BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 338            Hearing Date:     6/16/2015
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          |Author:   |Roger Hernández                                       |
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          |Version:  |4/13/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Eric Thronson                                         |
          |:         |                                                      |
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          SUBJECT:  Los Angeles County Metropolitan Transportation  
          Authority:  transactions and use tax


            DIGEST:  This bill authorizes the Los Angeles County  
          Metropolitan Transportation Authority (LACMTA) to impose by  
          ordinance an additional local, countywide, one-half-cent sales  
          tax.

          ANALYSIS:
          
          Existing law permits a county board of supervisors to create a  
          countywide transportation authority to plan and fund  
          transportation projects within the county.  These transportation  
          authorities may impose a local sales tax for transportation  
          purposes, if the tax ordinance is within statutory limits and  
          abides by restrictions on local taxes contained in the  
          California Constitution.  Counties that have chosen to tax  
          themselves for transportation purposes call themselves  
          "self-help" counties because they have approved measures to help  
          themselves address their own transportation problems.

          Instead of asking voters to impose a local sales tax for  
          transportation purposes under the generic authority in existing  
          law, some counties have specific authorization to propose a  
          measure to increase the sales tax for transportation purposes.   
          For example, the Legislature has passed specific legislation  
          authorizing Los Angeles County to propose to the voters an  
          increase in the local sales tax for transportation.  Voters have  
          approved three separate measures in Los Angeles County, for a  







          AB 338 (Roger Hernández)                          Page 2 of ?
          
          
          total sales tax rate of 1.5% dedicated to transportation  
          purposes.

          This bill:

          1)Authorizes LACMTA to impose by ordinance an additional local,  
            countywide, one-half-cent sales tax for up to 30 years.

          2)Requires LACMTA to adopt the ordinance and submit the proposal  
            to the voters.

          3)Specifies that the ordinance only becomes operative if  
            approved by two-thirds of the voters voting on the measure.

          4)Requires the ordinance imposing the tax to contain all of the  
            following:

             a)   An expenditure plan that lists the projects and programs  
               to be funded from the tax.
             b)   Provisions conforming to existing requirements for the  
               imposition of a sales tax, except the limitation that the  
               combined sales tax rate cannot exceed 2%.
             c)   Provisions limiting LACMTA's administration costs to  
               1.5%.
             d)   A requirement that net revenues must be used for  
               projects and programs in the expenditure plan.

          1)Requires LACMTA to notify the Legislature prior to amending  
            the adopted expenditure plan.

          2)Requires that net revenues are shared equitably between  
            regions of the county.

          3)Requires LACMTA to allocate 20% of the revenues for bus  
            operations, and that these revenues for operations:

             a)   Must be allocated based on formulas in existing law.
             b)   Cannot be derived from local discretionary shares.
             c)   Cannot be used to supplant funds from any other source  
               designated for operations.

          1)Requires LACMTA to allocate 5% of the revenues for rail  
            operations.

          COMMENTS:








          AB 338 (Roger Hernández)                          Page 3 of ?
          
          

          1)Purpose.  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 of commuters, and 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.  According  
            to the author, this bill provides an approach to bring  
            additional resources to Los Angeles County predicated on  
            fairness, transparency, and acknowledgement of best practices.

          2)L.A. County measure history.  Los Angeles County currently has  
            in place three separate one-half-cent sales taxes for  
            transportation purposes (for a total of 1.5 cents per dollar  
            spent).  The first two one-half-cent taxes were initiated in  
            1981 and 1991 under terms of special legislation and after  
            local voter approval, and have no expiration date.

            In 2008, the Legislature passed and the governor signed AB  
            2321 (Feuer, Chapter 302), which authorized LACMTA to place  
            before the voters an ordinance to increase the local  
            transportation sales tax by another one-half cent for 30  
            years.  The statute required LACMTA to adopt an expenditure  
            plan prior to submitting the ordinance to the voters, and  
            identified 18 projects to be included in that expenditure  
            plan.  AB 2321 required LACMTA to include in the expenditure  
            plan the anticipated completion date for each project.  In  
            November 2008, LACMTA placed the sales tax ordinance, referred  
            to as Measure R, on the ballot, and 67% of the voters approved  
            the measure.

            At the time voters approved Measure R, LACMTA estimated that  
            the 30-year program would raise about $40 billion.  Because of  
            the recession and general economic malaise that followed that  
            vote, LACMTA adjusted its revenue estimates downward and now  
            only expects the sales tax measure to generate about $36  
            billion.  To address this funding shortfall, LACMTA began a  
            search for additional revenue or funding mechanisms to meet  
            its transportation needs.  In 2012, the Legislature passed and  
            the governor signed AB 1446 (Feuer, Chapter 806), which  
            authorized LACMTA to place before the voters an ordinance to  
            either eliminate or extend Measure R's 30-year sunset date.   








          AB 338 (Roger Hernández)                          Page 4 of ?
          
          
            The measure, put before the voters in November 2012, failed to  
            achieve the two-thirds majority necessary for passage.

            Instead of seeking to extend Measure R, the author of this  
            bill is authorizing LACMTA to propose to voters another  
            half-cent sales tax.  This new authorization would not contain  
            the required projects of past measures, nor the restrictions  
            of past legislation, but is somewhat a "clean slate" from  
            which LACMTA can build a new expenditure plan and funding  
            prioritization.

          3)Similar legislation passed the Senate.  Similar to this bill,  
            SB 767 (De León) authorizes LACMTA to impose an additional  
            countywide sales tax measure, with a few significant  
            differences.  First, this bill limits the length of the  
            measure's term to no longer than 30 years, whereas SB 767  
            allows LACMTA to determine the length of the measure's term.   
            Second, SB 767 does not require LACMTA to notify the  
            Legislature prior to amending the adopted expenditure plan.   
            Finally, SB 767 does not allocate a percentage of the revenue  
            raised by the potential measure to bus and rail operations.   
            SB 767 was passed by this committee on April 14 8-0 and is  
            currently pending in the Assembly Rules Committee.

          4)Chaptering amendments.  This bill has chaptering conflicts  
            with SB 767.  Should these bills continue to move through the  
            Legislature, the author will need to resolve this conflict at  
            some point.

          5)Technical amendments.  

                 Page 3, line 29, delete "regions" and insert  
               "subregions".
                 Page 3, line 33, delete "(f)" and insert "(g)".

          1)Double-referral.  The Rules Committee has referred this bill  
            to both this committee and the Governance and Finance  
            Committee.  Therefore, if the bill passes this committee, it  
            will be referred to the Committee on Governance and Finance.
          
          RELATED LEGISLATION:
          
          SB 314 (Murray, 2003) - established a list of projects that  
          LACMTA was to construct with proceeds from a voter-approved  
          6.5-year, one-half-cent sales tax.  








          AB 338 (Roger Hernández)                          Page 5 of ?
          
          

          AB 2321 (Feuer, 2008) - superseded SB 314, authorizing LACMTA to  
          place before the voters an ordinance to increase by one-half  
          cent the local transportation sales tax for 30 years.

          AB 1446 (Feuer, 2012) - authorized LACMTA to place before the  
          voters an ordinance to either eliminate or extend Measure R's  
          30-year sunset date.

          SB 1037 (E. Hernandez, 2014) - required LACMTA to update its  
          expenditure plan and Long-Range Transportation Plan before  
          presenting another measure to extend Measure R before the  
          voters.

          Assembly Votes:

            Floor:    49-29
            Appr:     12-5
            Trans:    11-5
            L Gov:      6-3
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 10, 2015.)
          
            SUPPORT:  

          Amalgamated Transit Union
          California Teamsters Public Affairs Council

          OPPOSITION:

          California Taxpayers Association


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