HomeMy WebLinkAboutMINUTES - 03112003 - C25 TO: BOARD OF SUPERVISORS CONTRA
'
e�
FROM: John Sweeten,County Administrator COSTA
DATE: March 11,2003
SUBJECT: Support AB 1221 (Steinberg and Campbell)
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)& BACKGROUND AND JUSTIFICATION
RECOMMENDATION(SI:
SUPPORT AB 1221 (Steinberg and Campbell), which would address the state/local financial relationship and
fiscalization of land use by transferring a portion of local sales tax to the State in exchange for return of a portion of
property taxes currently subject to ERAF.
BACKGROUND/REASON(S) FOR RECOMMENDATIONN.,
AB 1221 would exchange a portion of the locally levied sales tax for an equivalent amount of property tax from the State.
Specifically, it would:
S' Reduce the locally levied 1%sales tax rate to .5%and raise the State sales tax by,5%.
)0, Increase the amount of property tax. (ERAF) equal to .5% of the locally levied sales tax from the State to each
respective city or county in the base year.
> Each year after the base year, the city and the county would receive the same amount of property tax they
received in the prior year plus a share of the property tax that is attributable to the growth in assessed value
within their jurisdiction. The pro rata shares of the property tax of each,jurisdiction would determine the share of
growth,consistent with existing law.
> Provide a trigger so that if a future legislature reduces the property tax allocated to local governments in this bill,
then the sales tax rate would also be reinstated.
According to Assemblymembers Steinberg and Campbell, AB 1221 would provide fiscal incentives to build more
housing and job centers, rather than retail uses that generate sales tax. It as also pointed out that property tax is a more
stable funding source than sales tax.
CONTINUED ON ATTACHMENT: 110—YES SIGNATURE: t
RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF BO RDMMITTEE
„,,,i APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON rarcrl 11> APPROVED AS RECOMMENDED_„_OTHER
VOTE OF SUPERVISORS
X UNANIMOUS
(ABSENT NOW- ) I HEREBY CERTIFY THAT THIS IS A
AYES: NOES: ) TRUE AND CORRECT COPY OF AN
ABSENT: ABSTAIN: ACTION TAKEN AND ENTERED
DISTRICT III SEAT VACANT ON MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
Contact: Saga Hoffman-3354090 ATTESTED March 11, 2003
CC. CAO JOHN SWEETEN,CLERK OF
Les Spahnn(via CAO) THE SO OF SUPERVISORS
EDC AIWINIST TOR
B DEPUTY
03/04/2003 16: 54 4485503 PAGE 02
CALIFORNIA LEGISLATURE
STATE CAPrML
SACRAMENTO,CALIFORNIA
081A
California Balanced Communities Act of 2003
AB 1221 (Steinberg & Campbell)
Background
Under the current law,Bradley-Burns Uniform Local Sales and Use Tax Lave,cities and counties
are allocated 1%of every retail purchase that takes place within their jurisdictional boundary. At
the same time,they receive very little property tax revenue. Given the fractured history of the
statellocal fiscal relationship,local jurisdictions have grown increasingly reliant upon their ability
to maximize their sales tax revenue. Consequently,land use decisions are often"fiscalized." New
growth is encouraged based on the necessity of each city and county to qualify for more and more
sales tax revenues. As a result,cities and counties within a given,region are constantly looking for
ways to bring more retail sales tax generators into their jurisdictional boundary. This often skews
their land use decisions toward retail use and away from housing,manufacturing and other uses
that do not generate a significant amount of sales takes or revenue. It also leads to endless
competition among cities and counties for a finite amount of retail sales tax dollars.
The result of this broken system of local government finance is the development of local
goven=e'nts with imbalances in community land uses,housing shortages in certain areas,long
commutes for workers living in housing rich/job poor fringe-area suburbs,and fractured families in
which working parents lose quality time with their children because of long commutes.
The Problem
The current fiscal incentives in local land use decisions often prevent local governments from
making responsible land use planning decisions.All too often the allure of generating sales tax puts
local officials in a situation of needing to saturate their cities with retail while housing and other
forms of development fail behind.Absent fiscal pressure,most communities would gladly choose
a mixture of land uses including housing,retail and commercial,unfortunately this is not their
reality.The reality is, California is a state full of unbalanced communities.
__ __
03/04/2003 15:54 4495503 PAGE 03
The Solution;AB 1221
The State of California has a golden opportunity to fix a broken system before our quality of life
further deteriorates. AB 1221 would create a more balanced system of local government financing
that would enable cities to grow the way they want to. AB 1221 does not take away the incentive
of local governments to serve their citizens by fostering retail services,but rather it allows for a
more balanced approach by taking away the disincentives currently associated with the building of
homes.Specifically,AD 1221 would:
➢ Swap a portion of the locally levied sales tax for an equivalent amount of property tax from the
State.
➢ Reduce the locally levied 1%sales tax rate to .5%and raise the Mate sales tax by.5%.
➢ Increase the amount of property talc(EW equal to.5%of the locally levied sales tax from
the State to each respective city or county in the base year.
> Each year after the base year,the city and the county will receive the same amount of property
tax they received in the prior year,plus a share of the property tax that is attributable to the
growth in assessed value within their jurisdiction The pro rata shares of the',pmperty tax of
each jurisdiction would determine the share of the growth. This is corL�istent with existing law.
➢ Provide a trigger so that if a future legislature reduces the property tax allocated to local
governments in this bill,then the sales tax rate would also be reinstated.
03/04/2003 16:54 4485503 PAGE 04
California Balanced Communities Act of 2003
AB 1221 (Steinberg & Campbell)
An act to amend Section 29530 of the Government Code, to amend Sections 6051, 6201,
7202, and 7203 of, and to add Section 97.68 to, the Revenue and Taxation';Code, relating
to taxation.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 29530 of the Government Code is amended to read:
29530. (a) If the board of supervisors so agrees by contract with the State
Board of Equalization, the board of supervisors shall establish a teal transportation fund in
the county treasury and shall deposit in the fund all revenues transmitted to the county by the
State Board of Equalization under Section 7204 of the Revenue and Taxation,Code, which are
derived from that portion of the taxes imposed by the county at a rate in excess of 1 percent,
and on and after July 1,.2004, in excess of onc-half of 1 percent, pursuant to Fart 1.5
(commencing with Section 7200) of Division 2 of that code, less an allocation of the cost of
the services of the State Board of Equalization in administering the sales and use tax
ordinance related to the rate in excess of 1 percent, and on and after July 1, 2004, in excess
of one-half of 1 percent, and of the Director of Transportation and the Controller in
administering the responsibilities assigned to him or her in Chapter 4 (commencing with
Section 99200) of Part 11 of Division 10 of the Public Utilities Code.
(b) Any interest or other income earned by
I
03/04/2003 16:54 4485503 PAGE 05 _
investment or otherwise of the local transportation fund stall accrue to and be a part of the
fund.
SEC. 2. Section 97.58 is added to the Revenue and Taxations Code, to read:
97.58. (a) Notwithstanding any other provision of this chapter, for purposes
of annual ad valorem property tax revenue allocations in the 004-05 fiscal
.year, all of the following apply:
(1) The total amount of ad valorem property tax revenue deemed allocated
to a county in the 2403-04 fiscal year shall be increased by the county reimbursement
amount.
(2) The total amount of ad valorem property tax revenue deemed allocated to
a city in the 2003-04 fiscal year shall be increased by that city's city reimbursement amount.
(3) The total amount of ad valorem property tax revenue deemed allocated to
a county's Educational Revenue Augmentation pond in the 2003-04 fiscal year shall be
reduced by the countywide adjustment amount.
(b) For the 2004-05 fiscal year and each fiscal year thereafter, ad valorem
property tax revenue allocations made pursuant to Section 96.1 shall fatly incorporate the
allocation adjustments required by this section.
(c) Any reduction resulting from'subdivision (a) in the amount of ad
valorem property tax revenue deposited in a county's Educational Revenue;Augmentation
Fund shall be applied exclusively to reduce the amount of revenue allocated from that
fond to school districts and county offices of education, and may not be applied to reduce
the amount of revenue allocated from that fund to community college districts.
(d) For purposes of this section:
(1) "City reimbursement amount" means the difference between the
following two amounts:
2
03/04/2003 16:54 4485503 PAGE 06
(A) The amount of revenue that a city would have received pursuant to
Section 72014 in the 2003-04 fiscal year if that city had imposed a sales and use tax at a rate of
one-half of 1 percent.
IN
(B) The amount of revenue that the city received pursuant to,Section 7204the
2003-04 fiscal year.;(2) "County reimbursement amount" means the difference between the
following two amounts:
(A) The amount of revenue that the county would have received pursuant to
Section 7204 in the 2003-04 fiscal year if that county had imposed a sales and use tax at a
rate of three-quarters of 1 percent.
(B) The amount of revenue that the county received pursuant to Section 7204
in the 2003-04 fiscal year.
(3) "Countywide adjustment amount" means the combined total
amounts determined pursuant to paragraphs (2) and (3) for the county and each city in
that county.
(4) The board shall make the calculations specified in paragraphs (1) and
(2), and shall notify the auditor of each county of these amounts on or before July 14,
2004.
SEC. 3. Section 5051 of the Revenue and Taxation Code is
amended to read:
6051. For the privilege of selling tangible personal property at retail a tax is
hereby unposed upon all retailers at the rate of 2 112 percent of the gross receipts of any
retailer from the sale of all tangible personal property sold at retail in this state on or after
August 1, 1933, and to and including June 30, 1935, and at the rate of 3 percent thereafter,
and at the rate of 2 1/2 percent on and after July 1, 1943, and to and including June 30,
1949, and at the rate of 3 percent on and after July 1, 1949, and to and including July 31,
1967, and at the rate of 4 percent on and after August 1, 1967, and to and including June
30, 1972, and at the rate of 3 3/4'percent on and after July 1, 1972, and to and including
3
03%04/2003 16.54 4485503 PAGE 07
June 30, 1973, and at the rate of 4 3/4 percent on and after July 1, 1973, and to and
including September 30, 1973, and at the rate of 3 314 percent on and after October 1, 1973,
and to and including March 31, 1974, and at the rate of 4 3/4 percent to and including June
30, 2004, and at the rate of S 1/4 percent on and after July 1, 2004,
SEC, 4. Section 6201 of the Revenue and Taxation Code is amended
to read:
5201. An excise tax is hereby imposed on the storage, use, or other
consumption in this state of tangible personal property purchased from any retailer on or after
July 1, 1935, for storage, use, or other consumption in this state at the rate of 3-percent of
the sales price of the property, and at the rate of 2 112 percent on and after July 1, 1943, and
to and including June 30, 1949, and at the rate of 3 percent on and after July 1, 1949, and to
and including July 31, 1967, and at the rate of 4 percent on and after August 1, 1957, and to
and including June 30, 1972, and at the rate of 3 3/4 percent on and after July 1, 1972, and
to and including June 30, 1973, and at the rate of 4 3/4 percent on and after July 1, 1973,
and to and including September 30, 1973, and at the rate of 3 3/4 percent on and after
October 1, 1973, and to and including March 31, 1974, and at the rate of 4 3/4 percent to
and including June 30, 2004, and at the rate of 5 1/4 percent on and after July 1, 2004.
SEC. 5. Section 7202 of the Revenue and Taxation Code is lamended to read:
7202. The sales tax portion of any sales and use tax ordinance adopted under this part shall
be imposed for the privilege of selling tangible personal property at retail, and shall include
provisions in substance as follows: (a) A provision imposing a talc for the privilege of selling
tangible personal property at retail upon every retailer in the county at the rate of 11/4
percent, and on and after July 1, 2044, three-quarters of 1 percent, of the gross receipts of
the.retailer from the sale of all tangible personal property sold by that person in the county.
(b) Provisions identical to those contained in Part 1
(commencing With Section 6001), insofar as they relate to sales taxes, except that the name of
the county as the taxing agency shall be substituted for that of the state and that an additional
seller's permit shall not be required if one has been or is issued to the sellerunder Section
6067.
4
03/,04/2003 1.6:54 4485503 PAGE 08
(c) A provision that all amendments subsequent
to the effective date of enactment of Part 1 (commencing with Section 6001) relating to sales
tax and not inconsistent with this part, shall automatically become a part of the sales tax
ordinance of the county. (d) A provision that the county shall contract prior to the effective
date of the county sales and use tax ordinances with the State Board of Equalization to
perform all functions incident to the administration or operation of the sales and use tax
ordinance of the county. Any such contract shall contain a provision that the county agrees to
comply with the provisions of Article 11 ('commencing with Section 29534) of Chapter 2 of
Division 3 of Title 3 of the Government Code.
(e) A provision that the ordinance may be made inoperative not less than 60
days, but not earlier than the first day of the calendar quarter, following the county's lack of
compliance with Article 11 (commencing with Section 29534) of Chapter 2 of Division 3 of
Title 3 of the Government Code or following an increase by any city within the county of the
rate of its sales or use tax above the rate in effect at the time the county ordinance was
enacted.
(f) A provision that the amount subject to tax shall not include the amount
of any sales tax or use tax imposed by the State of California upon a retailer or consumer.
(g) A provision that there is exempted from the
sales tax 84 percent of the gross :receipts from the sale of tangible personal property, other
than fuel or petroleum products, to operators of aircraft to be used or consumed principally
outside the county in which the sale is made and directly and exclusively in the use of the
aircraft as common carriers of persons or property under the authority of the laws of this
state, the United States, or any foreign government.
(h) A provision that any person subject to a sales and use tax under the county ordinance
shall be entitled to credit against the payment of taxes due under that ordinance the amount
of sales and use tax due to any city in the county; provided, that the city sales and use tax is
levied under an ordinance including provisions in substance as follows:
(1) A provision imposing a tax for the privilege of selling tangible personal property at
retail upon every retailer in the city at the rate of 1 percent
5
03/04/2003 16:54 4485503 PAGE 09
or less, and on and after July 1, 2004, ane-half of 1 percent or less, of the gross receipts of
the retailer from the sale of all tangible personal property sold by that person at retail in the
city and a use tax of 1 percent or less of purchase price upon the storage, use',>or ether
consumption of tangible personal property purchased from a retailer for storage, use or
consumption in the city.
(2) Provisions identical to those contained in Part 1 (commencing with Section 6001),
insofar as they relate to sales and use taxes, except that the name of the cityas the taxing
agency shall be substituted for that of the state (but the name of the city shall not be
substituted for the word "state" in the phrase "retailer engaged in business in this state" in
Section 6203 nor in the definition of that phrase in Section 6203) and that an additional
seller's permit shall not be required if one has been or is issued to the seller under Section
6067.
(3) A provision that all amendments subsequent to the effective date of the enactment of
Part 1 (commencing with Section 6001) relating to sales and use tax and not inconsistent
with this part, shall automatically become a part of the sales and use tax ordinance of the.
city.
(4) A provision that the city shall contract prior to the effective date of the
city sales and use tax ordinance with the State Board of Equalization to perform all
functions incident to the administration or operation of the sales and use tax ordinance of
the city which shall continue in effect so long as the county within which the city is located
has an operative sales and use tax ordinance enacted pursuant to this part.
(5) A provision that the storage, use or other consumption of tangible'personal
property, the gross receipts from the sale of which has been subject to sales tax under a sales
and use tax ordinance enacted in accordance with this part by any city and county, county, or
city in this state, shall be exempt from the tax due under this ordinance.
(6) A provision that the amount subject to tax shall not include the amount of any sales tax
or use tax imposed by the State of California upon a retailer or consumer.
(7) A provision that there are exempted from the computation of the amount
of the sales tax the gross receipts from the sale of tangible personal property to operators of
6
03/04/2003 15:54 4485503 PAGE 10
aircraft to be used or consumed principally outside the city in which the sale is made and
directly and exclusively in the use of the aircraft as common carriers of persons or property
under the authority of the taws of this state, the United States, or any foreign government.
(S) A provision that, in addition to the exemptions provided in Sections
6366 and 6366.1, the storage, use, or other consumption of tangible personal property
purchased by operators of aircraft and used or consumed by the operators directly and
exclusively in the use of the aircraft as common carriers of persons or
property for hire or compensation under a certificate of
public convenience and necessity issued pursuant to the
laws of this state, the United States, or any foreign
government is exempt from the use tax.
SPC. 6. Section 7203 of the Revenue and Taxation Code is amended
to read:
7203. The use tax portion of any sales and use tax ordinance adopted under this part shall
impose a complementary tax upon the storage, use or other consumption in the county of
tangible personal property purchased from any retailer for storage, use or other
consumption in the county. That tax shalt be at the rate of 1 1/4 percent, and on and after
July 1, 2004, three-quarters of l percent, of the sales price of the property whose storage,
use or other consumption is subject to the tax and shall include:
(a) Provisions identical to the provisions contained in Part l (commencing
with Section 6001), other than Section 6201 insofar as those provisions relate to
the use tax, except that the name of the county as the taxiing agency enacting the ordinance
shall be substituted for that of the state (but the name of the county shall not be substituted for
the word "state" in the phrase "retailer engaged in business in this state" in Section
6203 nor in the definition of that phrase in Section 6203).
7
031�NI2003 16:54 4485503
PAGE 21
(b) A provision that all amendments subsequent to the date of such
ordinance to the provisions of the Revenue and Taxation Cade relating to the use tax and
not inconsistent with this part shall automatically become a part of the ordinance.
(c) A provision that the storage, use or other consumption of tangible personal property, the
gross receipts from the sale of which has been subject to sales tax under a sales and use tax
ordinance enacted in accordance with this part by any city and county, county, or city in
this state, shall be exempt from the tae due under this ordinance.
(d) A provision that the amount subject to tax shall not include the amount of any sales tax,
or use taxx imposed by the State of California.upon a retailer or consumer.
(e) A provision that, in addition to the exemptions provided in Sections
6366 and 6366.1, the storage, use, or other consumption of tangible personal property, other
than fuel or petroleum products, purchased by operators of aircraft and used or consumed by
the operators directly and exclusively in the use of the aircraft as common carriers of persons
or property for hire or compensation under a certificate of public convenience and necessity
issued pursuant to the laws of this state, the United States or any foreign government is
exempt from 80 percent of the use tax.
SEC. 7. It is the intent of the Legislature in enacting this Act to maintain its
aggregate funding obligations under Proposition 48.
SEC. 8. If a future Legislature enacts legislation that amends Section 97.58
of the Revenue and Taxation Code to reduce the amount of property tax allocated under this
Act, all other provision of this Act shall become inoperative.
SEC. 9. Notwithstanding Section 17610 of the Government Code, if the
Commission on State Mandates determines that this act contain costs mandated by the
state, reimbursement to local agencies and school districts for those casts shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the
Government Cade. If the statewide cost of the claim for reimbursement does not
exceed one nnillion dollars ($1,000,000), reimbursement shall be made from the State
Mandates Claims Fund.
_ 0 _
'. g