Existing law creates the Riverside County Transportation Commission with specified powers and duties relative to transportation planning and programming in Riverside County. Existing law authorizes the commission to impose a transactions and use tax for transportation purposes subject to approval of the voters, which, pursuant to the California Constitution, requires approval of ²/₃ of the voters. Existing law requires that the tax be imposed in accordance with the procedures and requirements set forth in the Transactions and Use Tax Law, including a requirement that the combined rate of all taxes that may be imposed in accordance with that law in the county not exceed 2%. Existing law provides that the maximum tax rate that may be imposed by the commission for transportation purposes is ¹/₂ of 1%.

This bill would authorize the commission to impose a maximum tax rate for transportation purposes of 1% instead of ¹/₂of 1%, subject to voter approval, and would specify that the tax rate imposed by the commission would not be considered for purposes of the combined rate limit. The bill would prohibit the commission from imposing a tax rate other than 1%, or ³/₄, ¹/₂, or ¹/₄ of 1% unless specifically authorized by statute.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Riverside.

Existing law creates the Riverside County Transportation Commission with specified powers and duties relative to transportation planning and programming in Riverside County. Existing law authorizes the commission to impose a transactions and use tax for transportation purposes subject to approval of the voters, which, pursuant to the California Constitution, requires approval of ²/₃ of the voters. Existing law requires that the tax be imposed in accordance with the procedures and requirements set forth in the Transactions and Use Tax Law, including a requirement that the combined rate of all taxes that may be imposed in accordance with that law in the county not exceed 2%. Existing law provides that the maximum tax rate that may be imposed by the commission for transportation purposes is ¹/₂ of 1%.

This bill would authorize the commission to impose a maximum tax rate for transportation purposes of 1% instead of ¹/₂of 1%, subject to voter approval, and would specify that the tax rate imposed by the commission would not be considered for purposes of the combined rate limit. The bill would prohibit the commission from imposing a tax rate other than 1%, or ³/₄, ¹/₂, or ¹/₄ of 1% unless specifically authorized by statute.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Riverside.

Existing law creates the Riverside County Transportation Commission with specified powers and duties relative to transportation planning and programming in Riverside County. Existing law authorizes the commission to impose a transactions and use tax for transportation purposes subject to approval of the voters, which, pursuant to the California Constitution, requires approval of ²/₃ of the voters. Existing law requires that the tax be imposed in accordance with the procedures and requirements set forth in the Transactions and Use Tax Law, including a requirement that the combined rate of all taxes that may be imposed in accordance with that law in the county not exceed 2%. Existing law provides that the maximum tax rate that may be imposed by the commission for transportation purposes is ¹/₂ of 1%, or any lesser percentage. 1%.

This bill would authorize the commission to impose a maximum tax rate for transportation purposes of 1%, 1% instead of ¹/₂of 1%, subject to voter approval. approval, and would specify that the tax rate imposed by the commission would not be considered for purposes of the combined rate limit. The bill would prohibit the commission from imposing a tax rate other than 1%, or ³/₄, ¹/₂, or ¹/₄ of 1% unless specifically authorized by statute.

Existing law creates the Riverside County Transportation Commission with specified powers and duties relative to transportation planning and programming in Riverside County. Existing law authorizes the commission to impose a transactions and use tax for transportation purposes subject to approval of the voters, which, pursuant to the California Constitution, requires approval of ²/₃ of the voters. Existing law provides that the maximum tax rate that may be imposed by the commission is ¹/₂ of 1%, or any lesser percentage.

This bill would authorize the commission to impose a maximum tax rate for transportation purposes of 1%, subject to voter approval. The bill would prohibit the commission from imposing a tax rate other than 1%, or ³/₄, ¹/₂, or ¹/₄ of 1% unless specifically authorized by statute.

Existing law creates the Riverside County Transportation Commission with specified powers and duties relative to transportation planning and programming in Riverside County. Existing law authorizes the commission to impose a transactions and use tax for transportation purposes subject to approval of the voters, which, pursuant to the California Constitution, requires approval of ²/₃ of the voters. Existing law provides that the maximum tax rate that may be imposed by the commission is ¹/₂ of 1%, or any lesser percentage.

This bill would authorize the commission to impose a maximum tax rate for transportation purposes of 1%, subject to voter approval. The bill would prohibit the commission from imposing a tax rate other than 1%, or ³/₄, ¹/₂, or ¹/₄ of 1% unless specifically authorized by statute.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1189

Author:(Eduardo Garcia)

As Amended Ver:August 29, 2017

Majority vote

Original Committee Reference: L. GOV.

SUMMARY: Increases the maximum transactions and use tax rate, from 0.5% to 1%, which Riverside County Transportation Commission (RCTC) may impose, subject to voter approval.

The Senate amendments:

1. Prohibit the transactions and use tax rate authorized pursuant to this bill from being considered for purposes of the combined 2% cap established by existing law.
2. Find and declare that a special statute is necessary and that a general statute cannot be made applicable within the meaning of the California Constitution because of the need to provide a local funding option to meet the transportation needs of Riverside County.
3. Make technical changes.

AS PASSED BY THE ASSEMBLY, this bill:

1. Made changes to the existing authority granted to RCTC to impose a transactions and use tax by increasing the maximum tax rate from 0.5% to 1%, which RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibited RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.
3. Made conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.

FISCAL EFFECT: None

COMMENTS:

1. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use. 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.

In Riverside County, RCTC imposed a countywide transactions and use tax of 0.5% and multiple cities have 1% transactions and use tax. The voters approved the 0.5% transactions and use tax proposed by RCTC in 1988. In 2002, voters approved the extension of Measure A, the 0.5% transactions and use tax until, June 30, 2039.

1. Bill Summary. Existing law authorizes RCTC to impose up to a 0.5% transactions and use tax. RCTC utilized this authority to impose a transactions and use tax which was approved by the voters in 1988 and extended by the voters in 2002. Riverside County has not reached the 2% combined cap, but RCTC has reached the 0.5% maximum tax rate established by their statutory authority. This bill increases the maximum transactions and use tax rate that RCTC is authorized to impose from 0.5% to 1%. This bill prohibits the transactions and use tax authorized pursuant to this bill from being considered for purposes of the 2% combined rate cap established under existing law. This bill prohibits RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.
2. Author's Statement. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California's fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What's more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
3. Arguments in Support. The Riverside County Transportation Commission argues, "RCTC is proud to be part of the self-help county legacy its residents and voters have supported since 1988 when RCTC's first half-cent sales tax measure (Measure A) was implemented. While RCTC continues to deliver on the projects identified in the Measure A expenditure plan, due to a lack of state and federal matching funds, as well as the expected growth of our region, it has become objectively apparent that one-half of one cent cannot meet the mobility needs of Riverside County. As one of California's fastest growing counties, Riverside must seize its own destiny and invest in needed transportation improvement timely."
4. Arguments in Opposition. The Howard Jarvis Taxpayers Association states, "Locally, Riverside County has a 7.75% sales tax rate already. The statewide 7.5% sales tax rate is the highest in the nation and the 8.44% combined state/local rate according to the Tax Foundation is eighth in the nation. Dozens of municipalities already have double-digit sales tax rates. This certainly will not help the families struggling to make ends meet in at least 10 counties that have unemployment rates higher than the statewide average, including in Riverside County."

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0001548

 THIRD READING  

Bill No: AB 1189

Author:

Amended: 8/29/17 in Senate

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 9-3, 6/13/17

AYES: Beall, Cannella, Allen, Atkins, McGuire, Mendoza, Skinner, Wieckowski, Wiener

NOES: Bates, Gaines, Morrell

NO VOTE RECORDED: Roth

SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 6/28/17

AYES: McGuire, Beall, Hernandez, Hertzberg, Lara

NOES: Nguyen

NO VOTE RECORDED: Moorlach

ASSEMBLY FLOOR: 50-22, 4/20/17 - See last page for vote

SUBJECT:

SOURCE: Riverside County Transportation Commission

DIGEST:

This bill increases the maximum transactions and use tax rate, from 0.5% to 1%, the Riverside County Transportation Commission (RCTC) may impose, subject to voter approval.

Senate Floor Amendments of 8/29/17 exempt RCTC from the two percent transaction and use tax threshold.

ANALYSIS:

Existing law:

1. Authorizes cities and counties to impose a local sale and use tax. Prohibits, in any county, the combined rate of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Establishes the Riverside County Transportation Sales Tax Act, which authorizes RCTC to impose a transaction and use tax at a maximum rate of 0.5% pursuant to existing law which governs transactions and use taxes.
3. Authorizes RCTC to impose a maximum transaction and use tax rate of 0.5% or any lesser percentage. Authorizes RCTC to increase the tax rate subject to voter approval.
4. Requires the ordinance to be effective only if adopted by a two-thirds vote of RCTC Board of Directors and approved by two-thirds of the voters in the special election called by the board of supervisors or at any regular election.
5. Requires RCTC to specify in the ordinance that no more than 1% of the annual net amount of tax revenues may be used to fund the salaries and benefits of RCTC staff in administering the programs funded from the tax.
6. Requires specified information in the ordinance, including an expenditure plan.
7. Requires RCTC, with respect to transactions and use tax revenues, to adopt an annual budget and cause a post audit of the financial transactions and records, as specified.

This bill:

1. Makes changes to the existing authority granted to the RCTC to impose a transaction and use tax by increasing the maximum tax rate from 0.5% to 1% RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibits RCTC from levying a transaction and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.

1. Makes conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.
2. Provides that if a transactions and use tax rate increase is approved, the rate increase is not subject to the two percent transactions and use tax cap.

Background

1. Purpose. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California’s fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What’s more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
2. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use.

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 transaction and use tax, if voters approve the tax. Currently, twenty four counties within California have transactions and use taxes for transportation.

1. Measure A. Measure A, a half-cent sales tax measure, was approved by Riverside County voters in 1988 with 78.8% approval. This original measure ran for 20 years and sunset in 2009. Measure A was reauthorized by the voters in 2002 with 69.2% approval. Measure A will now sunset in June 2039. Revenue generated through Measure A has funded transportation improvement projects within Riverside County on State Route 60, State Route 91, and the State Route 60/91/215 interchange.
2. Local needs. Despite the new wave of transportation funding through SB 1 (Beall, Chapter 5, Statutes of 2017), transportation needs have not been completely met: Riverside County is still experiencing significant transportation funding shortfalls. While SB 1 will provide new funding targeted at road repair and rehabilitation, local agencies (including RCTC) continue to struggle to fund other local transportation projects and programs such as transit operations and highway improvements. For example, according to RCTC’s Strategic Assessment, the report identifies a $15.8 billion shortfall to build the capital infrastructure to sustain the county’s needs by 2039 (including transit, active transportation, highways, and rail), and a $238 million one-time deficit for transit maintenance and operations. This bill aims to provide RCTC with a local funding option that may be used in the future (upon voter approval) to meet the region’s transportation needs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/29/17)

Riverside County Transportation Commission (source)

California State Council of Laborers

California-Nevada Conference of Operating Engineers

Coachella Valley Association of Governments

HNTB

Mobility 21

Riverside Transit Agency

Self-Help Counties Coalition

OPPOSITION: (Verified 8/29/17)

Howard Jarvis Taxpayers Association

ASSEMBLY FLOOR: 50-22, 4/20/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Eggman, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Chávez, Chen, Choi, Dahle, Flora, Fong, Gallagher, Harper, Irwin, Kiley, Lackey, Maienschein, Melendez, Obernolte, Patterson, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Brough, Cervantes, Cunningham, Mathis, Mayes, Muratsuchi, Quirk-Silva, Ridley-Thomas

Prepared by:

8/30/17 10:19:46

**** END ****

 THIRD READING  

Bill No: AB 1189

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 9-3, 6/13/17

AYES: Beall, Cannella, Allen, Atkins, McGuire, Mendoza, Skinner, Wieckowski, Wiener

NOES: Bates, Gaines, Morrell

NO VOTE RECORDED: Roth

SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 6/28/17

AYES: McGuire, Beall, Hernandez, Hertzberg, Lara

NOES: Nguyen

NO VOTE RECORDED: Moorlach

ASSEMBLY FLOOR: 50-22, 4/20/17 - See last page for vote

SUBJECT:

SOURCE: Riverside County Transportation Commission

DIGEST:

This bill increases the maximum transactions and use tax rate, from 0.5% to 1%, the Riverside County Transportation Commission (RCTC) may impose, subject to voter approval.

ANALYSIS:

Existing law:

1. Authorizes cities and counties to impose a local sale and use tax. Prohibits, in any county, the combined rate of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Establishes the Riverside County Transportation Sales Tax Act, which authorizes RCTC to impose a transaction and use tax at a maximum rate of 0.5% pursuant to existing law which governs transactions and use taxes.
3. Authorizes RCTC to impose a maximum transaction and use tax rate of 0.5% or any lesser percentage. Authorizes RCTC to increase the tax rate subject to voter approval.
4. Requires the ordinance to be effective only if adopted by a two-thirds vote of RCTC Board of Directors and approved by two-thirds of the voters in the special election called by the board of supervisors or at any regular election.
5. Requires RCTC to specify in the ordinance that no more than 1% of the annual net amount of tax revenues may be used to fund the salaries and benefits of RCTC staff in administering the programs funded from the tax.
6. Requires specified information in the ordinance, including an expenditure plan.
7. Requires RCTC, with respect to transactions and use tax revenues, to adopt an annual budget and cause a post audit of the financial transactions and records, as specified.

This bill:

1. Makes changes to the existing authority granted to the RCTC to impose a transaction and use tax by increasing the maximum tax rate from 0.5% to 1% RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibits RCTC from levying a transaction and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.

1. Makes conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.

Background

1. Purpose. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California’s fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What’s more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
2. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use.

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 transaction and use tax, if voters approve the tax. Currently, twenty four counties within California have transactions and use taxes for transportation.

1. Measure A. Measure A, a half-cent sales tax measure, was approved by Riverside County voters in 1988 with 78.8% approval. This original measure ran for 20 years and sunset in 2009. Measure A was reauthorized by the voters in 2002 with 69.2% approval. Measure A will now sunset in June 2039. Revenue generated through Measure A has funded transportation improvement projects within Riverside County on State Route 60, State Route 91, and the State Route 60/91/215 interchange.
2. Local needs. Despite the new wave of transportation funding through SB 1 (Beall, Chapter 5, Statutes of 2017), transportation needs have not been completely met: Riverside County is still experiencing significant transportation funding shortfalls. While SB 1 will provide new funding targeted at road repair and rehabilitation, local agencies (including RCTC) continue to struggle to fund other local transportation projects and programs such as transit operations and highway improvements. For example, according to RCTC’s Strategic Assessment, the report identifies a $15.8 billion shortfall to build the capital infrastructure to sustain the county’s needs by 2039 (including transit, active transportation, highways, and rail), and a $238 million one-time deficit for transit maintenance and operations. This bill aims to provide RCTC with a local funding option that may be used in the future (upon voter approval) to meet the region’s transportation needs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/30/17)

Riverside County Transportation Commission (source)

California State Council of Laborers

California-Nevada Conference of Operating Engineers

Coachella Valley Association of Governments

HNTB

Mobility 21

Riverside Transit Agency

Self-Help Counties Coalition

OPPOSITION: (Verified 6/30/17)

Howard Jarvis Taxpayers Association

ASSEMBLY FLOOR: 50-22, 4/20/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Eggman, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Chávez, Chen, Choi, Dahle, Flora, Fong, Gallagher, Harper, Irwin, Kiley, Lackey, Maienschein, Melendez, Obernolte, Patterson, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Brough, Cervantes, Cunningham, Mathis, Mayes, Muratsuchi, Quirk-Silva, Ridley-Thomas

Prepared by:

6/30/17 11:50:43

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

Riverside County Transportation Commission: transactions and use tax

Increases the maximum rate of transactions and use tax that can be imposed by the Riverside County Transportation Commission from .5% to 1%.

Background

State law imposes the sales tax on every retailer engaged in business in this state that sells tangible personal property, and requires them to collect the appropriate tax from the purchase and remit the amount to the Board of Equalization (BOE). Sales tax applies whenever a retail sale is made, which is basically any sale other than one for resale in the regular course of business. Unless the person pays the sales tax to the retailer, he or she is liable for the use tax, which is imposed on any person consuming tangible personal property in the state. The use tax rate is the same rate as the sales tax rate, and must be remitted on or before the last day of the month following the quarterly period in which the person made the purchase. The current rate is 7.25% as shown in the table below.

Additionally, cities and counties may increase the sales and use tax, also known as district or transactions and use taxes (TUTs), rates by up to 2% for either specific or general purposes. The California Constitution states that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote (Article XIII C). Proposition 13 (1978) required a 2/3 vote of each house of the Legislature for state tax increases, and 2/3 vote of local voters for local special taxes. Proposition 62 (1986) prohibited local agencies from imposing general taxes without majority approval of local voters, and a 2/3 vote for special taxes. Proposition 218 (1996) extended those vote thresholds to charter cities and limited local agencies’ powers to levy new assessments, fees, and taxes. Local agencies generally propose to increase taxes by adopting an ordinance or a resolution at a public hearing.

According to BOE, as of April 1, 2017, 257 local agencies impose their own transactions and use taxes: 6 of 54 county-imposed taxes are general purpose taxes while 48 are special taxes, with 35 dedicated for transportation purposes. Of the 203 city-imposed taxes, 163 are general and 40 are special purpose. Generally, TUT may be imposed in 0.125% increments, up to a total of 2% within the county.

The Riverside County Transportation Sales Tax Act allows the Riverside County Transportation Commission to impose a TUT in the unincorporated area of Riverside County for transportation purposes at a maximum rate of 0.5% (AB 1637, Eaves, 1987). The Commission can spend tax proceeds on the construction, capital acquisition, maintenance, and operation of streets, roads, highways, including state highways, and public transit systems. The Commission must first enact an ordinance to do so by 2/3 vote of its board, which the voters must subsequently approve. In 1988, Riverside County voters approved Measure A, a 0.5% sales tax measure, which was subsequently reauthorized by the voters in 2002 until June 2039.

The Act states that the Commission may impose the tax at a maximum rate of 0.5%, thereby precluding the Commission from imposing another tax on top of Measure A. The Commission wants to alter the Act to add 0.5% to its current maximum rate, and clarify its authority to impose taxes in increments of .25%.

Proposed Law

Assembly Bill 1189 amends the Riverside County Transportation Sales Tax Act to increase the maximum rate of transactions and use tax that can be imposed by the Riverside County Transportation Commission from .5% to 1%. The bill precludes the Commission from imposing a tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%. The measure also makes a change to require any extension of a tax to be enacted by 2/3 of voters, not a majority, consistent with Constitutional requirements.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California’s fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What’s more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."

2. Too high? While the state sales and use tax rate decreased from 7.5% to 7.25% on January 1, 2017, the rate is high compared to other states, especially when adding on locally-imposed TUTs. Tax experts argue that sales and use taxes are regressive, meaning that the tax incidence falls more on low-income individuals than high-income individuals because they would be spending a greater percentage of their income on taxable sales. AB 1189 would allow the Riverside County Transportation Commission to add another 0.5% TUT rate, which when combined with Measure A’s current 0.5% would push the rates in the nine Riverside County cities with 1% rates to 9.25% (Cathedral City, Coachella, Hemet, Indio, La Quinta, Menifee, Palm Springs, Riverside, and Temecula). The Committee may wish to consider whether AB 1189 allows for a rate which is too high.

3. Incoming! On June 13^th, the Committee on Transportation and Housing approved AB 1189 by a vote of 9 to 3. The Committee on Governance and Finance is hearing the measure as the Committee of second reference.

Assembly Actions

Assembly Local Government Committee: 9-3

Assembly Floor: 50-22

Support and Opposition

(6/23/17)

Support: California State Council of Laborers, California-Nevada Conference of Operating Engineers, Coachella Valley Association of Governments, HNTB, Mobility 21, Riverside County Transportation Commission, Riverside Transit Agency, Self-Help Counties Coalition

Opposition: Howard Jarvis Taxpayers Association.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/13/2017

SUBJECT: .

DIGEST: This bill increases the maximum transactions and use tax rate, from 0.5% to 1%, Riverside County Transportation Commission (RCTC) may impose, subject to voter approval.

ANALYSIS:

Existing law:

1. Authorizes cities and counties to impose a local sale and use tax. Prohibits, in any county, the combined rate of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Establishes the Riverside County Transportation Sales Tax Act, which authorizes RCTC to impose a transaction and use tax at a maximum rate of 0.5% pursuant to existing law which governs transactions and use taxes.
3. Authorizes RCTC to impose a maximum transaction and use tax rate of 0.5% or any lesser percentage. Authorizes RCTC to increase the tax rate subject to voter approval.
4. Requires the ordinance to be effective only if adopted by a two-thirds vote of RCTC Board of Directors and approved by two-thirds of the voters in the special election called by the board of supervisors or at any regular election.
5. Requires RCTC to specify in the ordinance that no more than 1% of the annual net amount of tax revenues may be used to fund the salaries and benefits of RCTC staff in administering the programs funded from the tax.
6. Requires specified information in the ordinance, including an expenditure plan.
7. Requires RCTC, with respect to transactions and use tax revenues, to adopt an annual budget and cause a post audit of the financial transactions and records, as specified.

This bill:

1. Makes changes to the existing authority granted to the Riverside County Transportation Commission (RCTC) to impose a transaction and use tax by increasing the maximum tax rate from 0.5% to 1% RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibits RCTC from levying a transaction and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.

1. Makes conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.

COMMENTS:

1. Purpose. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California’s fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What’s more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
2. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use.

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 transaction and use tax, if voters approve the tax. Currently, twenty four counties within California have transactions and use taxes for transportation.

1. Measure A. Measure A, a half-cent sales tax measure, was approved by Riverside County voters in 1988 with 78.8% approval. This original measure ran for 20 years and sunset in 2009. Measure A was reauthorized by the voters in 2002 with 69.2% approval. Measure A will now sunset in June 2039. Revenue generated through Measure A has funded transportation improvement projects within Riverside County on State Route 60, State Route 91, and the State Route 60/91/215 interchange.
2. SB 1. Recently passed by the Legislature and signed by the Governor, SB 1 (Beall, Chapter 5, Statutes of 2017) is a transportation funding package projected to bring in $5.2 billion annually for road rehabilitation, transit improvement, and trade corridor enhancement projects. The historic passage of this transportation funding package was in response to the clear message that the state’s roads and highways and transit systems are in dire need of significant improvements and rehabilitation. This past winter season’s storms exacerbated this need by requiring the State Department of Transportation (Caltrans) to issue over $800 million in emergency contracts for road repair. Once implemented, SB 1 revenues will assist local transportation and transit agencies in cutting down on the existing backlog in their respective jurisdictions.
3. Local needs. Despite this new wave of transportation funding, the need has not been met: Riverside County is still experiencing significant transportation funding shortfalls. While SB 1 will provide new funding targeted at road repair and rehabilitation, local agencies (including RCTC) continue to struggle to fund other local transportation projects and programs such as transit operations and highway improvements. For example, according to RCTC’s Strategic Assessment, the report identifies a $15.8 billion shortfall to build the capital infrastructure to sustain the county’s needs by 2039 (including transit, active transportation, highways, and rail), and a $238 million one-time deficit for transit maintenance and operations. This bill aims to provide RCTC with a local funding option that may be used in the future (upon voter approval) to meet the region’s transportation needs.
4. Double Referral. This bill has been double referred to the Senate Governance and Finance Committee.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 7, 2017.)

SUPPORT:

Riverside County Transportation Commission [SPONSOR]

California State Council of Laborers

California-Nevada Conference of Operating Engineers

Coachella Valley Association of Governments

HNTB

Mobility 21

Riverside Transit Agency

Self-Help Counties Coalition

OPPOSITION:

Howard Jarvis Taxpayers Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1189

Author:(Eduardo Garcia)

As Amended Ver:March 16, 2017

Majority vote

SUMMARY: Increases the maximum transactions and use tax rate, from 0.5% to 1%, Riverside County Transportation Commission may impose, subject to voter approval. Specifically, this bill:

1. Makes changes to the existing authority granted to the Riverside County Transportation Commission (RCTC) to impose a transactions and use tax by increasing the maximum tax rate from 0.5% to 1% RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibits RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.
3. Makes conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.

EXISTING LAW:

1. Authorizes cities and counties to impose a local sales and use tax. Authorizes cities and counties to impose transactions and use taxes. Prohibits, in any county, the combined rate of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Establishes the Riverside County Transportation Sales Tax Act, which authorizes RCTC to impose a transactions and use tax at a maximum rate of 0.5% pursuant to existing law which governs transactions and use taxes.
3. Authorizes RCTC to impose a maximum transactions and use tax rate of 0.5% or any lesser percentage. Authorizes RCTC to increase the tax rate subject to voter approval.
4. Requires the ordinance to be effective only if adopted by a two-thirds vote of RCTC and approved by two-thirds of the voters in the special election called by the board of supervisors or at any regular election.
5. Requires RCTC to specify in the ordinance that no more than 1% of the annual net amount of tax revenues may be used to fund the salaries and benefits of RCTC staff in administering the programs funded from the tax.
6. Requires specified information in the ordinance, including an expenditure plan.
7. Requires RCTC, with respect to transactions and use tax revenues, to adopt an annual budget and cause a post audit of the financial transactions and records, as specified.

FISCAL EFFECT: None.

COMMENTS:

1. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use.

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. According to California City Finance, since 1995 local voters have considered 64 countywide transportation sales tax measures. Only 28 of those measures garnered the necessary two-thirds votes for passage. Currently, 24 counties have transactions and use taxes for transportation.

In Riverside County, RCTC imposed a countywide transactions and use tax of 0.5% and multiple cities have 1% transactions and use tax. The voters approved the 0.5% transactions and use tax proposed by RCTC in 1988. In 2002, voters approved the extension of Measure A, the 0.5% transactions and use tax until, June 30, 2039.

1. Bill Summary. Existing law authorizes RCTC to impose up to a 0.5% transactions and use tax pursuant to Transactions and Use Tax Law which establishes a combined rate in each county of 2%. RCTC utilized this authority to impose a transactions and use tax which was approved by the voters 1988 and extended by the voters in 2002. Riverside County has not reached the 2% combined cap, but RCTC has reached the 0.5% maximum tax rate established by their statutory authority. This bill increases the maximum transactions and use tax rate that RCTC is authorized to impose from 0.5% to 1%. This bill prohibits RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by stature.
2. Author's Statement. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California's fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What's more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
3. Arguments in Support. The Riverside County Transportation Commission argues, "RCTC is proud to be part of the self-help county legacy its residents and voters have supported since 1988 when RCTC's first half-cent sales tax measure (Measure A) was implemented. While RCTC continues to deliver on the projects identified in the Measure A expenditure plan, due to a lack of state and federal matching funds, as well as the expected growth of our region, it has become objectively apparent that one-half of one cent cannot meet the mobility needs of Riverside County. As one of California's fastest growing counties, Riverside must seize its own destiny and invest in needed transportation improvement timely."
4. Arguments in Opposition. The Howard Jarvis Taxpayers Association states, "Locally, Riverside County has a 7.75% sales tax rate already. The statewide 7.5% sales tax rate is the highest in the nation and the 8.44% combined state/local rate according to the Tax Foundation is eighth in the nation. Dozens of municipalities already have double-digit sales tax rates. This certainly will not help the families struggling to make ends meet in at least ten counties that have unemployment rates higher than the statewide average, including in Riverside County."

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0000116

Date of Hearing: April 5, 2017

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 1189 (

Author:Eduardo Garcia) – As Amended Ver:March 16, 2017

SUBJECT: Riverside County Transportation Commission: transactions and use tax.

SUMMARY: Increases the maximum transactions and use tax rate, from 0.5% to 1%, Riverside County Transportation Commission may impose, subject to voter approval. Specifically, this bill:

1. Makes changes to the existing authority granted to the Riverside County Transportation Commission (RCTC) to impose a transactions and use tax by increasing the maximum tax rate from 0.5% to 1% RCTC may impose, subject to an ordinance adopted by two-thirds of RCTC and approved by two-thirds of the voters.
2. Prohibits RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by statute.
3. Makes conforming changes to the two-thirds voter approval threshold required for the increase of a transactions and use tax imposed by RCTC pursuant to existing law.

EXISTING LAW:

1. Authorizes cities and counties to impose a local sales and use tax. Authorizes cities and counties to impose transactions and use taxes. Prohibits, in any county, the combined rate
   of all taxes imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Establishes the Riverside County Transportation Sales Tax Act, which authorizes RCTC to impose a transactions and use tax at a maximum rate of 0.5% pursuant to existing law which governs transactions and use taxes.
3. Authorizes RCTC to impose a maximum transactions and use tax rate of 0.5% or any lesser percentage. Authorizes RCTC to increase the tax rate subject to voter approval.
4. Requires the ordinance to be effective only if adopted by a two-thirds vote of RCTC and approved by two-thirds of the voters in the special election called by the board of supervisors or at any regular election.
5. Requires RCTC to specify in the ordinance that no more than 1% of the annual net amount of tax revenues may be used to fund the salaries and benefits of RCTC staff in administering the programs funded from the tax.
6. Requires specified information in the ordinance, including an expenditure plan.
7. Requires RCTC, with respect to transactions and use tax revenues, to adopt an annual budget and cause a post audit of the financial transactions and records, as specified.

FISCAL EFFECT: None

COMMENTS:

1. Transactions and Use Taxes. Existing 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%. 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 (majority vote required), which are unrestricted, or special taxes (two-thirds vote required), which are restricted for a specified use.

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. According to California City Finance, since 1995 local voters have considered sixty four countywide transportation sales tax measures. Only twenty eight of those measures garnered the necessary two-thirds votes for passage. Currently, twenty four counties have transactions and use taxes for transportation.

In Riverside County, RCTC imposed a countywide transactions and use tax of 0.5% and multiple cities have 1% transactions and use tax. The voters approved the 0.5% transactions and use tax proposed by RCTC in 1988. In 2002, voters approved the extension of Measure A, the 0.5% transactions and use tax until, June 30, 2039.

1. Bill Summary. Existing law authorizes RCTC to impose up to a 0.5% transactions and use tax pursuant to Transactions and Use Tax Law which establishes a combined rate in each county of 2%. RCTC utilized this authority to impose a transactions and use tax which was approved by the voters 1988 and extended by the voters in 2002. Riverside County has not reached the 2% combined cap, but RCTC has reached the 0.5% maximum tax rate established by their statutory authority. This bill increases the maximum transactions and use tax rate that RCTC is authorized to impose from 0.5% to 1%. This bill prohibits RCTC from levying a transactions and use tax or multiple taxes at a rate other than 1%, 0.75%, 0.5%, or 0.25%, unless specifically authorized by stature.
2. Author's Statement. According to the author, "Transportation funding is limited. Solutions from Sacramento and Washington are uncertain and still likely to fall short of meeting the needs of one of California’s fastest-growing and most diverse counties. As the backlog of unfunded transportation projects increases and the population and economy grow, so does traffic congestion and its related impacts on health and economic productivity. What’s more, state transportation funding is inadequate and federal transportation funding is uncertain. This bill is a housekeeping item to provide legal clarity so that RCTC has the option to ask Riverside County voters for an additional one-half or one-quarter of one cent sales tax measure."
3. Arguments in Support. The Riverside County Transportation Commission argues, "RCTC is proud to be part of the self-help county legacy its residents and voters have supported since 1988 when RCTC's first half-cent sales tax measure (Measure A) was implemented. While RCTC continues to deliver on the projects identified in the Measure A expenditure plan, due to a lack of state and federal matching funds, as well as the expected growth of our region, it has become objectively apparent that one-half of one cent cannot meet the mobility needs of Riverside County. As one of California's fastest growing counties, Riverside must seize its own destiny and invest in needed transportation improvement timely."
4. Arguments in Opposition. The Howard Jarvis Taxpayers Association states, "Locally, Riverside County has a 7.75 percent sales tax rate already. The statewide 7.5 percent sales tax rate is the highest in the nation and the 8.44 percent combined state/local rate according to the Tax Foundation is eighth in the nation. Dozens of municipalities already have double-digit sales tax rates. This certainly will not help the families struggling to make ends meet in at least ten counties that have unemployment rates higher than the statewide average, including in Riverside County."

REGISTERED SUPPORT / OPPOSITION:

Support

Riverside County Transportation Commission [SPONSOR]

California State Council of Laborers

Coachella Valley Association of Governments

Opposition

Howard Jarvis Taxpayers Association

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958