BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 338


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          Date of Hearing:  April 27, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 338  
          (Roger Hernández) - As Amended April 13, 2015


          SUBJECT:  Los Angeles County Metropolitan Transportation  
          Authority:  transactions and use tax


          SUMMARY:  Authorizes the Los Angeles County Metropolitan  
          Transportation Authority (MTA), subject to voter approval, to  
          impose an additional transactions and use tax (sales tax) at a  
          rate of 0.5% for no more than 30 years.  Specifically, this  
          bill:  


          1)Authorizes MTA to impose a one half-cent sales tax that is  
            applicable to the incorporated and unincorporated areas of Los  
            Angeles County (County) for a period not to exceed 30 years.  


          2)Specifies that the authorized tax is in addition to any other  
            tax MTA is authorized to impose or has imposed.


          3)Requires MTA to adopt an ordinance imposing the sales tax and  
            submit it to the voters.


          4)Specifies that the ordinance only becomes operative if  
            approved by two-thirds 








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          of the voters voting on the measure pursuant to Article XIII C  
            of the California Constitution.  
          5)Requires the ordinance imposing the tax to contain all of the  
            following:


             a)   An expenditure plan that lists the transportation  
               projects and programs to be funded by the tax and that  
               includes measures that ensure net revenues are shared  
               equitably between regions of the County;


             b)   Provisions conforming the ordinance to the existing  
               Transactions and Use Tax Law, except to the 2% combined  
               transactions and use tax cap;


             c)   A provision that limits MTA's administrative costs to  
               1.5% of total net revenues; 


             d)   A requirement that the net revenues from the tax and  
               MTA's administration costs be used by MTA to fund  
               transportation projects and programs identified in the  
               expenditure plan; and,


             e)   A requirement that MTA allocate 20% of net revenues from  
               the tax to bus operations and 5% of net revenues from the  
               tax to rail operations during the period that the ordinance  
               is operative.  


          6)Requires MTA to notify the Legislature prior to the adoption  
            of amendments to the adopted expenditure plan.  










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          7)Allows MTA to incur bonded indebtedness payable from the net  
            revenues of the tax.  


          8)Requires the tax to be imposed pursuant to the Transactions  
            and Use Tax Law and exempts it from the 2% combined rate  
            limitation.


          9)Requires that the 20% of tax revenues for bus operations be  
            allocated to all eligible and included municipal transit  
            operators in the County and to MTA in accordance with current  
            law.


          10)Requires that the allocations to MTA and eligible and  
            included municipal operators be made solely from the revenues  
            derived from the tax and not from local discretionary sources.  
             


          11)Requires that the funds allocated for bus operations not  
            supplant any other funds allocated for public transit. 


          EXISTING LAW:  


          1)Authorized MTA to adopt a one half cent-sales tax in Los  
            Angeles County for 30 years, subject to two-thirds voter  
            approval.  The sales tax, presented to the voters as Measure  
            R, was approved in 2008.  

          2)Requires MTA to allocate 20% of the proceeds derived from the  
            one half-cent sales tax for bus operations and 5% for rail  
            operations.  

          3)Authorizes MTA to incur bonded indebtedness payable from the  
            proceeds of Measure R.








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          4)Required MTA to adopt an expenditure plan prior to submitting  
            the proposed Measure R to the voters for a vote.

          5)Allows MTA, subject to two-thirds voter approval, to extend  
            the tax approved through Measure R indefinitely. MTA placed  
            this measure before the voters in November 2012 but it failed  
            to achieve the two-thirds threshold necessary for passage.  

          6)Authorizes cities and counties to impose sales taxes in 0.125%  
            increments in addition to the state's 7.5% sales tax.

          7)Limits the combined rate of all transactions and use taxes  
            imposed in any county to 2%.
          
          FISCAL EFFECT:  Unknown

          COMMENTS:  The 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 sales tax, subject  
          to two-thirds voter approval.  Existing law caps the combined  
          rate of all sales taxes in a county at 2% but provides several  
          exemptions to the cap, including to several counties to allow an  
          additional sales tax for transportation purposes.  

          According to the Board of Equalization, Los Angeles County has  
          14 sales taxes, including three county-wide taxes for  
          transportation purposes and 11 city-wide taxes.  Despite the  
          statutory exemption for Measure R, the County has reached the 2%  
          cap.  Measure R, in addition to Measure C (1990) and Proposition  
          A (1980), which were both imposed indefinitely, are the three  
          one half-cent county-wide sales taxes that provide the majority  
          of MTA's funding.


          AB 338 authorizes MTA to impose, with voter approval, an  
          additional one half-cent sales tax for up to 30 years, subject  








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          to two-thirds voter approval.  The tax authorized by this bill  
          is not subject to the 2% cap.  Similar to prior legislation,  
          this bill requires the ordinance imposing the tax to contain  
          specified information, including an expenditure plan to list the  
          transportation projects and programs to be funded from the tax.   
          However, AB 338 also requires the expenditure plan to include  
          measures that ensure revenues are shared equitably between  
          regions of the County. Similar to the authorizing legislation  
          for Measure R, AB 338 specifies that 20% of all revenues derived  
          from that tax be spent for bus transit operations and 5% for  
          rail transit operations.  


          According to the author, "While Los Angeles continues to  
          experience some of the most challenging traffic congestion in  
          the state and nation, Los Angeles voters have also recognized  
          the importance of investing in a transportation network that is  
          responsive to the needs to commuters, transit users, and that  
          facilitates the movement of goods in the region.  Most  
          importantly, Los Angeles voters have responded to an expenditure  
          plan that can demonstrate fairness in the distribution of  
          investments throughout the region.  AB 338 provides an approach  
          to bring additional resources to Los Angeles County predicated  
          on fairness, transparency and acknowledgement of best  
          practices."  


          There is no doubt that the state needs more funding for  
          transportation across the board.  AB 338 provides the  
          opportunity for Los Angeles County voters to decide whether or  
          not to tax themselves to fulfill that funding need in their own  
          region.  This is a reasonable approach to addressing  
          transportation funding needs.  


          Double referral: This bill passed out of the Assembly Local  
          Government Committee on April 22, 2015, with a 6-3 vote.










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          Related legislation:  SB 767 (De León) also authorizes MTA to  
          impose an additional countywide 0.5% transactions and use tax,  
          but is not identical to this bill.  SB 767 allows MTA to  
          determine the length of the transactions and use tax, whereas  
          this bill establishes a 30-year limit. Additionally, SB 767 does  
          not contain several of the provisions in this bill, including  
          the requirement that the expenditure plan must contain a measure  
          to ensure equity between regions, the dedicated percentage of  
          revenue to bus and rail operations, or the requirement that MTA  
          must notify the Legislature prior to adopting amendments to the  
          adopted expenditure plan.  


          SB 767 passed out of the Senate Transportation and Housing and  
          Governance and Finance committees and is awaiting a hearing in  
          the Senate Appropriations Committee.
          AB 464 (Mullin) raises the transactions and use tax rate cap  
          from 2% to 3%.  AB 464 passed the Assembly Revenue and Taxation  
          Committee on April 13 on a 5-3 vote and will be heard in the  
          Assembly Local Government Committee on April 29, 2015.


          Prior legislation:  SB 314 (Murray), Chapter 785, Statutes of  
          2003, originally enacted provisions that authorized MTA to  
          impose, subject to voter approval, a 0.5% sales tax for no more  
          than six and one-half years for specific transportation projects  
          and programs. That sales tax was never imposed.   


          AB 2321 (Feuer), Chapter 302, Statutes of 2008, authorized MTA  
          to impose, subject to voter approval, a 0.5% sales tax for 30  
          years and required MTA to include specified projects and  
          programs in its long-range transportation plan.  In November of  
          2008, more than 67% of Los Angeles County voters approved this  
          tax in a ballot measure known as Measure R.  

          AB 1446 (Feuer), Chapter 806, Statutes of 2012, authorized MTA,  
          subject to voter approval, to extend the existing sales tax  
          (Measure R) indefinitely.  AB 1446 also required MTA to update  








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          its expenditure plan prior to submitting the tax measure to the  
          voters.  The measure was put before Los Angeles County voters in  
          November 2012 but failed to achieve the two-thirds threshold  
          necessary for passage.  


          SB 1037 (Hernández), Chapter 196, Statutes of 2014, required MTA  
          to update its expenditure plan and Long-Range Transportation  
          Plan before placing another sales tax measure before the voters.  
           


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Amalgamated Transit Union


          California Teamsters Public Affairs Council




          Opposition


          California Taxpayers Association


          Howard Jarvis Taxpayers Association












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          Analysis Prepared by:Anya Lawler / TRANS. / (916) 319-2093