BILL ANALYSIS                                                                                                                                                                                                    




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  SCA 11                      HEARING:  1/25/13
          AUTHOR:  Hancock                      FISCAL:  No
          VERSION:  1/25/13                     TAX LEVY:  No
          CONSULTANT:  Grinnell                 

                LOCAL GOVERNMENT: SPECIAL TAXES: VOTER APPROVAL
          

          Lowers the vote threshold for a local agency to levy,  
          increase, or extend any special tax from 2/3 to 55%.


                           Background and Existing Law  

          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. The Constitution further  
          bars school districts from imposing general taxes, but  
          allows school districts, community college districts, and  
          county offices of education to issue bonded indebtedness  
          for school facilities with 55% percent approval  
          (Proposition 39, 2000).


                                   Proposed Law  

          Senate Constitutional Amendment 11 lowers the vote  
          threshold for local agencies imposing, extending, or  
          increasing any special tax from 2/3 to 55%.  The measure  
          also makes conforming changes to the Constitution.


                               State Revenue Impact




          SCA 11 - 1/25/13 -- Page 2



           
          No estimate.




                                     Comments  

          1.   Purpose of the bill  .  According to the author, "SCA 11  
          would lower the vote threshold for increasing most special  
          taxes from 2/3 to 55%.  By doing so, it would align the  
          general requirement with that of school bonds under  
          Proposition 39.  It would lower the burden on cities,  
          counties, and special districts to increase revenue for  
          needed local services provided to Californians.  It would  
          apply to nearly all services, from schools, to  
          transportation, to public safety agencies.  SCA 11 would  
          not mandate any increase on special taxes.  Cities,  
          counties, and special districts would still have to place  
          proposals on the ballot, and local voters would still have  
          to approve them.  The existing exceptions to the 2/3 rule  
          (for instance, sales taxes on real property sales) under  
          Prop. 13 would remain in place.  

          The only change SCA 11 makes is existing law is to lower  
          the vote threshold so that 55% of local voters can choose  
          to increase revenue for their city, county or special  
          district."

          2.   More or less  .  Majority rule is a two-edged sword:  
          democratically elected governments are supposed to enact  
          policies that the voters want, but both federal and state  
          systems restrict the majority due to fears about its  
          ability to use its power to oppress minority interests.   
          For the great majority of public issues, fifty-percent plus  
          one of a legislative body or an electorate rule, but for  
          others the United States and California Constitutions  
          provide that a majority is not enough and a higher  
          threshold is necessary, such as amending the U.S.  
          Constitution, removing a president from office, ratifying a  
          treaty, or overriding a veto.   States largely import the  
          2/3 vote from the United States Constitution into their own  
          for those same purposes, but also require 2/3 vote on taxes  
          or other measures.   In a series of voter initiatives,  
          Californians have elevated local special tax increases and  
          legislatively enacted state tax increases to this level,  





          SCA 11 - 1/25/13 -- Page 3



          while almost every other change can be enacted by majority  
          vote; local agencies can enact general taxes, and voters  
          can approve tax initiatives increasing state taxes by  
          majority vote, as they did with Proposition 30 (2012).  As  
          such, local agencies need a majority vote to assess taxes  
          and spend the proceeds on whatever purposes they want to,  
          but 2/3 if they restrict the use of the tax proceeds.   
          Supermajorities of the Legislature are necessary to  
          increase taxes, but only majorities of voters can.

          SCA 4 partially reverses the previously elevated standard  
          for local special taxes.  If enacted, local agencies can  
          enact special taxes for any purpose at 55% vote,  
          paralleling Proposition 39's similar allowance for school  
          bonds.  The policy question for the Committee is: what  
          should be the voting threshold for local special taxes?   
          The Legislative Analyst's Office says there's no right  
          answer, as requirements vary across states, but adds that  
          the process should be easy enough for voters to understand  
          and reflect overarching objectives for voter participation  
          in tax decisions.  The Committee may wish to consider the  
          overall system of voter thresholds necessary to increase  
          taxes.     

          3.   Join the party  .  The Committee will hear five other  
          measures that change the vote threshold for special taxes:
                 SCA 3 (Leno) - allows school districts, community  
               college districts, and county office of education to  
               levy parcel taxes at 55% vote.
                 SCA 4 (Liu) - allows local agencies to levy,  
               extend, or increase special taxes at 55% vote for  
               local transportation projects.
                 SCA 7 (Wolk) - lowers the vote threshold for bonded  
               indebtedness incurred to construct, reconstruct,  
               rehabilitate, or replace public libraries; allows  
               local agencies to levy, extend, or increase special  
               taxes at 55% vote to fund public libraries.
                 SCA 8 (Corbett) - allows local agencies to levy,  
               extend, or increase special taxes at 55% vote for  
               local transportation projects.
                 SCA 9 (Corbett) - allows local agencies to levy,  
               extend, or increase special taxes at 55% vote for  
               community and economic development projects.


                        Support and Opposition  (05/09/13)





          SCA 11 - 1/25/13 -- Page 4




           Support  :  American Association of University Women;  
          Association of California Construction Managers;  
          Association of California Healthcare Districts; California  
          Association of Zoos and Aquariums; California Coalition for  
          Adequate School Housing; California Park and Recreation  
          Society; California Professional Firefighters; California  
          Special Districts Association; California State Association  
          of Counties; California Watershed Coalition; Chabot Space  
          and Science Center; Chino Valley Independent Fire District;  
          City and County of San Francisco; City of Rancho Cordova;  
          Contra Costa County Fire Protection District; Cordova  
          Recreation and Park District; Cucamonga Valley Water  
          District; Desert Recreation District; East Bay Municipal  
          Utility District; East Bay Zoological Society; Fulton-El  
          Camino Recreation and Park District; Hesperia Recreation  
          and Park District; Idyllwild Fire Protection District;   
          League of California Cities; Leucadia Wastewater District;  
          Livermore Area Recreation and Park District; Metropolitan  
          Transportation Commission; Olivehain Municipal Water  
          District; Olivehurst Public Utility District; Palos Verdes  
          Library District; Reclamation District No. 1000; Running  
          Springs Water District; Santa Clara County Board of  
          Supervisors; Santa Clara County Open Space;  Small School  
          Districts Association; Three Valleys Municipal Water  
          District; Tomales Village Community Services District;  
          Vista Irrigation District; 
          1 individual

           Opposition  :  American Council of Engineering Companies,  
          Apartment Association California Southern Cities; Apartment  
          Association of Orange County; 
          California; Apartment Association of Greater Los Angeles;  
          Association of California Life and Health Insurance  
          Companies; California Ambulance Association; California  
          Apartment Association; California Business Properties  
          Association; California Chamber of Commerce; California  
          Grocers Association; California Healthcare Institute;  
          California Manufacturers and Technology Association;  
          California Restaurant Association; California Retailers  
          Association; California Taxpayers Association; California  
          Association of Winegrape Growers; East Bay Rental Housing  
          Association; Howard Jarvis Taxpayers Association; National  
          Federation of Independent Business; Nor Cal Rental Property  
          Association; 
          Orange County Business Council; San Diego County Apartment  





          SCA 11 - 1/25/13 -- Page 5



          Association;  San Miguel Community Services District; Santa  
          Barbara Rental Property Association; Union Pacific  
          Railroad;  Southwest California Legislative Council; 
          Trinity Center Community Services District; Western  
          Manufactured Housing Communities Association