 19, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:ACA 4

Author:(Frazier) – As Amended Ver:August 17, 2015

Urgency: State Mandated Local Program: No Reimbursable: No

SUMMARY:

This measure allows certain local transportation initiative tax measures to be enacted with a 55% majority instead of a two-thirds majority vote. Specifically, this measure:

1. Provides that the imposition, extension, or increase of a sales and use tax or transactions and use tax by a city, county, city and county, or special district for local transportation projects requires approval of 55% of those voting on such a measure.

2. Defines a "local transportation project" as the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance of local streets, roads, and highways, state highways and freeways, and public transit systems.

FISCAL EFFECT:

1. One-time General Fund costs of around $220,000 to include the text and analysis of the measure and arguments for and against the measure in the statewide voter information guide.

2. The lower vote threshold would likely lead to approval of more local measures imposing or extending sales taxes in order to fund local transportation infrastructure.

COMMENTS:

1. Purpose. According to the author, "Voters in nineteen counties throughout California have voted to impose special taxes for local transportation projects and programs in their county. Collectively, these counties generate between $3 billion and $4 billion annually – money that is used for transportation projects as identified and prioritized by each county and ratified by the voters.

"These counties, referred to as "self-help counties," have consistently provided reliable and stable funding for transportation—funding that far outstrips state and federal funding on an annual basis.

"Despite the success of these self-help counties, a two-thirds voter approval threshold is a near-impossible hurdle for other counties that are aspiring to be self-help counties. As a result, these counties are deprived of much-needed funding for transportation infrastructure, maintenance, and operations…ACA 4 gives hope to aspiring counties and to existing self-help counties whose existing special transportation taxes are due to expire."

2. Transportation Needs. The biennial California Statewide Local Streets and Roads Needs Assessment, released in October 2014, found pavement conditions are declining and existing funding levels are insufficient to repair or maintain streets, roads, bridges, sidewalks, storm drains, and traffic signs. The report estimated the local system will have a $78.3 billion funding shortfall in the next 10 years. Moreover, the administration is estimating the funding shortfall on the state highway system totals $57 million over the next decade.

3. Prior Legislation. This constitutional amendment is substantially similar to ACA 23 (Perea) of 2012, which died on the Assembly Inactive File.

Analysis Prepared by: Chuck Nicol / APPR. / (916) 319-2081

Date of Hearing: July 13, 2015

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Philip Ting, Chair

ABPCA Bill Id:ACA 4 (

Author:Frazier) – As Introduced Ver:February 27, 2015

2/3 vote.

SUBJECT: Local government transportation projects: special taxes: voter approval

SUMMARY: Lowers, from two-thirds to 55%, the voter approval threshold for a local government to impose, extend, or increase a special tax to fund "local transportation projects" under its jurisdiction. Specifically, this constitutional amendment:

1. Authorizes a local government to impose, extend, or increase a special tax to fund "local transportation projects" under its jurisdiction, as may otherwise be authorized by law, with the approval of 55% of the voters voting on the proposition.

2. Provides that a special tax to fund "local transportation projects" is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate previously approved in the manner required by law.

3. Defines a "local transportation project" as the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance of local streets, roads, and highways, state highways and freeways, and public transit systems.

4. Provides that this constitutional amendment shall become effective immediately upon approval by the voters and shall apply to any local measure imposing, extending, or increasing a special tax for the funding of local transportation projects that is submitted at the same election.

EXISTING LAW:

1. Classifies any tax a local government imposes as either a "general tax" or a "special tax". (Cal. Const., art. XIII C, § 2(a).)

2. Defines a "general tax" as any tax imposed for general governmental purposes. (Cal. Const., art. XIII C, § 1(a).)

3. Defines a "special tax" as any tax imposed for specific purposes, including a tax imposed for specific purposes, which is placed into a general fund. (Cal. Const., art. XIII C, § 1(d).)

4. Prohibits a local government from imposing, extending, or increasing a general tax unless that tax is submitted to the electorate and approved by a majority vote. (Cal. Const., art. XIII C, § 2(b).)

5. Prohibits special purpose districts or agencies, including school districts, from levying a general tax. (Cal. Const., art. XIII C, § 2(a).)

6. Prohibits a local government from imposing, extending, or increasing a special tax unless that tax is submitted to the electorate and approved by a two-thirds vote. (Cal. Const., art. XIII C, § 2(d).)

7. Authorizes a city, county, or special district, by a two-thirds vote of its electorate, to impose a special tax within that city, county, or special district, except an ad valorem tax on real property or a transactions or sales tax on the sale of real property. (Cal. Const., art. XIII A, § 4)

8. Caps the maximum amount of any ad valorem tax on real property at one percent of the property's full cash value. (Cal. Const., art. XIII A, § 1(a).) This limitation, however, does not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on bonded indebtedness incurred by a school district, community college district, or county office of education for the construction, reconstruction, rehabilitation, or replacement of school facilities, approved by 55 percent of the voters of the district or county. (Cal. Const., art. XIII A, § 1 (b)(3).) Any such proposition must include specified accountability requirements, including an annual, independent performance audit.

FISCAL EFFECT: Unknown

COMMENTS:

1. The author has provided the following statement in support of this measure:

Voters in nineteen counties throughout California have voted to impose special taxes for local transportation projects and programs in their county. Collectively, these counties generate between $3 billion and $4 billion annually – money that is used for transportation projects as identified and prioritized by each county and ratified by the voters.

These counties, referred to as "self-help counties," have consistently provided reliable and stable funding for transportation—funding that far outstrips state and federal funding on an annual basis.

They also have in place:

• Extensive accountability measures.

• Local elected oversight on taxpayer's dollars.

• Expenditure plans that explicitly detail how funds will be spent, allowing the public to fully understand where their local transportation [dollars] go.

Despite the success of these self-help counties, a two-thirds voter approval threshold is a near-impossible hurdle for other counties that are aspiring to be self-help counties. As a result, these counties are deprived of much-needed funding for transportation infrastructure, maintenance, and operations.

ACA 4 gives hope to aspiring counties and to existing self-help counties whose existing special transportation tax is due to expire. If ACA 4 secures the necessary votes for passage, any county with a special transportation tax on the ballot at the same time [needs] to achieve the 55% threshold to be successful. Local control. Local opportunity. That's what ACA 4 provides.

2. This constitutional amendment is supported by the California Transportation Commission, which notes the following:

The useful life of the existing system, which represents decades of major investments, is placed at risk due to the lack of necessary funding to meet basic maintenance, operation and rehabilitation needs. Congestion in urban areas, safety and unexpected delays in rural areas, and growing challenges of freight movement are only a few examples of the compelling issues facing California's transportation agencies. Our existing transportation system continues to deteriorate while demand increases, adversely affecting mobility, commerce, quality of life, the environment and the operational efficiency of key transportation assets.

Sales tax investments, directed towards local transportation needs, have proven to provide tremendous benefit to the overall state transportation system. Funds generated from sales tax measures serve to reduce congestion, improve public transportation, and enable local governments to better address the critical transportation needs of the state.

3. This constitutional amendment is opposed by the California Chamber of Commerce, which notes the following:

Our primary concern with ACA 4 is that it provides blanket authority to the local government to impose nearly any type of "special tax" with a reduced voter threshold of only fifty-five percent. There are few parameters or restrictions under which a "special tax" may be imposed under ACA 4, other than the revenue must be used for transportation projects and the "special tax" cannot be an ad valorem or a transaction tax on real property. With such broad discretion in the type or scope of "special tax" to impose, we are concerned that it could lead to targeted taxes at the local level against unpopular taxpayers, industries, products, or property. Specifically, under ACA 4, a parcel tax could be disproportionately directed at commercial property within the local jurisdiction, thereby potentially undermining the protections in place under Proposition 13 and discriminating against commercial property versus residential.

4. Committee Staff Comments

   1. A brief overview of voter-approval requirements for local taxes: For most of California's history, local governments could raise taxes by a vote of the governing board. Beginning in 1978, voters approved a series of constitutional amendments that established voter-approval requirements for new local taxes. Specifically, Proposition 13 (1978) greatly constrained the ability of local governments to raise property tax rates and required all new local government "special taxes" to be approved by two-thirds of voters. Proposition 62 (1986) and Proposition 218 (1996), in turn, required new "general taxes" to be approved by a majority of voters, and extended voter-approval requirements to other property-related levies not covered by Proposition 13. Finally, Proposition 26 (2010) broadened the definition of a "tax" to include some levies previously considered fees or charges, resulting in a wider application of voter-approval requirements.

   2. Proposition 39 as precedent: This constitutional amendment appears at least loosely modeled after Proposition 39 of 2000, which amended the California Constitution to allow school facility bond measures to be approved by 55% (rather than two-thirds) of the voters in local elections. Proposition 39 also allowed property taxes to exceed the 1% limit in order to repay the bonds. Proposition 39 provided that this lowered vote threshold would apply only if the local bond measure submitted to voters included the following:

      1. A requirement that the bond funds can be used only for construction, rehabilitation, equipping of school facilities, or the acquisition or lease of real property for school facilities;

      2. A specific list of school projects to be funded and certification that the school board has evaluated safety, class size reduction, and information technology needs in developing the list; and,

      3. A requirement that the school board conduct annual, independent financial audits until all bond funds have been spent.

Despite being opposed by groups such as the Howard Jarvis Taxpayers Association, which argued the lower vote threshold was unnecessary and would lead to higher property taxes, Proposition 39 passed with roughly 53.4% of the vote on November 7, 2000.

3. Direct democracy in action: In June 2014, California voters decided over 140 local measures; among these were 85 measures seeking approval for taxes or bonds. A July 2014 report issued by local finance expert Michael Coleman noted that, "[c]onsistent with results in prior elections, majority vote tax measures fared much better than supermajority measures." At the time of the report's release, only one majority vote measure was trailing at the polls. While roughly two out of three supermajority measures passed in the June 2014 election, the report noted that, typically, only about one-half of two-thirds supermajority measures succeed.
   
   Solano County notes that it is one of many counties throughout California that has not been able to obtain voter approval for a countywide local sales tax for transportation purposes due to the two-thirds vote requirement. On two separate occasions, Solano County received the support of over 60% of voters for a local countywide sales tax for transportation, but not the two-thirds required for passage. The Solano Transportation Authority has been forced to manage scarce local revenues by phasing transportation projects over several years, which results in a longer project construction period with increased impacts on surrounding communities, including disruption to local businesses.

4. Is there a rhyme or reason? Ideally, a state's requirements for approving local tax measures should be easy for residents to understand and reflect overarching objectives regarding citizen involvement in local taxation decisions. As the Legislative Analyst's Office (LAO) has noted, however, California's voter-approval process for local tax measures is both complex and "does not appear to follow any particular set of unifying principles." In evaluating potential changes to California's voter-approval requirements, the LAO has suggested the state begin by considering what objectives voter-approval requirements are designed to fulfil and evaluate potential changes based on whether or not they serve these purposes. Specifically, the LAO has suggested that the Legislature may wish to consider the following questions:

   1. Should voter-approval requirements vary based on the use of the revenue?

   2. Should voter-approval requirements vary across local governments?

   3. How should voter-approval requirements for revenue measures to repay infrastructure bonds or other long-term debt differ from requirements for revenues raised for local government operations, if at all?

   4. What objectives does the existing distinction between general taxes and special taxes achieve?

The current supermajority vote requirement makes it more difficult for local governments to impose taxes for specific purposes like transportation. The two-thirds threshold essentially empowers a minority of voters to block revenue measures that have been approved both by their elected representatives and, in many cases, a majority of their fellow citizens.

5. California's transportation infrastructure: On October 28, 2014, the biennial California Statewide Local Streets and Roads Needs Assessment¹ was released, with alarming results. The report noted that the condition of the system that makes up more than 80% of California's roadways is on the path to failure. In addition, the survey found that pavement conditions are declining and that existing funding levels are insufficient to repair or maintain streets, roads, bridges, sidewalks, storm drains, and traffic signs. The report noted that deferring this crucial work will likely double the cost of repairs in the future and impede efforts to reduce greenhouse gas emissions and other air pollutants. Finally, the report estimated that, in the next 10 years, the local system will have a $78.3 billion funding shortfall.

6. Prior legislative effort: This constitutional amendment is substantially identical to ACA 23 (Perea), introduced in the 2011-12 Regular Session. ACA 23 (Perea) passed the Assembly Committee on Local Government by a vote of 6 to 3, passed the Assembly Committee on Appropriations by a vote of 12 to 5, and died on the Inactive File.

7. Double-referral: This constitutional amendment was double-referred to the Assembly Committee on Transportation, which passed this constitutional amendment by a vote of 10 to 5 on April 27, 2015. The Assembly Committee on Transportation analysis notes the following:

   1. Since 1923, California has relied heavily on gas taxes to support both local streets and the state highway system. Gas taxes have the benefit of being fairly inexpensive to administer and, until recently, have served as a reasonably equitable means of distributing the tax burden amongst drivers in rough proportion to their use of the roadway system.

   2. The gas tax is no longer a viable or sustainable revenue source.

   3. According to the Institute on Taxation and Economic Policy, two important developments have combined to reduce greatly the functionality of the gas tax: (a) the purchasing power of gas tax revenues has declined significantly due to inflation; and, (b) Improvements in vehicle fuel efficiency have cut directly into gas tax revenues by allowing drivers to travel greater distances with less gasoline.

REGISTERED SUPPORT / OPPOSITION:

Support

ACT, Southern California

AIA Los Angeles

Alameda-Contra Costa Transit District

Alameda County Transportation Commission

American Society of Civil Engineers Region 9

Apostolic Faith Center

Atkinson Contractors

California Asphalt Pavement Association

California Association of Councils of Governments

California Greenworks, Inc.

California Kids IAQ

California State Association of Counties

California Transit Association

California Transportation Commission

Capitol Corridor Joint Powers Authority

Circulate San Diego

City of Camarillo

City of Concord

City of Fairfield Councilmember Rick Vaccaro

City of Fairfield Mayor Harry T. Price

City of Fairfield Vice-Mayor Chuck Timm

City of Indian Wells

City of Lomita

City of San Jose

City of Santa Monica

City of Suisun City

City of West Hollywood

Civic Resource Group

Clean Air Now

Climate Resolve

Coalition For A Safe Environment

Coalition for Clean Air

Community Dreams

Community Health Councils

Council of Infill Builders

Cubic

Culver City Mayor Meghan Sahli-Wells

Diverse Strategies for Organizing

El Grove Chamber of Commerce

FAST

Gary Shelton Consulting

Glendale City Employees Association

Global Green

Green Commuter

HDR

IBEW Local 11

Ironworkers Local 433

JMB Realty

Kal Krishnan Consultant Services

Laborers Local 300

L.A. Business Council

L.A. County Federation of Labor

L.A./Orange County Building & Construction Trades Council

LA River Revitalization Corp.

League of California Cities

Los Angeles Area Chamber of Commerce

Los Angeles – San Diego – San Luis Obispo Rail Corridor Agency Board of Directors

Los Angeles Walks

Los Angeles World's Fair

MNS Engineers

Move LA

Natural Resources Defense Council

Occidental College Urban & Environmental Policy Institute

Organization of SMUD Employees

Parsons Brinkerhoff

Sacramento Metropolitan Chamber of Commerce

San Bernardino Public Employees Association

San Francisco Municipal Transportation Agency

San Luis Obispo County Employees Association

Santa Clara Valley Transportation Authority

Santa Cruz County Regional Transportation Commission

Santa Cruz Metropolitan Transit District

Santa Monica Spoke

SENER Engineering & Systems Inc.

Sieroty Company, Inc.

Solano County Board of Supervisors

Solano Transportation Authority

South Bay Cities Council of Governments

Southern California Transit Advocates

The Transit Coalition

Town of Danville

Transform

Transportation Agency for Monterey County

Transportation Authority of Marin

Tristan Management and Consulting

Valley Industry and Commerce Association

Ventura County Transportation Commission

Westside Center for Independent Living

Opposition

Air Logistics Corporation

Apartment Association of Greater Los Angeles

Associated Builders and Contractors of California

California Association of Realtors

California Chamber of Commerce

California Manufacturers & Technology Association

California Retailers Association

California Tank Lines Inc.

California Taxpayers Association

Chemical Transfer Co.

Howard Jarvis Taxpayers Association

National Federation of Independent Business

Orange County Business Council

Orange County Taxpayers Association

Santa Barbara Rental Property Association

Solano County Taxpayers Association

Southwest California Legislative Council

Superior Tank Wash Inc.

West Coast Leasing, LLC

Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098

Date of Hearing: April 27, 2015

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:ACA 4

Author:(Frazier) – As Introduced Ver:February 27, 2015

SUBJECT: Local government transportation projects: special taxes: voter approval

SUMMARY: Reduces the voter threshold from two-thirds to 55% for passage of local sales taxes dedicated to transportation purposes. Specifically, this constitutional amendment:

1. Provides that the imposition, extension, or increase of a special tax by a local government for the purpose of providing funding for local transportation projects under its jurisdiction requires the approval of 55% of the voters voting on the proposition.

2. States that a special tax for the purpose providing funding for local transportation projects is not deemed to have been increased if it is imposed at a rate not higher than the maximum rate previously approved in the manner required by law.

3. Defines "local transportation projects" to mean the planning, design, development, financing, construction, reconstruction, rehabilitation, improvement, acquisition, lease, operation, or maintenance of local streets, roads, and highways, state highways and freeways, and public transit systems.

EXISTING LAW:

1. Authorizes cities, counties, and special districts to impose a general tax for general governmental purposes with the approval of a majority of voters.

2. Authorizes cities, counties, and special districts to impose a special tax for specified purposes with the approval of two-thirds of the voters.

3. Authorizes school districts, community college districts, or county offices of education to incur school bonded indebtedness with the approval of 55% of the voters voting on the bond measure, requires bond proceeds only be used for purposes specified in the Constitution, and requires an audit to ensure that the funds have been expended only on the specific projects listed.

FISCAL EFFECT: Unknown

COMMENTS: Since 1923, California and the rest of the nation has relied heavily on gas taxes to support its local streets and roads and state highway system. Gas taxes have the benefit of being fairly inexpensive to administer. Furthermore, until recently, they have been a reasonably equitable means of distributing the tax burden amongst drivers in rough proportion to their use of the roadway system.

The gas tax is no longer a viable, sustainable revenue source, however. According to the Institute on Taxation and Economic Policy, two important developments have combined to greatly reduce the functionality of the gas tax:

1. The purchasing power of gas tax revenues has declined significantly due to inflation. If current tax rates, set in 1994, remain unchanged through 2035, real gas tax revenues will have declined by over 40%; and,

2. Improvements in vehicle fuel efficiency have cut directly into gas tax revenues by allowing drivers to travel farther distances while buying less gasoline. From an environmental and energy policy standpoint, this is undeniably desirable. Decreased fuel consumption reduces greenhouse gasses and our dependence on foreign oil. But with vehicle fuel efficiency set to nearly double in the next 20 years, gas tax revenues will be cut nearly in half.

In the face of rapidly declining gas tax revenues, voters in twenty counties throughout California have turned to imposing special taxes for local transportation projects and programs in their county. Collectively, these counties generate between $3 billion and $4 billion annually - money that is used for transportation projects as identified and prioritized by each county and ratified by the voters. These counties, referred to as "self-help counties," have consistently provided reliable and stable funding for transportation—funding that far outstrips state and federal funding on an annual basis. They also have in place:

1. Accountability measures.

2. Local elected oversight on taxpayer's dollars.

3. Expenditure plans that explicitly detail how funds will be spent, allowing the public to fully understand where their local transportation dollars go.

Despite the success of these self-help counties, a two-thirds voter approval threshold is a near-impossible hurdle for other counties that are aspiring to be self-help counties. As a result, these counties are deprived of much-needed funding for transportation infrastructure, maintenance, and operations.

ACA 4 could benefit these aspiring counties as well existing self-help counties whose existing special transportation tax is due to expire. If ACA 4 secures the necessary votes for passage, any county with a special transportation tax on the ballot at the same time need only achieve the 55% threshold to be successful.

Writing in support of ACA 4, the California Transportation Commission points out that, "Sales tax investments, directed towards local transportation needs, have proven to provide tremendous benefit to the overall state transportation system. Funds generated from sales tax measures serve to reduce congestion, improve public transportation, and enable local governments to better address the critical transportation needs of the state."

Opponents argue that a tax imposed on a group of taxpayers, rather than the general public, is worthy of a greater level of voter sanction and, thus, the existing two-thirds vote requirement is justified. They also argue that the two-thirds vote requirement serves two other purposes: to force local governments to justify a clear and critical need for a particular public function or program; and 2) to hold local governments to a higher level of accountability for taxes that are earmarked for specific purposes. Opponents fear that ACA 4 would undo these safeguards.

Previous legislation: ACA 23 (Perea) of 2012, was virtually identical to this constitutional amendment. ACA 23 died on the Assembly Third Reading inactive file.

Double-referred­: This constitutional amendment will be referred to the Assembly Revenue and Taxation Committee should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

California State Association of Counties

California Transit Association

California Transportation Commission

Glendale City Employees Association

Move LA

Organization of SMUD Employees

Sacramento Metropolitan Chamber of Commerce

San Bernardino Public Employees Association

San Luis Obispo County Employees Association

Santa Clara Valley Transportation Authority

Solano Transportation Authority

Ventura County Transportation Commission

Opposition

California Taxpayers Association

Air Logistics Corporation

Associated Builders and Contractors of California

California Association of Realtors

California Retailers Association

California Tank Lines, Inc.

Orange County Business Council

Southwest California Legislative Council

California Chamber of Commerce

Chemical Transfer Company

Howard Jarvis Taxpayers Association

National Federation of Independent Business

West Coast Leasing, LLC

California Manufacturers and Technology Association

Orange County Taxpayers Association

Superior Tank Wash, Inc.

West Coast Leasing, LLC

Analysis Prepared by: Janet Dawson / TRANS. / (916) 319-2093