(1)Existing law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy a transactions and use tax for general purposes, 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 also authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with the Transactions and Use Tax Law.

This bill would authorize the board, unless the transactions and use tax described in paragraph (2) has been imposed, to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2026. The bill would require the board, in concurrence with the county and for purposes of this tax, to develop an expenditure plan of projects, programs, and services that may include, among other things, public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning. The bill would authorize the board to administer the expenditure plan in its entirety, or to transfer proceeds of the tax to the San Mateo County Transportation Authority for administration by that authority consistent with the expenditure plan. The bill would authorize the authority to administer those funds, consistent with the expenditure plan.

(2)Existing law authorizes the County of San Mateo to impose a transactions and use tax for countywide transportation programs at a rate of no more than 0.5% that, in combination with other taxes imposed in accordance with the Transactions and Use Tax Law, would exceed the 2% combined rate limit.

This bill would prohibit the County of San Mateo from imposing this transactions and use tax if the retail transactions and use tax described in paragraph (1) has been imposed by the board of the San Mateo County Transit District.

(1)Existing law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy a transactions and use tax for general purposes, 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 also authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with the Transactions and Use Tax Law.

This bill would authorize the board, unless the transactions and use tax described in paragraph (2) has been imposed, to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2026. The bill would require the board, in concurrence with the county and for purposes of this tax, to develop an expenditure plan of projects, programs, and services that may include, among other things, public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning. The bill would authorize the board to administer the expenditure plan in its entirety, or to transfer proceeds of the tax to the San Mateo County Transportation Authority for administration by that authority consistent with the expenditure plan. The bill would authorize the authority to administer those funds, consistent with the expenditure plan.

(2)Existing law authorizes the County of San Mateo to impose a transactions and use tax for countywide transportation programs at a rate of no more than 0.5% that, in combination with other taxes imposed in accordance with the Transactions and Use Tax Law, would exceed the 2% combined rate limit.

This bill would prohibit the County of San Mateo from imposing this transactions and use tax if the retail transactions and use tax described in paragraph (1) has been imposed by the board of the San Mateo County Transit District.

(1)Existing law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy a transactions and use tax for general purposes, 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 also authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with the Transactions and Use Tax Law.

This bill would authorize the board, unless the transactions and use tax described in paragraph (2) has been imposed, to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2021. 2026. The bill would require the board, in concurrence with the county and for purposes of this tax, to develop an expenditure plan of projects projects, programs, and services that may include, among other things, public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning. The bill would authorize the board to administer the expenditure plan in its entirety, or to transfer proceeds of the tax to the San Mateo County Transportation Authority for administration by that authority consistent with the expenditure plan. The bill would authorize the authority to administer those funds, consistent with the expenditure plan.

(2)Existing law authorizes the County of San Mateo to impose a transactions and use tax for countywide transportation programs at a rate of no more than 0.5% that, in combination with other taxes imposed in accordance with the Transactions and Use Tax Law, would exceed the 2% combined rate limit.

This bill would prohibit the County of San Mateo from imposing this transactions and use tax if the retail transactions and use tax described in paragraph (1) has been imposed by the board of the San Mateo County Transit District.

(1)Existing law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy a transactions and use tax for general purposes, 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 also authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with the Transactions and Use Tax Law.

This bill would authorize the board, unless the transactions and use tax described in paragraph (2) has been imposed, to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2021. The bill would require the board, in concurrence with the county and for purposes of this tax, to develop an expenditure plan of projects that may include, among other things, public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning.

(2)Existing law authorizes the County of San Mateo to impose a transactions and use tax for countywide transportation programs at a rate of no more than 0.5% that, in combination with other taxes imposed in accordance with the Transactions and Use Tax Law, would exceed the 2% combined rate limit.

This bill would prohibit the County of San Mateo from imposing this transactions and use tax if the retail transactions and use tax described in paragraph (1) has been imposed by the board of the San Mateo County Transit District.

(1)Existing law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy a transactions and use tax for general purposes, 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 also authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with specified provisions of law, including a requirement that the combined rate of all such taxes that may be imposed in the county not exceed 2%. the Transactions and Use Tax Law.

This bill would authorize the board board, unless the transactions and use tax described in paragraph (2) has been imposed, to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2021.

Existing law authorizes the board of the San Mateo County Transit District to adopt a retail transactions and use tax ordinance in accordance with specified provisions of law, including a requirement that the combined rate of all such taxes that may be imposed in the county not exceed 2%.

This bill would authorize the board to exceed that 2% limit to impose a retail transactions and use tax set at a rate of no more than 0.5%, if approved by the board before January 1, 2021.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1613

Author:(Mullin)

As Amended Ver:July 5, 2017

Majority vote

Original Committee Reference: L. GOV.

SUMMARY: Authorizes the San Mateo County Transit District (SamTrans), subject to voter approval, to exceed the 2% transactions and use tax (TUT) limit at a rate of no more than 0.5%.

The Senate amendments:

1. Extend the date by which the SamTrans Board of Directors (Board) may adopt an ordinance approving a TUT, subject to voter approval, from January 1, 2021, to January 1, 2026.
2. Require the Board to develop an expenditure plan of projects, programs, and services, in concurrence with San Mateo County that may include public transit; local streets and roads; state highways; bicycle and pedestrian facilities; intelligent transportation systems; and, transportation planning.
3. Allow the Board to administer the expenditure plan in its entirety, or transfer proceeds of the tax to San Mateo County Transportation Authority (SMCTA) to be administered consistent with the expenditure plan.
4. Grant SMCTA the power to administer funds transferred by SamTrans, consistent with the expenditure plan for a voter-approved TUT imposed by SamTrans, pursuant to the authority provided by this bill.

EXISTING LAW:

1. Prohibits, in any county, the combined rate of all TUTs imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Authorizes San Mateo County, until January 1, 2026, and in accordance with the requirements of the Bay Area County Traffic and Transportation Fund Act, to impose a TUT for countywide transportation purposes at 0.5% that exceeds the 2% limit established in existing law, subject to voter approval.
3. Authorizes the Board of the SamTrans to impose a TUT, subject to voter approval.
4. Requires, pursuant to California Constitution Article XIII C, that no local government may impose, extend, or increase any special tax, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.

AS PASSED BY THE ASSEMBLY, this bill:

1. Authorized SamTrans to impose a retail TUT, subject to voter approval, that would, in combination with all other TUTs in San Mateo County, exceed the 2% limit on TUTs established in existing law, if the following requirements are met:
   1. The tax is set at a rate of no more than 0.5%;
   2. The Board adopts the ordinance approving the tax before January 1, 2021; and,
   3. The TUT conforms to the Transactions and Use Tax law, as specified.
2. Prohibited the Board from utilizing the authority in 1) above, if San Mateo County uses their existing authority to impose a TUT that exceeds the 2% countywide limit in current law by 0.5% for transportation programs.
3. Prohibited San Mateo County from utilizing their existing authority to impose a TUT for transportation programs that exceeds the 2% countywide limit on TUTs, if SamTrans uses the authority in 1), above.
4. Clarified that the ordinance adopted by the Board proposing a TUT must be consistent with California Constitution Article XIII C.

FISCAL EFFECT: None

COMMENTS:

1. TUTs. TUTs are taxes that are applied to the retail sales of tangible personal property, such as when clothing or other goods are purchased in a store, as well as to the use or storage of such property when sales tax is not paid. If these taxes are to be used for unrestricted, general purposes, they must be approved by the voters by a majority vote. Special taxes, which are restricted for a specified use, such as transportation projects, must be approved by a two-thirds vote.

Under current law, cities, counties, and specified special districts and transportation authorities may not impose transactions and use taxes that, when combined with other taxes, exceed a total of 2%. However, the Legislature has provided multiple exemptions to cities, counties, special districts, and county transportation authorities, to exceed the 2% cap.

According to California City Finance, since 1995, voters have considered 64 countywide transportation sales tax measures. Only 28 of those measures passed with the necessary two-thirds vote. Currently, 24 counties have TUTs for transportation.

1. Bill Summary. This bill authorizes SamTrans to impose a retail TUT, subject to voter approval, that exceeds the 2% countywide combined rate cap. Under this bill, the governing board of SamTrans must first adopt an ordinance of the proposed tax at a rate of no more than 0.5% before January 1, 2026. The TUT must also receive the appropriate voter approval, pursuant to the California Constitution, which requires a two-thirds vote for special taxes.

This bill requires the Board to develop an expenditure plan of projects, programs, and services that may include things such as public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning. For purposes of the expenditure plan, this bill also specifies how the expenditure plan and funds may be administered. For example, the Board may administer the TUT expenditure plan entirely, or the Board may transfer proceeds of the tax to SMCTA for administration. Finally, this bill also authorizes SMCTA to administer funds transferred to it by SamTrans, consistent with the expenditure plan for the voter-approved TUT.

While this bill does not specifically restrict San Mateo County's ability to place a TUT measure on the ballot for transportation purposes, the 0.5% cap could only be used by SamTrans or San Mateo County, but not both. Under current law, no more taxes may be imposed once the total 0.5% cap is reached. Effectively, this means that once the 2.5% threshold is reached, no entity may impose more taxes, regardless of which entity put the TUT proposal on the ballot. This bill is sponsored by SamTrans.

1. Author's Statement. According to the author, "This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county's transportation priorities. San Mateo County is currently subject to the 2% cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county's prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, may be better suited for this role."
2. Transportation in San Mateo County. SamTrans is a special district that implements multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. SamTrans began operating the first bus lines in 1976. The district is funded through a variety of funding sources, including federal, state, and local taxes. According to their 2015-2019 Strategic Plan, "SamTrans has structural deficits driven by the uncertainty of funding from federal, state, and local sources, particularly State Transportation Development Act funds that make up 23% of SamTrans revenue and a local half-cent sales tax that makes up another 45%. Because SamTrans can't directly influence these, SamTrans has control over only a small part of its revenue stream, specifically farebox revenue [such as bus fares], which makes up about 11% of its revenue."

SamTrans also manages SCMTA funding of highway, bicycle, arterial, and other mobility programs in the county. SCMTA is an independent agency that was created in 1988 when San Mateo County voters approved a 20 year half-cent sales tax to fund transportation projects and programs in the County. This sales tax expired in 2008, and was extended until 2033. SCMTA continues to manage and administer sales tax revenues that are generated through other measures. SCMTA is governed by a seven-member board, with one member appointed by SamTrans.

1. Funding in San Mateo County. Currently, San Mateo County has three countywide TUTs at a total of 1.5%. However, because the cap takes both countywide and citywide taxes into account, even if a county has not reached the 2% cap, an additional city tax could mean that the cap has been reached. Because of this interaction between city-imposed and county-imposed TUTs, the concern that counties will run into the 2% cap still applies today.

With three countywide taxes and several citywide TUTs, San Mateo County has reached the 2% limit. SB 705 (Hill), Chapter 579, Statutes of 2015, authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act. The authority granted by SB 705 to exceed the 2% cap has not been utilized.

1. Arguments in Support. SamTrans, the Peninsula Corridor Joint Powers Board, and SMCTA write in support: "Historically, San Mateo County voters have shown a willingness to approve local sales taxes to fund new and existing transportation services, invest in critically needed infrastructure and support other vital local services. This legislation will provide the capacity to allow for local decision makers to weigh their options in addressing our transportation needs."
2. Arguments in Opposition. The Howard Jarvis Taxpayers Association, in opposition, writes, "Even if appropriate voter approval is achieved locally, AB 1613 still represents poor public policy for numerous reasons. […] With both wages and consumer confidence increasing, this is the wrong message to be sending to California taxpayers."

Analysis Prepared by: Kim Kollwitz / L. GOV. / (916) 319-3958 FN: 0001225

 THIRD READING 

Bill No: AB 1613

Author: Mullin (D)

Amended: 7/5/17 in Senate

Vote: 21

SENATE TRANS. & HOUSING COMMITTEE: 9-3, 6/27/17

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

NOES: Bates, Gaines, Morrell

NO VOTE RECORDED: Roth

SENATE GOVERNANCE & FIN. COMMITTEE: 5-2, 7/12/17

AYES: McGuire, Beall, Hernandez, Hertzberg, Lara

NOES: Nguyen, Moorlach

ASSEMBLY FLOOR: 45-29, 5/22/17 - See last page for vote

SUBJECT: San Mateo County Transit District: retail transactions and use tax

SOURCE: San Mateo County Transit District

DIGEST:

This bill authorizes the San Mateo County Transit District (Samtrans) to impose a countywide sales tax if certain conditions are met.

ANALYSIS:

Existing law:

1. Prohibits, in any county, the combined rate of all Transactions and Use Taxes (TUTs) imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Authorizes San Mateo County, until January 1, 2026, and in accordance with the requirements of the Bay Area County Traffic and Transportation Fund Act, to impose a TUT for countywide transportation purposes at 0.5% that exceeds the 2% limit established in existing law, subject to voter approval.
3. Authorizes the Board of the SamTrans to impose a TUT, subject to voter approval.
4. Requires, pursuant to Article XIII C of the California Constitution, that no local government may impose, extend, or increase any special tax, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.

This bill:

1. Authorizes SamTrans to impose a retail TUT, subject to voter approval, that would, in combination with all other TUTs in San Mateo County, exceed the 2% limit on TUTs established in existing law, if the following requirements are met:
   1. The tax is set at a rate of no more than 0.5%;
   2. The SamTrans Board of Directors (Board) adopts the ordinance approving the tax before January 1, 2026;
   3. Requires SamTrans to develop an expenditure plan for projects, programs, and services to be funded by the 0.5% TUT, as specified.
   4. The TUT conforms to the Transactions and Use Tax law, as specified.
2. Provides that SAMTRANS may administer the expenditure plan in its entirety or may transfer proceeds to the San Mateo County Transportation Authority (SMCTA) for administration of the expenditure plan, as specified. Further provides SMCTA the authority administer funds from the expenditure plan.
3. Prohibits the Board from utilizing the authority in 1) above, if San Mateo County uses their existing authority to impose a TUT that exceeds the 2% countywide limit in current law by 0.5% for transportation programs.
4. Prohibits San Mateo County from utilizing their existing authority to impose a TUT for transportation programs that exceeds the 2% countywide limit on TUTs, if SamTrans uses the authority in 1), above.
5. Clarifies that the ordinance adopted by the Board proposing a TUT must be consistent with California Constitution Article XIII C.

Comments

1. Purpose. According to the author, “This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county’s transportation priorities. San Mateo County is currently subject to the 2 percent cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county’s prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, is well-qualified to manage a future measure.”
2. TUT. TUTs are taxes that are applied to the retail sales of tangible personal property, such as when clothing or other goods are purchased in a store, as well as to the use or storage of such property when sales tax is not paid. If these taxes are to be used for unrestricted, general purposes, they must be approved by the voters by a majority vote. Special taxes, which are restricted for a specified use, such as transportation projects, must be approved by a two-thirds vote.

Under current law, cities, counties, and specified special districts and transportation authorities may not impose transactions and use taxes that, when combined with other taxes, exceed a total of 2%. However, the Legislature has provided multiple exemptions to cities, counties, special districts, and county transportation authorities to exceed the 2% cap. For example, AB 2321 (Feuer, Chapter 302, Statutes of 2008) authorized the Los Angeles Metropolitan Transportation Authority (MTA) to impose, subject to voter approval, a 0.5% sales tax for 30 years. Additionally, AB 1086 (Wieckowski, Chapter 327, Statutes of 2011) authorized a one-time exemption for Alameda County from the 2% cap.

1. San Mateo County TUT rates. Currently, San Mateo County has three countywide TUTs at a total of 1.5%. However, because the cap takes both countywide and citywide taxes into account, even if a county has not reached the 2% cap, an additional city tax could mean that the cap has been reached. Because of this interaction between city-imposed and county-imposed TUTs, the concern that counties will run into the 2% cap still applies today.

With three countywide taxes and several citywide TUTs, San Mateo County has reached the 2% limit. SB 705 (Hill, Chapter 579, Statutes of 2015) authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act. The authority granted by SB 705 to exceed the 2% cap has not been utilized.

1. SamTrans. SamTrans is a special district that implements multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. SamTrans began operating the first bus lines in 1976. The district is funded through a variety of funding sources, including federal, state, and local taxes. SamTrans also manages the San Mateo County Transportation Authority’s (SMCTA) funding of highway, bicycle, arterial, and other mobility programs in the county. SCMTA is an independent agency that was created in 1988 when San Mateo County voters approved a 20 year half-cent sales tax to fund transportation projects and programs in the County. This sales tax expired in 2008, and was extended until 2033.

This bill does not propose an additional increase to the TUT cap in San Mateo County. Rather, this bill simply provides SamTrans with the authority to impose, upon voter approval, a 0.5% TUT for transportation purposes. While the SB 705 TUT cap will still apply, this bill provides the San Mateo region with the flexibility to determine how to administer the 0.5% TUT that best meets San Mateo’s regional needs.

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

SUPPORT: (Verified 7/14/17)

San Mateo County Transit District (source)

Peninsula Corridor Joint Powers Board

San Mateo County Transportation Authority

Silicon Valley Leadership Group

OPPOSITION: (Verified 7/14/17)

CalTax

Howard Jarvis Taxpayers Association

ASSEMBLY FLOOR: 45-29, 5/22/17

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

NOES: Acosta, Travis Allen, Arambula, Baker, Bigelow, Brough, Cervantes, Chávez, Choi, Cunningham, Dababneh, Dahle, Fong, Gallagher, Harper, Irwin, Kiley, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Patterson, Quirk-Silva, Salas, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Bonta, Chen, Daly, Flora, Muratsuchi, Nazarian

Prepared by:

8/17/17 12:39:21

**** END ****

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Mike McGuire, Chair

2017 - 2018 Regular

San Mateo County Transit District: retail transactions and use tax

Amends SamTrans’s current authority to impose a transactions and use tax that exceeds the 2% cap, but only if San Mateo County does not use its current authority to do so.

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.

Cities and counties may increase the sales and use tax, also known as district or transactions and use taxes (TUTs), rates up to 2% for either specific or general purposes. Additionally, a transportation commission of one of the nine Bay Area counties, or the Metropolitan Transportation Commission, can impose a TUT of 0.5% or 1% for transportation

purposes within the applicable incorporated and unincorporated territory of the county with voter approval pursuant to the California Constitution, which 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 and 48 are special purpose taxes with 35 dedicated for transportation purposes. Of the 203 city-imposed taxes, 163 are general purpose and 40 are special purpose.

Generally, TUT may be imposed in 0.125% increments, up to a total of 2% within the county. However, the Legislature has granted several exemptions to the 2% cap, subject to voter approval, as local jurisdictions where both the county and cities within the county impose TUT can exceed the cap, including the City of El Cerrito, Contra Costa County, Transportation Agency for Monterey County, and the Los Angeles Metropolitan Transportation Authority (MTA). With three .5% rates, and four cities with their own rates, the Legislature has also exempted San Mateo County from the cap (SB 705, Hill, 2015); however, voters have not yet imposed this tax.

The San Mateo County Transit District (SamTrans) is a special district that operates multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. State law authorizes SamTrans to impose a 0.5% transactions and use tax, which was approved by voters in 1982. SamTrans also manages the San Mateo County Transportation Authority’s (SMCTA) funding of highway, bicycle, arterial, and other mobility programs in the county. SMCTA is an independent agency that was created in 1988 when San Mateo County voters in 1988 approved a 0.5% TUT to fund transportation projects and programs in the County, which was extended until 2033. SCMTA is governed by a seven-member board, with one member appointed by SamTrans.

Because the agency operates a current sales tax program, and delivers multi-modal transportation programs, it wants to the Legislature to shift the authority to impose a TUT above the 2% cap from the county to SamTrans.

Proposed Law

Assembly Bill 1613 amends SamTrans’s current authority to impose a transactions and use tax that exceeds the 2% cap, so long as the tax is at a rate of no more than 0.5%, and SamTrans’s board approves an ordinance imposing the tax on or before January 1, 2026. SamTrans must develop an expenditure plan of projects that can include public transit, local streets and roads, state highways, bicycle and pedestrian facilities, intelligent transportation systems, and transportation planning. SamTrans may administer the plan in its entirety, or transfer tax proceeds to the San Mateo County Transportation Commission for administration consistent with the expenditure plan. The County of San Mateo must also approve the plan.

However, SamTrans cannot impose the tax authorized by this bill if San Mateo County exercises their authority to do under SB 705. Conversely, the measure bars San Mateo County from imposing the tax if SamTrans does so first.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county’s transportation priorities. San Mateo County is currently subject to the 2 percent cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county’s prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, is well-qualified to manage a future 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. While AB 1613 adds authority for SamTrans that’s currently unused by San Mateo County, and as a result doesn’t explicitly raise taxes, the measure could increase the probability that San Mateo County taxpayers would pay an additional 0.5% rate on top of its three currently imposed transactions and use taxes, for a total rate of 9.25%, which increases to 9.75% in the Cities of Belmont, East Palo Alto, and South San Francisco, which have imposed their own 0.5% rates, or 9.5% in the City of San Mateo, which imposes a 0.25% TUT. The Committee may wish to consider whether AB 1613 allows for a rate which is too high.

3. Existing cap. SB 566 (Scott, 2003) imposed the uniform 2% cap for both cities and counties, in response to a multitude of jurisdiction-specific bills seeking to authorize TUTs. The cap set an upper limit on the local rate, as California’s sales and use tax rate is very high as noted above. In 2015, AB 464 (Mullin) attempted to raise the cap to 3%, but Governor Brown vetoed the bill, stating:

“This bill would raise, on a blanket basis, the limit on local transactions and use tax for all counties and cities from two percent to three percent. Although I have approved raising the limit for individual counties, I am reluctant to approve this measure in view of all the taxes being discussed and proposed for the 2016 ballot.”

4. Related legislation. The Legislature has previously shifted the authority from one entity and transferred it to another similar to AB 1613. However, that measure differed by ending the authority of the agency initially authorized to impose the tax. In 2012, the Legislature allowed Alameda and Contra Costa Counties one-time authority to impose a transactions and use tax in 0.5% increments that would exceed the 2% cap (AB 1086, Wieckowski, 2012). After the vote fell short of the 2/3 required, the Legislature removed this authority from counties, and placed it instead with the Contra Costa County Transportation Authority (AB 1665, Bonilla, 2016). AB 1613 required both SamTrans and San Mateo County to approve any expenditure plan.

Assembly Actions

Assembly Local Government Committee: 6-3

Assembly Floor: 45-29

Support and Opposition

(6/30/17)

Support: San Mateo County Transit District, the Peninsula Corridor Joint Powers Board (Cal-Train), San Mateo County Transportation Authority, Silicon Valley Leadership Group.

Opposition: California Taxpayers Association, Howard Jarvis Taxpayers Association.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/27/2017

SUBJECT: .

DIGEST: This bill authorizes the San Mateo County Transit District (Samtrans) to impose a countywide sales tax if certain conditions are met.

ANALYSIS:

Existing law:

1. Prohibits, in any county, the combined rate of all Transactions and Use Taxes (TUTs) imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Authorizes San Mateo County, until January 1, 2026, and in accordance with the requirements of the Bay Area County Traffic and Transportation Fund Act, to impose a TUT for countywide transportation purposes at 0.5% that exceeds the 2% limit established in existing law, subject to voter approval.
3. Authorizes the Board of the SamTrans to impose a TUT, subject to voter approval.
4. Requires, pursuant to Article XIII C of the California Constitution, that no local government may impose, extend, or increase any special tax, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.

This bill:

1. Authorizes SamTrans to impose a retail TUT, subject to voter approval, that would, in combination with all other TUTs in San Mateo County, exceed the 2% limit on TUTs established in existing law, if the following requirements are met:
   1. The tax is set at a rate of no more than 0.5%;
   2. The SamTrans Board of Directors (Board) adopts the ordinance approving the tax before January 1, 2021;
   3. Requires SamTrans to develop an expenditure plan for projects to be funded by the 0.5% TUT, as specified.
   4. The TUT conforms to the Transactions and Use Tax law, as specified.
2. Prohibits the Board from utilizing the authority in 1) above, if San Mateo County uses their existing authority to impose a TUT that exceeds the 2% countywide limit in current law by 0.5% for transportation programs.
3. Prohibits San Mateo County from utilizing their existing authority to impose a TUT for transportation programs that exceeds the 2% countywide limit on TUTs, if SamTrans uses the authority in 1), above.
4. Clarifies that the ordinance adopted by the Board proposing a TUT must be consistent with California Constitution Article XIII C.

COMMENTS:

1. Purpose. According to the author, “This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county’s transportation priorities. San Mateo County is currently subject to the 2 percent cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county’s prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, is well-qualified to manage a future measure.”
2. TUT. TUTs are taxes that are applied to the retail sales of tangible personal property, such as when clothing or other goods are purchased in a store, as well as to the use or storage of such property when sales tax is not paid. If these taxes are to be used for unrestricted, general purposes, they must be approved by the voters by a majority vote. Special taxes, which are restricted for a specified use, such as transportation projects, must be approved by a two-thirds vote.

Under current law, cities, counties, and specified special districts and transportation authorities may not impose transactions and use taxes that, when combined with other taxes, exceed a total of 2%. However, the Legislature has provided multiple exemptions to cities, counties, special districts, and county transportation authorities to exceed the 2% cap. For example, AB 2321, Chapter 302, Statutes of 2008, authorized the Los Angeles Metropolitan Transportation Authority (MTA) to impose, subject to voter approval, a 0.5% sales tax for 30 years. Additionally, AB 1086, Chapter 327, Statutes of 2011, authorized a one-time exemption for Alameda County from the 2% cap.

1. San Mateo County TUT rates. Currently, San Mateo County has three countywide TUTs at a total of 1.5%. However, because the cap takes both countywide and citywide taxes into account, even if a county has not reached the 2% cap, an additional city tax could mean that the cap has been reached. Because of this interaction between city-imposed and county-imposed TUTs, the concern that counties will run into the 2% cap still applies today.

With three countywide taxes and several citywide TUTs, San Mateo County has reached the 2% limit. SB 705, Chapter 579, Statutes of 2015, authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act. The authority granted by SB 705 to exceed the 2% cap has not been utilized.

1. SamTrans. SamTrans is a special district that implements multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. SamTrans began operating the first bus lines in 1976. The district is funded through a variety of funding sources, including federal, state, and local taxes. SamTrans also manages the San Mateo County Transportation Authority’s (SMCTA) funding of highway, bicycle, arterial, and other mobility programs in the county. SCMTA is an independent agency that was created in 1988 when San Mateo County voters approved a 20 year half-cent sales tax to fund transportation projects and programs in the County. This sales tax expired in 2008, and was extended until 2033.

This bill does not propose an additional increase to the TUT cap in San Mateo County. Rather, this bill simply provides SamTrans with the authority to impose, upon voter approval, a 0.5% TUT for transportation purposes. While the SB 705 TUT cap will still apply, this bill provides the San Mateo region with the flexibility to determine how to administer the 0.5% TUT that best meets San Mateo’s regional needs.

1. Double referral. This bill has been double referred to the Senate Governance and Finance Committee.

Related Legislation:

SB 705 (Hill, Chapter 579, Statutes of 2015) — authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act.

AB 1086 (Wieckowski, Chapter 327, Statutes of 2011) — authorized a one-time exemption for Alameda County from the 2% cap.

AB 2321 (Feuer, Chapter 302, Statutes of 2008) — authorized the Los Angeles Metropolitan Transportation Authority (MTA) to impose, subject to voter approval, a 0.5% sales tax for 30 years.

Assembly votes:

Floor: 45-29

Local Gov: 6-3

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

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

June 21, 2017.)

SUPPORT:

San Mateo County Transit District (Sponsor)

Peninsula Corridor Joint Powers Board (Caltrain)

San Mateo County Transportation Authority

Silicon Valley Leadership Group

OPPOSITION:

CalTax

Howard Jarvis Taxpayers Association

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ASSEMBLY THIRD READING

ATR Bill Id:AB 1613

Author:(Mullin)

As Amended Ver:April 19, 2017

Majority vote

SUMMARY: Authorizes the San Mateo County Transit District (SamTrans), subject to voter approval, to exceed the 2% transactions and use tax (TUT) limit at a rate of no more than 0.5%. Specifically, this bill:

1. Authorizes SamTrans to impose a retail TUT, subject to voter approval, that would, in combination with all other TUTs in San Mateo County, exceed the 2% limit on TUTs established in existing law, if the following requirements are met:
   1. The tax is set at a rate of no more than 0.5%;
   2. The SamTrans Board of Directors (Board) adopts the ordinance approving the tax before January 1, 2021; and,
   3. The TUT conforms to the Transactions and Use Tax law, as specified.
2. Prohibits the Board from utilizing the authority in 1) above, if San Mateo County uses their existing authority to impose a TUT that exceeds the 2% countywide limit in current law by 0.5% for transportation programs.
3. Prohibits San Mateo County from utilizing their existing authority to impose a TUT for transportation programs that exceeds the 2% countywide limit on TUTs, if SamTrans uses the authority in 1), above.
4. Clarifies that the ordinance adopted by the Board proposing a TUT must be consistent with California Constitution Article XIII C.

EXISTING LAW:

1. Prohibits, in any county, the combined rate of all TUTs imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Authorizes San Mateo County, until January 1, 2026, and in accordance with the requirements of the Bay Area County Traffic and Transportation Fund Act, to impose a TUT for countywide transportation purposes at 0.5% that exceeds the 2% limit established in existing law, subject to voter approval.
3. Authorizes the Board of the SamTrans to impose a TUT, subject to voter approval.
4. Requires, pursuant to the California Constitution, Article XIII C, that no local government may impose, extend, or increase any special tax, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.

FISCAL EFFECT: None

COMMENTS:

1. TUTs. TUTs are taxes that are applied to the retail sales of tangible personal property, such as when clothing or other goods are purchased in a store, as well as to the use or storage of such property when sales tax is not paid. If these taxes are to be used for unrestricted, general purposes, they must be approved by the voters by a majority vote. Special taxes, which are restricted for a specified use, such as transportation projects, must be approved by a two-thirds vote.

Under current law, cities, counties, and specified special districts and transportation authorities may not impose transactions and use taxes that, when combined with other taxes, exceed a total of 2%. However, the Legislature has provided multiple exemptions to cities, counties, special districts, and county transportation authorities, to exceed the 2% cap.

According to California City Finance, since 1995, voters have considered 64 countywide transportation sales tax measures. Only 28 of those measures passed with the necessary two-thirds vote. Currently, 24 counties have TUTs for transportation.

1. Bill Summary. This bill authorizes SamTrans to impose a retail TUT, subject to voter approval, that exceeds the 2% countywide combined rate cap. Under this bill, the governing board of SamTrans must first adopt an ordinance of the proposed tax at a rate of no more than 0.5% before January 1, 2021. It must also receive the appropriate voter approval, pursuant to the California Constitution, which requires a two-thirds vote for special taxes.

While this bill does not specifically restrict San Mateo County's ability to place a TUT measure on the ballot for transportation purposes, the 0.5% cap could only be used by SamTrans or San Mateo County, but not both. Under current law, no more taxes may be imposed once the total 0.5% cap is reached. Effectively, this means that once the 2.5% threshold is reached, no entity may impose more taxes, regardless of which entity put the TUT proposal on the ballot. This bill is sponsored by SamTrans.

1. Author's Statement. According to the author, "This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county's transportation priorities. San Mateo County is currently subject to the 2% cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county's prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, may be better suited for this role."
2. Transportation in San Mateo County. SamTrans is a special district that implements multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. SamTrans began operating the first bus lines in 1976. The district is funded through a variety of funding sources, including federal, state, and local taxes. According to their 2015-2019 Strategic Plan, "SamTrans has structural deficits driven by the uncertainty of funding from federal, state, and local sources, particularly State Transportation Development Act funds that make up 23% of SamTrans revenue and a local half-cent sales tax that makes up another 45%. Because SamTrans can't directly influence these, SamTrans has control over only a small part of its revenue stream, specifically farebox revenue [such as bus fares], which makes up about 11% of its revenue."

SamTrans also manages the San Mateo County Transportation Authority's (SMCTA) funding of highway, bicycle, arterial, and other mobility programs in the county. SCMTA is an independent agency that was created in 1988 when San Mateo County voters approved a 20 year half-cent sales tax to fund transportation projects and programs in the County. This sales tax expired in 2008, and was extended until 2033. SCMTA continues to manage and administer sales tax revenues that are generated through other measures. SCMTA is governed by a seven-member board, with one member appointed by SamTrans.

1. Funding in San Mateo County. Currently, San Mateo County has three countywide TUTs at a total of 1.5%. However, because the cap takes both countywide and citywide taxes into account, even if a county has not reached the 2% cap, an additional city tax could mean that the cap has been reached. Because of this interaction between city-imposed and county-imposed TUTs, the concern that counties will run into the 2% cap still applies today.

With three countywide taxes and several citywide TUTs, San Mateo County has reached the 2% limit. SB 705 (Hill), Chapter 579, Statutes of 2015, authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act. The authority granted by SB 705 to exceed the 2% cap has not been utilized.

1. Previous Legislation. The Legislature has previously granted exemptions to the 2% cap for TUTs to support countywide transportation programs.
   1. AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized the Los Angeles Metropolitan Transportation Authority (MTA) to impose, subject to voter approval, a 0.5% sales tax for 30 years. SB 767 (De León), Chapter 580, Statutes of 2015, authorized MTA to impose an additional 0.5% tax for transportation purposes.
   2. AB 1086 (Wieckowski), Chapter 327, Statutes of 2011, authorized a one-time exemption for Alameda County from the 2% cap. AB 210 (Wieckowski), Chapter 194, Statutes of 2013, extended the authority granted to Alameda County to adopt an ordinance imposing a TUT from January 1, 2014, to December 31, 2020, and authorized Contra Costa County to adopt an ordinance imposing a TUT in the same manner as Alameda County. AB 1665 (Bonilla), Chapter 45, Statutes of 2016, removed the authority from the Counties of Alameda and Contra Costa to impose a TUT for countywide transportation programs at a rate of no more than 0.5%, and instead, granted that authority to the Contra Costa Transportation Authority.
   3. AB 464 (Mullin) of 2015 would have increased the maximum combined rate of all taxes imposed by any county from 2% to 3%. AB 464 was vetoed by the Governor.
2. Arguments in Support. SamTrans, the Peninsula Corridor Joint Powers Board, and SMCTA write in support: "Historically, San Mateo County voters have shown a willingness to approve local sales taxes to fund new and existing transportation services, invest in critically needed infrastructure and support other vital local services. This legislation will provide the capacity to allow for local decision makers to weigh their options in addressing our transportation needs."
3. Arguments in Opposition. The Howard Jarvis Taxpayers Association, in opposition, writes, "Even if appropriate voter approval is achieved locally, AB 1613 still represents poor public policy for numerous reasons. […] With both wages and consumer confidence increasing, this is the wrong message to be sending to California taxpayers."

Analysis Prepared by: Kim Kollwitz / L. GOV. / (916) 319-3958 FN: 0000259

Date of Hearing: May 3, 2017

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Cecilia Aguiar-Curry, Chair

ABPCA Bill Id:AB 1613 (

Author:Mullin) – As Amended Ver:April 19, 2017

SUBJECT: San Mateo County Transit District: retail transactions and use tax.

SUMMARY: Authorizes the San Mateo County Transit District (SamTrans), subject to voter approval, to exceed the 2% transactions and use tax (TUT) limit at a rate of no more than 0.5%. Specifically, this bill:

1. Authorizes SamTrans to impose a retail TUT, subject to voter approval, that would, in combination with all other TUTs in San Mateo County, exceed the 2% limit on TUTs established in existing law, if the following requirements are met:
   1. The tax is set at a rate of no more than 0.5%;
   2. The SamTrans Board of Directors (Board) adopts the ordinance approving the tax before January 1, 2021; and,
   3. The TUT conforms to the Transactions and Use Tax law, as specified.
2. Prohibits the Board from utilizing the authority in 1) above, if San Mateo County uses their existing authority to impose a TUT that exceeds the 2% countywide limit in current law by 0.5% for transportation programs.
3. Prohibits San Mateo County from utilizing their existing authority to impose a TUT for transportation programs that exceeds the 2% countywide limit on TUTs, if SamTrans uses the authority in 1), above.
4. Clarifies that the ordinance adopted by the Board proposing a TUT must be consistent with California Constitution Article XIII C.

EXISTING LAW:

1. Prohibits, in any county, the combined rate of all TUTs imposed in accordance with Transactions and Use Tax Law from exceeding 2%.
2. Authorizes San Mateo County, until January 1, 2026, and in accordance with the requirements of the Bay Area County Traffic and Transportation Fund Act, to impose a TUT for countywide transportation purposes at 0.5% that exceeds the 2% limit established in existing law, subject to voter approval.
3. Authorizes the Board of the SamTrans to impose a TUT, subject to voter approval.
4. Requires, pursuant to Article XIII C of the California Constitution, that no local government may impose, extend, or increase any special tax, unless and until that tax is submitted to the electorate and approved by a two-thirds vote.

FISCAL EFFECT: None

COMMENTS:

1. TUTs. TUTs are taxes that are applied to the retail sales of tangible personal property, such as when clothing or other goods are purchased in a store, as well as to the use or storage of such property when sales tax is not paid. If these taxes are to be used for unrestricted, general purposes, they must be approved by the voters by a majority vote. Special taxes, which are restricted for a specified use, such as transportation projects, must be approved by a two-thirds vote.

Under current law, cities, counties, and specified special districts and transportation authorities may not impose transactions and use taxes that, when combined with other taxes, exceed a total of 2%. However, the Legislature has provided multiple exemptions to cities, counties, special districts, and county transportation authorities, to exceed the 2% cap.

According to California City Finance, since 1995, voters have considered 64 countywide transportation sales tax measures. Only 28 of those measures passed with the necessary two-thirds vote. Currently, 24 counties have TUTs for transportation.

1. Bill Summary. This bill authorizes SamTrans to impose a retail TUT, subject to voter approval, that exceeds the 2% countywide combined rate cap. Under this bill, the governing board of SamTrans must first adopt an ordinance of the proposed tax at a rate of no more than 0.5% before January 1, 2021. It must also receive the appropriate voter approval, pursuant to the California Constitution, which requires a two-thirds vote for special taxes.

While this bill does not specifically restrict San Mateo County’s ability to place a TUT measure on the ballot for transportation purposes, the 0.5% cap could only be used by SamTrans or San Mateo County, but not both. Under current law, no more taxes may be imposed once the total 0.5% cap is reached. Effectively, this means that once the 2.5% threshold is reached, no entity may impose more taxes, regardless of which entity put the TUT proposal on the ballot. This bill is sponsored by SamTrans.

1. Author’s Statement. According to the author, “This bill would give a transportation agency in the County of San Mateo the option to place a sales tax measure before the voters during an upcoming election that could provide additional revenues for the county’s transportation priorities. San Mateo County is currently subject to the 2 percent cap and successfully sought legislation to exceed it in 2015. This bill would not increase the taxing authority beyond what was enacted in 2015, but rather provide another option for the county in determining the agency responsible for drafting and implementing the expenditure plan for a future transportation sales tax. The District, because of its role in administering the county’s prior sales tax measure (Measure A), but also because of the multi-modal nature of the agencies it administers, may be better suited for this role.”
2. Transportation in San Mateo County. SamTrans is a special district that implements multimodal transportation services, such as bus, paratransit, and commuter rail and shuttle lines, throughout San Mateo County. SamTrans began operating the first bus lines in 1976. The district is funded through a variety of funding sources, including federal, state, and local taxes. According to their 2015-2019 Strategic Plan, “SamTrans has structural deficits driven by the uncertainty of funding from federal, state, and local sources, particularly State Transportation Development Act funds that make up 23 percent of SamTrans revenue and a local half-cent sales tax that makes up another 45 percent. Because SamTrans can’t directly influence these, SamTrans has control over only a small part of its revenue stream, specifically farebox revenue [such as bus fares], which makes up about 11 percent of its revenue.”

SamTrans also manages the San Mateo County Transportation Authority’s (SMCTA) funding of highway, bicycle, arterial, and other mobility programs in the county. SCMTA is an independent agency that was created in 1988 when San Mateo County voters approved a 20 year half-cent sales tax to fund transportation projects and programs in the County. This sales tax expired in 2008, and was extended until 2033. SCMTA continues to manage and administer sales tax revenues that are generated through other measures. SCMTA is governed by a seven-member board, with one member appointed by SamTrans.

1. Funding in San Mateo County. Currently, San Mateo County has three countywide TUTs at a total of 1.5%. However, because the cap takes both countywide and citywide taxes into account, even if a county has not reached the 2% cap, an additional city tax could mean that the cap has been reached. Because of this interaction between city-imposed and county-imposed TUTs, the concern that counties will run into the 2% cap still applies today.

With three countywide taxes and several citywide TUTs, San Mateo County has reached the 2% limit. SB 705 (Hill), Chapter 579, Statutes of 2015, authorized San Mateo County to exceed the 2% cap to impose a TUT for transportation purposes by 0.5%, subject to voter approval and in accordance with the requirements of the Bay Area County Traffic and Transportation Funding Act. The authority granted by SB 705 to exceed the 2% cap has not been utilized.

1. Previous Legislation. The Legislature has previously granted exemptions to the 2% cap for TUTs to support countywide transportation programs.
   1. AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized the Los Angeles Metropolitan Transportation Authority (MTA) to impose, subject to voter approval, a 0.5% sales tax for 30 years. SB 767 (De León), Chapter 580, Statutes of 2015, authorized MTA to impose an additional 0.5% tax for transportation purposes.
   2. AB 1086 (Wieckowski), Chapter 327, Statutes of 2011, authorized a one-time exemption for Alameda County from the 2% cap. AB 210 (Wieckowski), Chapter 194, Statutes of 2013, extended the authority granted to Alameda County to adopt an ordinance imposing a TUT from January 1, 2014, to December 31, 2020, and authorized Contra Costa County to adopt an ordinance imposing a TUT in the same manner as Alameda County.
      AB 1665 (Bonilla), Chapter 45, Statutes of 2016, removed the authority from the Counties of Alameda and Contra Costa to impose a TUT for countywide transportation programs at a rate of no more than 0.5%, and instead, granted that authority to the Contra Costa Transportation Authority.
   3. AB 464 (Mullin) in 2015 would have increased the maximum combined rate of all taxes imposed by any county from 2% to 3%. AB 464 was vetoed by the Governor.
2. Arguments in Support. SamTrans, the Peninsula Corridor Joint Powers Board, and SMCTA write in support: “Historically, San Mateo County voters have shown a willingness to approve local sales taxes to fund new and existing transportation services, invest in critically needed infrastructure and support other vital local services. This legislation will provide the capacity to allow for local decision makers to weigh their options in addressing our transportation needs.”
3. Arguments in Opposition. The Howard Jarvis Taxpayers Association, in opposition, writes, “Even if appropriate voter approval is achieved locally, AB 1613 still represents poor public policy for numerous reasons. […] With both wages and consumer confidence increasing, this is the wrong message to be sending to California taxpayers.”

REGISTERED SUPPORT / OPPOSITION:

Support

San Mateo County Transit District [SPONSOR]

Peninsula Corridor Joint Powers Board (Caltrain)

San Mateo County Transportation Authority

Opposition

Howard Jarvis Taxpayers Association

Analysis Prepared by: Kim Kollwitz / L. GOV. / (916) 319-3958