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HomeMy WebLinkAboutMINUTES - 09101996 - SD1 TO: BOARD OF SUPERVISORS Contra •.r1 •.r�:�'•.. FROM: PHIL BATCHELOR, COUNTY ADMINISTRATORor ' s Costa Count �.. y DATE: August 29, 1996 s>A couK'� SUBJECT: PROPOSITION 217 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: CONSIDER whether to take a position on Proposition 217, an initiative statute on the November 5, 1996 ballot which would reinstate the 10% and 11% State income tax rates, with a portion of the additional revenue being returned to those local jurisdictions which lost property tax revenue to the State beginning in the 1993-94 fiscal year. BACKGROUND: 4` In adopting the 1996-97 County Budget on August 13, 1996, the Board of Supervisors was prepared to take a position on Proposition 217. However, the Chairman noted that the agenda did not specifically reference the possibility that the Board would take a position on this measure. As a result, the Board of Supervisors directed that consideration of Proposition 217 be specifically noticed for action on September 10, 1996. The Attorney General's summary of Proposition 217 notes that the measure would do the following: • Retroactively reinstates 10% and 11% tax rates, respectively, on taxpayers with taxable income over $115,000 and $230,000 (current estimates), and joint taxpayers with taxable income over $230,000 and $460,000 (current estimates). CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Y APPROVE OTHER SIGNATURE(S): y2&,6& 4 ��.1 ACTION OF BOARD ON September 10 1996 APPROVED AS RECOMMENDED OTHER X John Wolfe , Contra Costa Taxpayers Association, 820 Main Street , Martinez , and ; Henry Clarke , Public Employees Union Local #1 , P . O . Box 222 , Martinez , commented on the proposed measure . Following testimony and Board discussion, IT IS BY THE BOARD ORDERED that the Board ADOPTED a position SUPPORTING Proposition 217 . I VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: I I I IV V NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: III OF SUPERVISORS ON THE DATE SHOWN. ATTESTED September 10 , 1996 Conta&unty Administrator PHIL BATCHELOR,CLERK OF THE BOARD OF cc: Auditor-Controller SUPERVISORS AVD COUNTY ADMINISTRATOR County Counsel BY ,DEPUTY . sal • Requires the State Controller to apportion revenue from the reinstated tax rates among counties. • Requires counties to allocate that revenue to local government agencies based on each local agency's proportionate share of property taxes which must be transferred to schools and community colleges under 1994 legislation. • Prohibits future reduction of local agency's proportionate share of property taxes. The Legislative Analyst estimates that this measure will produce additional revenue of about $700 million, with about half being allocated to schools under Proposition 98 and half to other local governments. The analysis prepared by the Legislative Analyst for the State Ballot Pamphlet is probably the most objective and most concise available and reads as follows: "BACKGROUND "In the early 1990's California faced a severe recession, which resulted in significant shortfalls in the state budget. In response, the state acted to increase revenues and reduce expenditures. As one way of increasing revenues, the state imposed a temporary income tax rate increase in 1991, adding 10 percent and 11 percent rates for the highest-income taxpayers. This temporary tax increase ended in 1995. "in addition, the state reduced its expenditures by lowering the share of school funding paid by the state and raising the share paid by local property taxes. To do this, the state shifted property tax revenues from counties, cities, and special districts to schools. This action did not change the overall level of spending on schools. Instead, it reduced the amount the state needed to pay from its revenues in support of schools. "The loss of property tax revenues lowered the amount of money available to local governments for programs such as parks, libraries, social services, and public safety. Overall, the state shifted about $3.6 billion in property tax revenues, reducing the amount of property tax revenues going to local governments each year by about 25 percent. These property tax revenue losses are partially offset by $1.6 billion in increased sales tax revenues as a result of the passage of Proposition 172 in 1993. These sales tax revenues are dedicated to local public safety programs. "PROPOSAL "This measure (1) reinstates, beginning with the 1996 tax year, the income tax increase for higher-income taxpayers that ended last year and (2) allocates the money from this tax increase to schools and local governments. -2- 6p/ "Personal Income Tax Rates. Under California's personal income tax, taxpayers pay different rates depending on their income. These rates currently vary from 1 percent to 9.3 percent. Individual taxpayers pay at the 9.3 percent rate on taxable income over about $32,000 and married couples pay 9.3 percent on taxable income over about$65,000. This measure would reinstate the 10 percent and 11 percent personal income tax rates. We estimate that under the measure an individual would pay at the 10 percent rate on taxable income between $115,000 and $230,000 and at a rate of 11 percent on taxable income over $230,000. A married couple would pay at the 10 percent rate on taxable income between $230,000 and $460,000, and at a rate of 11 percent on taxable income over$460,000. "The measure would affect about 1 percent of taxpayers in the state. These taxpayers currently pay approximately $6.5 billion, or 31 percent, of the total personal income taxes collected each year. The measure also restricts the ability of the state to reduce the income taxes paid by higher-income taxpayers in the future without a vote of the people. "Allocation to Schools. Under the State Constitution, increases in state General Fund revenues generally result in an increased level of funding for schools. We estimate that over the next several years schools would get about half of the additional money resulting from this tax increase. "Allocation to Local Governments. About half of the additional money raised by this tax increase would be allocated to local governments. The allocations would be based on the amount of money that a local government lost as a result of the property tax shifts (less the amount received in Proposition 172 sales tax revenue). The local share would be allocated as follows: • 54 percent to counties. 22 percent to cities. • 24 percent to special districts. "The measure also prohibits the state from shifting additional property tax revenues away from these local governments. "FISCAL IMPACTS "This tax increase would raise state General Fund revenues by about $700 million, or 1.5 percent, each year. As noted above, about half of the funds would be allocated to schools and half to other local governments." The argument in favor of Proposition 217 is signed by the League of Women Voters of California, the California Federation of Teachers, and the California Professional Firefighters. -3- The argument against Proposition 217 is signed by the California Taxpayers' Association, a small business owner, and the National Federation of Independent Business. The rebuttal to the argument in favor of Proposition 217 is signed by a school board member from the Antelope Valley Union High School District, the California Chamber of Commerce Small Business Committee, and the Mayor of the City of Lake Forest. The rebuttal to the argument against Proposition 217 is signed by the Peace Officers Research Association of California (PORAC), the California State Parent Teacher Association (PTA), and the Executive Director of the California Tax Reform Association. A copy of the text of Proposition 217 and a copy of the text of the arguments in favor of and in opposition to Proposition 217 are attached. -4- Top Income Tax Brackets. Reinstatement. E217 ] Revenues to Local Agencies. Initiative Statute. .. Argument in Favor of Proposition 217 Why are taxpayers paying more in taxes while local services " The results? Parks close. Libraries close or cut back their keep getting cut? hours. Criminals are let out of overcrowded jails. Child- The answer is clear: each year since 1993, the Governor and protection services are cut. Police departments are Legislature have taken billions of property tax dollars from understaffed. local governments to help balance the state budget. To make up for some of the losses,voters have passed sales At the same time, they intend to give a tax.break to the taxes and local taxes;which fall on,ordinary taxpayers. wealthiest 1.2%of taxpayers,instead of restoring local services.Proposition 217 helps fill the gap, without a tax increase. That's why the people put Proposition 217 on the ballot. After restoring funds that would be lost to schools, it PROPOSITION 217 STOPS AN UNFAIR TAX BREAK automatically returns the revenues from continuing the top Unless Proposition 217 passes, the two top.brackets on the brackets back to local government. state income tax will expire this year. That means only the Each local government will receive revenue in direct wealthiest 1.2%of taxpayers will get a$700 million tax cut. proportion to the amount taken away by the state.This revenue PROPOSITION 217 IS NOT A TAX'INCREASE:'It merely must go to schools and to restore local services in proportion to keeps in place the two highest.state income tax brackets that local losses. apply to families with taxable incomes over $230,000 and Proposition 211 also prohibits the state from taking any $460,000—after taking all their deductions.These brackets,'at additional property tax revenues away from local government 10%and 11%,would otherwise decline to 9.3%.That's tlZe same in the-future.., rate paid by families with taxable income of$65,000. . VOTE YES ON PROPOSITION 217. No other taxpayers are getting a tax cut. Just the top 1.2%. This is especially unfair at a time when the gap:between the Proposition 217 restores a little fiscal sanity to California. It wealthiest Americans and everyone else is getting.larger. simply continues tax rates already in place on the wealthiest PROPOSITION 217 PROTECTS OUR SCHOOLS. taxpayers to protect our schools and restore more of the local California already has the most crowded classrooms in the funding the state took away. That means restored funding for country. The'last thing we need is to be taking money away public safety,for parks,for libraries,and for child protection,all from our schools. Proposition 217 will ensure that up.to $500 of which have suffered since 1993. million will stay in school budgets rather than go to,the wealthy FRAN PACKARD in a tax cut. President,League of Women Voters of California By,passing Proposition 217, voters will prevent any.loss of MARY BERGAN revenues for our schools. President,California Federation of nachers PROPOSITION 217 PARTIALLY RESTORES DANIEL TERRY LOCAL REVENUES. President,California Professional Firefighters Since 1993, Sacramento has taken billions.of'dollars in local taxes from local services—and keeps on taking more.. Rebuttal to Argument in Favor of Proposition 217 California's'economy finally is'on the'mend; creating jobs reduce classroom sizes.The promoters own campaign materials 1.5 times faster than the national average... .. :._ .... state: "IT IS..MOST LIKELY THAT THE MEASURE WILL Increased state tax revenues from this economic recovery HAVE NO INITIAL IMPACT ON SCHOOLS ." have been used%to boost school spending by$3 billion: Local. They-proinise-funds'.for libraries, parks and police. But government received$100 million more for law enforcement. countability how local governments would spend g. �� � there's no ac WHY DO PROPOSITION 217 PROMOTERS--WANT TO the money. Los Angeles County,for example, spent$694,532 to THROW A MONKEY WRENCH INTO THIS EXPANDING lobby Sacramento in the first quarter of 1996—more than all ECONOMY? the other industry,labor and special interest groups. Eighty percent of California's businesses pay personal,NOT. BEFORE TAXES ARE RAISED ANOTHER DIME,THE corporate, income taxes. Most are small businesses,and could BUREAUCRATS SHOULD TIGHTEN THEIR BELTS, CUT be hurt by Proposition 217.. WASTE AND DO MORE WITH THE $62 BILLION THEY Small business is driving job growth in.this state. It's dumbAT:READY HAVE! . to attack these job creators. TAXES ALREADY ARE TOO HIGH! PROPOSITION 217 IS A RETROACTIVE NO on 217 TAX INCREASE! We just don't need another tax. With Proposition 217, KEVIN WRIGHT CARNEY California would effectively have the HIGHEST PERSONAL: School Boardmember,Antelope Valley Union INCOME TAX RATE IN THE COUNTRY. High School District JOHN P.NEAL MORE MONEY DOWN A BUREAUCRATIC Chairman,California Chamber of Commerce Small BLACK HOLE Business Committee Despite claims it "protects schools," PROPOSITION 217 RICHARD T.DIXON CONTAINS NO GUARANTEE that one penny would.be used to Mayor,City of Lake Forest 70 Arguments printed on this page are the.opinions of the authors and have not been checked for accuracy by any official agency. G96 +t'jr • ��f/ 1 Top Income Tax Brackets. Reinstatement. Revenues to Local Agencies. 1nitiative Statute.. 217 Argument Against Proposition 217 • TAXES IN CALIFORNIAALREADY ARE TOO HIGH! But if State and localgovernment spending per person in California i Proposition 217 passes, California would effectively have the already is fifteen percent higher than the national average. highest personal income tax rate in the country, THE LAST THING WE NEED TO DO IS SEND.ANY MORE RETROACTIVE TAX INCREASE MONEY TO THE SACRAMENTO POLITICIANS. 3 BEFORE TAXES ARE RAISED ANOTHER DIME, THE Proposition 217 imposes a'retroactive and PERMANENT BUREAUCRATS SHOULD TIGHTEN THEIR BELTS, CUT TAX INCREASE on income earned since January-1,1996. _ THE WASTE IN GOVERNMENT AND ACCOMPLISH MORE t HURTS SMALL`BUSINESS WITH THE .BILLIONS OF OUR TAX DOLLARS THEY a Its promoters may have intended to soak the rich, but ALREADY HAVE: , Proposition 217 would really hurt the state's small business PROPOSITION 217 ALSO MESSES WITH OUR t owners. Eighty (80) percent,of California's businesses pay PROPERTY TAXES! . personal,NOT corporate income taxes. Under current'law, property taxes pay for public services And that hurts all of us! provided by local agencies-where the property is located. HIGHER TAXES FOR SMALL BUSINESS But under Proposition 217,_if.your city attracts more new MEAN LESS MONEY FOR JOBS AND SALARIES" employers or.new homes,it would be penalized by losing.its fair tF.'. share of property.taxes.It could also lead tohigher fees on new Small businesses are the engine driving California's economic home buyers.and new,businesses recovery. In fact, small companies are creating 60% of all our Residents of a new city 'could be subject to DOUBLE new jobs.It just doesn't make sense to saddle these job-creators TAXATION. They would continue to pay property taxes, but ;t with higher taxes. none of these wouldfinance police, fire and other services for t If Proposition 217 passes,:some`'companies may decide residents of the new city. Instead, other local taxes and fees ,l enough is enough and move their businesses and the jobs they would have to be found. .r provide.OUT of California.to states with lower income tax Proposition 217 maybe well-intended, but it contains too Ll rates. r many provisions with uncertain and even potentially dangerous NO GUARANTEES OR ACCOUNTABILITY economic consequences. Proposition 217 is'confusing, tries to . Proposition 217 contains absolutely no guarantees -or .tackle too many issues and would end up hurting small accountability on how the new tax.moneymill be spent. businesses the most. : Some claim up. 60 percent of the new tax money would be TAXES IN CALIFORNIA ALREADY ARE TOO HIGH! spent on education. But no one�knows for sure. VOTE NO on 217! Proposition 217 promoters do not provide any guarantees on how much of this new tax would be spent on schools.Neither do LARRY McCAR.THY 41',:' theyi account for just how that money would,be spent.YOUR President,California Taxpayers'Association 'TAX MONEY COULD END UP PAYING FOR BUREAUCRATS RUTH LUNQUIST ` AND ADMINISTRATORS,NOT ON:THE KIDS AND IN:THE Small Business Owner.(Herald Printing) , CLASSROOM. MARTY74 B.HOPPER ' Make no mistake, PROPOSITION 217 IS.JUST MORE Californias State Director,National Federation of �"5.1,MONEY'DOWN ABUREAUCRATIC$LACK HOLE. Independent,Business(1VFIB) is k5 Rebuttal to Argument Against Proposition 217 it �+i The opponents are misleading on all.counts..Why? Because They say there are no,guarantees for education. FACT: id j q,r,=they'are trying to protect a.$700.million tax break for the Proposition 98 and the California Constitution guarantee the fi 'i wealthiest 1.2% of taxpayers that will'hurt'our schools, lawrevenues for schools.'That's why parents and educators support to ,.enforcement,libraries and other local services. Proposition 217.. . ' They say taxes are,too high..FACT:Cutting taxes for:the top They say 217,affects property taxes. FACT: It does, in one %=and no one else-means more of the,tax load will be E d way only.It prevents:the State from taking more property taxes 1T shifted onto ordinary taxpayers. from local governments.'That protects public safety and other .Yt They'call'217 a "retroactive'tax increase."' FACT: 217 local services. _, continues the top income tax brackets without change. Taxes _due in April 1997 will be paid'at the same rate as in April, 1996. Consider the facts. Then, VOTE YES ON PROPOSITION 217. They say 217 "hurts small business." FACT: There are. millions of small businesses, but 217 affects a total of only STEVEN H.CRAIG ,tt,',;. 169,000 personal income taxpayers whose incomes aver'age President,Peace"Officers Research Association � $488,000-per year. _ of California 4 p They say taxes on the wealthy mean fewer jobs. FACT: The CAROL RULEY 11% top income tax bracket was established by Governor President,California State Parent Teacher Reagan in 1973, and has been in effect for all but four years Association(PTA) since:California'has had enormous business expansion and job 'LENNY GOLDBERG growth since 1973. Executive Director,California Tax Reform Association 96 %;," 71 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. 71 affect other provisions,sentences,phrases, words,groups of words or applications of this entered in the journal,two-thirds of the membership concurring,or by a statute that becomes -division. To this end,the provisions,sentences,phrases,words,and groups of words in this effective only when approved by the electorate.No amendment by the Legislature shall be division are severable. deemed to further the purposes of this division unless it furthers the purpose of the specific CHAPTER 19. AMENDMENT provision of this division that is being amended.In any judicial action with respect to any 1796.19. No provision of this division may be amended by the Legislature except to legislative amendment,the court shall exercise its independent judgment as to whether or not further the purposes of that provision by a statute passed in each house by roll call vote the amendment satisfies the requirements of this section. Proposition 217:Text of Proposed Law This initiative measure is submitted to the people in accordance with the provisions of Section 97.42 is added to the Revenue and Taxation Code,to read: Article 11,Section 8 of the Constitution. 97.42. (a) Notwithstanding any other provision of law,for each fiscal year commencing This initiative measure amends and adds sections to various codes;therefore,existing with the 1996-97 fiscal year,the auditor shall not reduce the proportionate share of total provisions proposed to be deleted are printed in snikeont type and new provisions proposed to property tax revenues collected in the county that is allocated to local agencies below the be added are printed in italic type to indicate that they are new. corresponding proportionate share for those local agencies for the 1995-96 fiscal year. (b) It is the intent of the people of the State of California in enacting this section that the PROPOSED LAW amount of fiscal relief provided by the statutory initiative adding this section not be offset by Local Control and Fiscal Responsibility Act an additional diversion of local property tax revenues by the state.It is further the intent of Section 1. The people of the State of California do hereby find and declare all of the the people that the amount of fiscal relief provided by this statutory initiative not be offset by any other diversions of local revenue by the state. following: Section 4. Continuation of the top income tax brackets. (a) Local taxpayers have the right to see their property tax dollars controlled locally and Section 17041 of the Revenue and Taxation Code is amended to read: spent for the local services they need.But every year since 1992,against the wishes of local 17041. (a) (1) There shall be imposed for each taxable year upon the entire taxable government and taxpayers,the state government has taken at least three billion six hundred income of every resident of this state,except the head of a household as defined in Section million dollars($3,600,000,000)of property taxes from the cities and counties to cover the 17042,taxes in the following amounts and at the following rates upon the amount of taxable state's budget deficit. income:' (b)This property tax shift from local government control to state government has severely If the taxable income is: the tax is: damaged the ability of local governments to provide basic local services such as police, sheriffs,fire,parks,libraries,emergency medical services,and child protection. Not over$3,650..............:..................... 1%of the taxable income (c) To replace the funds taken by the state government,ordinary taxpayers have been Over$3,650 but not over$8,650.......... $36.50 plus 2%of the excess over$3,650 burdened with increased sales taxes and other taxes and increased fees at the local level even Over$8,650 but not over$13,650........ $136.50 plus 4%of the excess over$8,650 as local services have been cut. Over$13,650 but not over$18,950...... $336.50 plus 6%of the excess over$13,650 (d) Instead of reversing this tax shift from the state back to local control,the state Over$18,950 but not over$23,950...... $654.50 plus 8%of the excess over$18,950 Legislature gave an eight hundred million dollars($800,000,000)tax break to the wealthiest Over$23,950......................................... $1,054.50 plus 9.3%of the excess over$23,950 1.2%of Californians by reducing the top income tax brackets in 1996.These wealthiest 1.20k of taxpayers will receive at least four billion dollars($4,000,000,000)in tax breaks over the (2) (A) For any taxable year beginning on or after January 1,1991-and before 3amtary 1-; next 5 years while local services will suffer and average taxpayers get no relief. +996,the income tax brackets and rates set forth in paragraph(1)shall be modified by each (e) When tax measures which fall on ordinary citizens,such as sales tax increases,were of the following: due to end,the state Legislature has continued them or provided.for a vote of the people on (i) For that portion of taxable income that is over one hundred thousand dollars($100,000) -their continuation.But when income tax rates on only the very wealthiest 1.2%of taxpayers but not over two hundred thousand dollars($200,000),the tax rate is 10 percent of the excess were due to expire,the state Legislature refused to even allow a vote of the people on over one hundred thousand dollars($100,000). continuing the top income tax brackets. (ii) For that portion of taxable income that is over two hundred thousand dollars (f) Reversing these two actions of the Legislature—the property tax shift and the tax cut ($200,000),the tax rate is 11 percent of the excess over two hundred thousand dollars for the wealthy—will help restore stability to city and county services,will relieve the burden ($200,000). on local taxpayers,and will improve the fiscal and economic condition of the entire state of (B) The income tax brackets specified in this paragraph shall be recomputed,as otherwise California. provided in subdivision(h),only for taxable years beginning on and after January 1, 1992. (g) Thus,the people of the State of California enact the "Local Control and Fiscal (b) There shall be imposed for each taxable year upon the entire taxable income of every Responsibility.Act"to provide cities and counties with fiscal relief and restoration in :nonresident or part-year resident which is derived from sources in this state,except the head proportion to the revenue loss that each local agency sustains as a result of the continued of a household as defined in Section 17042,a tax which shall be equal to the tax computed financing of the state budget at the expense of local government,and to pay for the amount of under subdivision(a)as if the nonresident or part-year resident were a resident multiplied by fiscal relief and restoration as can be financed by continuing those top income tax rates on the the ratio of California adjusted gross income to total adjusted gross income from all sources. wealthiest taxpayers that would otherwise expire in 1996. For purposes of computing the tax under subdivision(a)and gross income from all sources, (h).It is the intent of the people of the State of California to restore the historical the net operating loss deduction provided,in Section 172 of the Internal Revenue Code,as connection of basic local government services to the local property tax.In view of the modified by Section 17276,shall be computed as if the taxpayer was a resident for all prior complexity of both the method by which the Legislature transferred property tax revenues years• from local agencies and of reversing this transfer by the initiative process,the people hereby (c) (1) There shall be imposed for each taxable year upon the entire taxable income of call upon the Legislature and Governor to take those actions that are necessary to reverse the every resident of this state,when the resident is the head of a household,as defined in Section property tax shift from cities,counties,and special districts in a manner that maintains and is 17042,taxes in the following amounts and at the following rates upon the amount of taxable consistent with the funding and allocation levels resulting from this measure. income: Section 2. Chapter 6.6(commencing with Section 30061)is added to Part 6 of Division If the taxable income is: the tax is: 3 of Title 3 of the Government Code,to read: Not over$7,300...................................:. I%of the taxable income CHAPTER 6.6. LOCAL F/SCAL REt1EF Over$7,300 but not over$17,300........ $73 plus 2%of the excess over$7,300 30061. (a) Upon receipt by a county of an apportionment made pursuant to subdivision Over$17,300 but not over$22,300...... $273 plus 4%of the excess over$17,300 (b)of Section 19603,the county treasurer shall deposit that apportionment in a Fiscal Relief Over$22,300 but not over$27,600..:... $473 plus 6%of the excess over$22,300 and Restoration Fund in the county treasury and shall notify the auditor of the amount of that Over$27',600 but not over$32,600....:. $791 plus 8%of the excess over$27,600 deposit.For each fiscal year immediately following a fiscal year in which a deposit is made $1,191 plus 9.3%of the excess over$32,600_ into a county s Fiscal Relief and Restoration Fund pursuant to this section,the auditor shall Over$32,600........................I............... allocate the amount of the deposit,including any interest accrued thereon,among the local (2) (A) For any.taxable year beginning on or after January 1,1991 and before 3amrmy+; agencies in the county in accordance with each local agency s proportionate share of the total 1996,the income tax brackets and rates set forth in paragraph(1)shall be modified by each amount of property tax revenue that is required to be shifted from all local agencies in the of the following: county for that fiscal year as a result of Sections 97.2 and 97.3 of the Revenue and Taxation (i) For that portion of taxable income that is over one hundred thirty-six thousand one Code.For purposes of determining proportionate shares pursuant to the preceding sentence, hundred fifteen dollars($136,115)but not over two hundred seventy-two thousand two the auditor shall reduce the shift amount determined for each local agency by the amount of hundred thirty dollars($272,230),the tax rate is 10 percent of the excess over one hundred money allocated to that agency pursuant to Section 35 of Article XIII of the California thirty-six thousand one hundred fifteen dollars($136,115). Constitution,and shall also reduce the shift amount determined for all local agencies in the (ii) For that portion of taxable income that is over two hundred seventy-two thousand two county pursuant to that same constitutional provision.For purposes of this subdivision, hundred thirty dollars($272,230),the tax rate is I l percent of the excess over two hundred "local agency"does not include a redevelopment agency or an enterprise special district,and seventy-two thousand two hundred thirty dollars($272,230). an"enterprise special district"means a special district that engages in an enterprise activity (B) The income tax brackets specified in this paragraph shall be recomputed,as otherwise as identified in the 1989-90 edition of the State Controller's Report on Financial provided in subdivision(h),only for taxable years beginning on and after January 1,1992. Transactions of Special Districts in California. (d) There shall be imposed for each taxable year upon the entire taxable income of every (b) It is the intent of the people of the State of California in enacting this section to nonresident or part-year resident which is derived from sources within this state when the provide basic fiscal relief to local agencies in proportion to the amounts of property tax nonresident or part-year resident is the head of a household,as defined in Section 17042,a tax revenue that state law diverted from local agencies commencing with the 1992-93 and which shall be equal to the tax computed under subdivision(c)as if the nonresident or 1993-94 fiscal years, but reduced by the additional revenue allocated to those agencies part-year resident were a resident multiplied by the ratio of California adjusted gross income pursuant to the sales and use tax currently imposed by Proposition 172,which was approved to total adjusted gross income from all sources.For purposes of computing the.tax under by statewide voters at the November 2, 1993,special statewide election. subdivision(c)and gross income from all sources,the net operating loss deduction provided Section 3. Limit on future property tax shifts. in Section 172 of the Internal Revenue Code, as modified by Section 17276,shall be G96 107 computed as if the taxpayer was a resident for all prior years. Section 5. Allocation of revenues from state to local government. (e) There shall be imposed for each taxable year upon the taxable income of every estate, Section 19603 of the Revenue and Taxation Code is amended to read: trust,or common trust fund taxes equal to the amount computed under subdivision(a)for an_ 19603. The(a) Except as provided in subdivision(b),the balance of the moneys in the individual having the same amount of taxable income. Personal Income Tax Fund shall,upon order of the Controller,be drawn therefrom for the (f) The tax imposed by this part is not a surtax. purpose of making refunds under this part or be transferred to the General Fund.All (g) (1) Section l(g)of the Internal Revenue Code,relating to certain unearned income of undelivered refund warrants shall be redeposited in the Personal Income Tax Fund upon minor children taxed as if the parent's income,shall apply,except as otherwise provided. receipt by the Controller. (2) Section 1(g)(7)(B)(ii)(II)of the Internal Revenue Code,relating to income included on (b) (1) (A) Subject to any reduction required by subparagraph(B), art December I of parent's return,is modified,for purposes of this part,by substituting"five dollars($5)"for each fiscal year,there is hereby deposited in the Local Agency Fiscal Restoration Account, "seventy-five dollars($75)"and"1 percent"for"15 percent." which is hereby created in the General Fund,that additional amount of personal income tax (h) For each taxable year beginning on or after January 1,1988,the Franchise Tax Board revenue that is collected for the immediately preceding taxable year as a result of the shall recompute the income tax brackets prescribed in subdivisions (a) and (c). That amendments to Section 17041 made by the statutory initiative adding this subdivision,which computation shall be made as follows: continue in existence the two highest personal income tax rates. t (1) The California Department of Industrial Relations shall transmit annually to the (B)Notwithstanding any other provision of law,any increase resulting from the statutory Franchise Tax Board the percentage change in the California Consumer Price Index for all initiative adding this subdivision in the amount of state educational funding required by items from June of the prior calendar year to June of the current calendar year,no later than Section 8 of Article XVI of the California Constitution and any implementing statute shall be August 1 of the current calendar year. funded from a reduction in the amount of the deposit otherwise required by subparagraph(A). (2) The Franchise Tax Board shall do both of the following: In no event shall the statutory initiative adding this subdivision result in a level of state (A) Compute an inflation adjustment factor by adding 100 percent to the percentage educational funding that is less than the level of state education funding that would occur in change figure that is furnished pursuant to paragraph(1)and dividing the result by 100. the absence of that measure. (B) Multiply the preceding taxable year income tax brackets by the inflation adjustment (2) In each fiscal year,the full amount of revenues that is deposited in the Local Ageincy factor determined in subparagraph(A)and round off the resulting products to the nearest one Fiscal Restoration Account pursuant to paragraph (1) is hereby appropriated to the dollar($1). Controller for apportionment among all counties in the state. Based upon information ' (i) (1) For purposes of this section,the term"California adjusted gross income"includes provided by the Department of Finance,the Controller shall make an apportionment to each each of the following: county in accordance with the proportion that the total amount of revenue, required to be (A) For any part of the taxable year during which the taxpayer was a resident of this state shifted for the prior fiscal year from all local agencies in the county as a result of Sections (as defined by Section 17014),all items of adjusted gross income,regardless of source. 97.2 and 97.3,bears to the total amount required to be shied for the prior fiscal year as a (B) For any part of the taxable year during which the taxpayer was not a resident of this result of those same sections for all local agencies in the state.For purposes of determining state,only those items of adjusted gross income which were derived from sources within this proportionate shares pursuant to the preceding sentence,the Controller shall reduce the total state,determined in accordance with Chapter I I(commencing with Section 17951). amount of shift revenue determined for all local agencies of a county by the total amount of (2) For purposes of computing"California adjusted gross income"under paragraph(1), revenue allocated in that county pursuant to Section 35 of Article X111 of the California the amount of any net operating loss sustained in any taxable year during any part of which Constitution,and shall also reduce the total amount of shift revenues determined for all local the taxpayer was not a resident of this state shall be limited to the sum of the following: agencies in the state by the.total amount of revenue allocated in the state pursuant to that (A) The amount of the loss attributable to the part of the taxable year in which the same constitutional provision.Each apportionment received by a county pursuant to this taxpayer was a resident. section shall be deposited by the county treasurer as provided in Section 30061 of the (B) The amount of the loss which,during the part of the taxable year the taxpayer is not a Government Code.For purposes of this subdivision, "local agency"has the same meaning as resident,is attributable to California source income and deductions allowable in arriving at that same term is used in Section 30061 of the Government Code. adjusted gross income. (c) It is the intent of the people of the State of California in enacting subdivision(b)to . (j) It is the intent of the people of the State of California in enacting the amendments to make those personal income tax revenues,derived from the tax rates imposed upon only the this section made by the statutory initiative adding this subdivision to continue those marginal very highest income taxpayers,available to relieve local agencies that have been required by income tax rates that affect only the very highest income taxpayers and would otherwise state law to assume a portion of the state's funding burden,and thereby allow those agencies expire in 1996,in order to generate those revenues necessary to provide a basic level of local to better fund essential public services. fiscal relief and maintain the state's ability to fulfill its other obligations.It is the intent of the Section 6. The Legislature may amend this measure only by a statute,passed in each people of the State of California that any future enactment that alters the rate,base, or house of the Legislature by a two-thirds vote,that is consistent with and furthers the purposes burden of the state personal income tax at least maintain the level and proportionate share of of this measure.However,the Legislature may enact a statute to implement subdivision(h)of revenues derived from the marginal income tax rates provided for by the statutory initiative Section 1 of this measure with the approval of only a majority of each house of the adding this subdivision. Legislature. Proposition 218: Text of Proposed Law This initiative measure is submitted to the people in accordance with the or special taxes.Special purpose districts or agencies,including school districts,shall have provisions of Article II,Section 8 of the Constitution. no power to levy general taxes. This initiative measure expressly amends the Constitution by adding articles (b) No local government may impose,extend,or increase any general tax unless and until thereto;therefore,new provisions proposed to be added are printed in italic type that tax is submitted to the electorate and approved by a majority vote.A general tax shall not to indicate that they are new. be deemed to have been increased if it is imposed at a rate not higher than the maximum rale PROPOSED ADDITION OF ARTICLE XIII C so approved.The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government, AND ARTICLE XIII D except in cases of emergency declared by a unanimous vote of the governing body. RIGHT TO VOTE ON TAXES ACT (c) Any general tax imposed,extended,or increased,without voter approval,by any local government on or after January 1, 1995,and prior to the effective date of this article,shall SECTION 1. TITLE. This act shall be known and may be cited as the"Right to Vote continue to be imposed only if approved by a majority vote of the voters voting in all election on Taxes Act.". . on the issue of the imposition,which election shall be held within two years of the effective SECTION 2., FINDINGS AND DECLARATIONS. The people of the State of date of this article and in compliance with subdivision(b). California hereby find and declare that Proposition 13 was intended to provide effective tax (d) No local government may impose,extend,or increase any special tax unless and until relief and to require voter approval of tax increases.However,local governments have that tax is submined to the electorate and approved by a two-thirds vote.A special tax shall subjected taxpayers to excessive tax,assessment,fee and charge increases that not only not be deemed to have been increased if it is imposed at a rate not higher than the.maximum frustrate the purposes of voter approval for tax increases,but also threaten the economic rate so approved. security of all Californians and the California economy itself.This measure protects taxpayers SEC. 3. Initiative Power for Local Taxes, Assessments, Fees and Charges. by limiting the methods by which local governments exact revenue from taxpayers without Notwithstanding any other provision of this Constitution, including, but not limited to, their consent. Sections 8 and 9 of Article 11,the initiative power shall not be prohibited or otherwise limited SECTION 3. VOTER APPROVAL FOR LOCAL TAX LEVIES. Article XIII C is in matters of reducing or repealing any local tax,assessment,fee or charge. The power of added to the California Constitution to read: initiative to affect local taxes,assessments,fees and charges shall be applicable to all local ARTICLE X111 C governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives. SECTION 1. Definitions. As used in this article: (a) "General tax"means any tax imposed for general governmental purposes. SECTION 4. ASSESSMENT AND PROPERTY RELATED FEE REFORM. (b) "Local government"means any county,city,city and county,including a charter city Article XIII D is added to the California Constitution to read: or county,any special district,or any other local or regional governmental entity. (c) `Special district"means an agency of the state,formed pursuant to general law or a ARTICLE XIII D special act,for the local performance of governmental or proprietary fractions with limited SECTION 1. Application. Notwithstanding any other provision of law,the provisions of geographic boundaries including, but not limited to,school districts and redevelopment this article shall apply to all assessments,fees and charges, whether imposed pursuant to agencies, state statute or local government charter authority.Nothing in this article or Article XIII C (d) "Special tax"means any tax imposed for specific purposes,including a tax imposed shall be construed to: for specific purposes,which is placed into a general fund. (a) Provide any new authority to any agency to impose a tax,assessment,fee,or charge. SEC. 2. Local Government Tax Limitation. Notwithstanding any other provision of this (b) Affect existing laws relating to the imposition of fees or charges as a condition of Constitution: property development. (a)All tares imposed by any local government shall be deemed to be either general taxes (c) Affect existing laws relating to the imposition of timber yield taxes. 108 G96