BILL ANALYSIS
SB 264
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Date of Hearing: July 3, 2007
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
SB 264 (Alquist) - As Amended: June 20, 2007
SENATE VOTE : 23-13
SUBJECT : Transactions and use taxes: Santa Clara Valley
Transportation Authority.
SUMMARY : Authorizes the Santa Clara Valley Transportation
Authority to impose a transactions and use tax at a rate of
0.125%, for transit facilities and services subject to the
approval of two-thirds of the county electorate. Specifically,
this bill :
1)Clarifies that any retail district tax ordinance adopted by
Santa Clara Valley Transportation Authority (VTA) must be
approved by the electors in accordance with the California
Constitution, at a special election called for that purpose by
VTA.
2)Requires any transactions and use tax (district tax) ordinance
adopted by VTA to become operative within at least 110 days
following the ordinance adoption.
3)Expands the Transactions and Use Tax Law to permit VTA to
adopt an ordinance imposing a district tax at a rate of
0.125%, provided VTA complies with the applicable statutes.
4)Contains legislative findings stating that a special law is
necessary because of the unique fiscal pressures experienced
by VTA in providing essential public transit services.
EXISTING LAW :
1)Permits a county to impose a district tax for general purposes
at a rate of 0.25%, or multiple thereof, if the ordinance
proposing the tax is approved by a two-thirds vote of the
board of supervisors and a majority of the county's
electorate.
2)Permits a county to impose a district tax for special purposes
at a rate of 0.25%, or multiple thereof, if the ordinance
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proposing the tax is approved by a two-thirds vote of the
board of supervisors and a two-thirds vote of the county's
electorate.
3)Limits the combined rate of all district taxes imposed in any
county to 2%.
FISCAL EFFECT : Unknown
COMMENTS :
1)The author states that "Santa Clara County's economy depends
heavily on the high technology sector and has experienced wide
fluctuations that affect local sales tax receipts. When the
local economy is in a downturn, those organizations, such as
VTA, which rely on local sales tax revenues to fund their
operating and capital needs are seriously affected. For
example, in FY 2002 and FY 2003, available local sales tax
revenue for the County's voter-approved 2000 Measure A Transit
Improvement Program declined by about 25%. The VTA seeks to
expand their options, including the lowest tax increase
necessary, to move the county forward with its transit
improvements."
2)VTA's Board of Directors has initiated discussions on
developing a strategy to address a 20% shortfall in its
transportation capital program for Santa Clara County. It is
considering various options for reducing costs, as well as
alternatives for generating additional revenue. One option
that is currently being discussed is a one-eighth-cent local
transportation sales tax, which SB 264 would allow them to do.
Under current law, VTA, similar to other transportation
organizations in California, has the ability to impose a local
transportation sales tax in quarter-cent increments, subject
to a two-thirds vote of the electorate. However, VTA does not
have the authority to impose a one-eighth-cent local sales tax
for transportation purposes. SB 264 would provide VTA with
that authority, subject to a two-thirds vote of the
electorate.
3)Santa Clara County currently imposes two district taxes. The
first is a 0.50% sales tax approved by the voters in 1976,
exclusively for transit purposes. The second is a 0.50% sales
tax for public transit. Thus, of the 2% countywide cap, Santa
Clara County has a total of 1% left. The total state and
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local tax rate in Santa Clara County is 8.25%.
4)According to the Assembly Revenue and Taxation Committee's
analysis, the Board of Equalization (BOE) notes that there are
four counties that currently levy a tax at a rate of a 1/8%.
BOE has found that some retailers can have difficulty
reprogramming cash registers and accounting programs, since a
1/8 (0.125)% rate results in a factor with five digits after
the decimal point. In Santa Clara County, an additional 1/8
(0.125)% rate would result in a total tax rate of 8.375%, for
a factor of 0.08375, which might pose difficulty for some
retailers.
5)Proponents state that, "the VTA will likely need to secure
additional revenue to help deliver transit improvements
promised to county voters. The agency is facing a significant
budget gap, created in large part by the recent recession.
They are making every effort to close that gap through value
engineering on new projects, increased operational
efficiencies on the existing system, and identifying
opportunities to raise additional funds through strategies
such as joint development agreements. But ultimately the
agency may need to seek additional tax revenues to close the
gap".
6)The BayRail Alliance, which is opposed to SB 264, has concerns
over the financial management of VTA and believes that it
would not be prudent to give VTA the authority to levy another
tax.
7)The Howard Jarvis Taxpayer's Association, which is also
opposed to the bill, states that, "an additional sales tax for
transportation purposes in Santa Clara County is unnecessary.
In addition to currently existing sales tax increment, Santa
Clara County has a vast array of additional funding sources
for transportation purposes including access to bond proceeds
recently approved by California voters as part of the
statewide infrastructure program.
SB 264 is a tax increase on consumers at a time when they cannot
afford to pay it. According to the Tax Foundation,
California's state and local tax burden is 11.5 percent of
gross income, a number that has increased each of the last
four years."
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8)This bill was heard in the Assembly Revenue and Taxation
Committee on June 25, 2007, and passed with a 6-2 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
Amalgamated Transit Union
Santa Clara Valley Transportation Authority
Silicon Valley Leadership Group
Opposition
BayRail Alliance
Howard Jarvis Taxpayers Association
Santa Clara VTA Riders Union
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958